Blockchain in­vest­ments grow but reser­va­tions re­main

Or­gan­i­sa­tions are in­creas­ingly shift­ing from ex­plor­ing blockchain to iden­ti­fy­ing and build­ing prac­ti­cal busi­ness ap­pli­ca­tions, ac­cord­ing to a Deloitte sur­vey.

The Malta Independent on Sunday - - ENEWS & TECH -

Many global ex­ec­u­tives think blockchain has great po­ten­tial to help them rein­vent busi­ness pro­cesses and are poised to in­vest in a wide range of use cases dur­ing the next year, ac­cord­ing to the re­sults of Deloitte Con­sult­ing LLP’s 2018 Global Blockchain sur­vey, which polled 1,053 se­nior ex­ec­u­tives on­line in seven coun­tries.

Seventy-four per­cent of sur­vey re­spon­dents re­port their or­gan­i­sa­tions see a com­pelling busi­ness case for blockchain, while 34 per­cent say their com­pany al­ready has a blockchain sys­tem in pro­duc­tion and 41 per­cent ex­pect to de­ploy a blockchain ap­pli­ca­tion in the next year. Nearly 40 per­cent say their or­gan­i­sa­tion will in­vest $5 mil­lion or more in blockchain tech­nol­ogy in the com­ing year.

Blockchain is a ver­sa­tile dis­trib­uted ledger tech­nol­ogy that can record fi­nan­cial trans­ac­tions, store med­i­cal records, and track the flow of goods, in­for­ma­tion, and pay­ments, among other uses. Re­spon­dents’ blockchain use cases span sev­eral ar­eas, with sup­ply chain (53 per­cent), in­ter­net of things (51 per­cent), and dig­i­tal iden­tity (50 per­cent) lead­ing the way.

“Blockchain is at an in­flec­tion point, with mo­men­tum shift­ing from ex­plor­ing the tech­nol­ogy’s po­ten­tial to build­ing prac­ti­cal busi­ness ap­pli­ca­tions,” says Linda Pawczuk, a prin­ci­pal and blockchain leader for the Amer­i­cas at Deloitte Con­sult­ing LLP. “As more or­gan­i­sa­tions in­vest in blockchain, the tech­nol­ogy is likely to gain sig­nif­i­cant trac­tion,” she says. Com­pa­nies could un­lock greater ef­fi­cien­cies, cre­ate new busi­ness mod­els and rev­enue sources, and en­hance se­cu­rity, among other ben­e­fits.

De­spite this mo­men­tum, re­spon­dents in­di­cate that for all the talk about blockchain’s prom­ise, there are few ac­tive use cases to ad­vance their be­liefs. “A cer­tain blockchain fa­tigue is set­ting in among those who feel its po­ten­tial has been over-com­mu­ni­cated while its real-world ben­e­fits re­main elu­sive,” says David Schatsky, a man­ag­ing direc­tor at Deloitte LLP. “Based on where blockchain is to­day and, more im­por­tantly, its likely adop­tion rate within the next three years, we strongly be­lieve or­gan­i­sa­tions should stay en­gaged in ex­plor­ing the im­pact of blockchain on their busi­ness and their in­dus­try.”

Many legacy or­gan­i­sa­tions – well-es­tab­lished fi­nan­cial in­sti­tu­tions and tra­di­tional brick-and-mor­tar re­tail­ers, for in­stance – are ad­just­ing their blockchain mind­set. Rather than sim­ply ed­u­cat­ing them­selves about blockchain and then find­ing a dis­crete use case, they are ex­plor­ing the broader busi­ness ecosys­tem that can sup­port the tech­nol­ogy. In do­ing so, they are in­creas­ingly adopt­ing the ap­proach of many emerg­ing dig­i­tal dis­rup­tors, which are typ­i­cally less con­strained by legacy tech­nolo­gies and are well-versed in the po­ten­tial ben­e­fits blockchain can pro­vide through­out the busi­ness value chain.

84 per­cent of re­spon­dents be­lieve blockchain tech­nol­ogy is broadly scal­able and will even­tu­ally achieve main­stream adop­tion, and 59 per­cent think the tech­nol­ogy will dis­rupt their in­dus­try. By con­trast, some 39 per­cent of re­spon­dents be­lieve blockchain is over­hyped; in the United States, that num­ber is 44 per­cent.

The di­ver­gence may re­flect a shift to­ward the prag­ma­tists in the blockchain com­mu­nity, ac­cord­ing to Pawczuk. While ex­ec­u­tives in the fi­nan­cial ser­vices sec­tor, for ex­am­ple, are lead­ing the way in us­ing the tech­nol­ogy to re-ex­am­ine pro­cesses and func­tions, their coun­ter­parts in other sec­tors may re­main more re­served as they work to de­velop ap­pro­pri­ate use cases, she says.

Many ex­ec­u­tives see a va­ri­ety of ob­sta­cles mov­ing for­ward. Reg­u­la­tory con­cerns (39 per­cent) are the big­gest bar­rier cited by sur­vey re­spon­dents, fol­lowed by the need to re­place or adapt legacy sys­tems (37 per­cent). A full one-third (33 per­cent) be­lieve cur­rent ROI for blockchain re­mains un­cer­tain.

While es­tab­lished or­gan­i­sa­tions may face chal­lenges in try­ing to make blockchain fit into their ex­ist­ing busi­ness par­a­digm, “it’s im­por­tant for th­ese ex­ec­u­tives to recog­nise this is an evo­lu­tion in com­merce,” says Rob Massey, part­ner and global blockchain leader at Deloitte Tax LLP. “Com­pa­nies would do well to fo­cus beyond a solid proof of con­cept for im­ple­men­ta­tion. Blockchain can be a busi­ness model en­abler, fun­da­men­tally chang­ing how a busi­ness op­er­ates. We are see­ing this im­pact in ev­ery in­dus­try.”

*** As or­gan­i­sa­tions put more re­sources be­hind blockchain and bet­ter recog­nise how it can im­prove their busi­ness pro­cesses and bot­tom lines, the re­sult­ing cost sav­ings, com­pet­i­tive ad­van­tages, and ROI will likely grow more pro­nounced, with the tech­nol­ogy en­abling a com­pletely new level of in­for­ma­tion ex­change both within and across in­dus­tries.

1. The sur­vey was com­mis­sioned by Deloitte Con­sult­ing LLP and con­ducted on­line be­tween March 26 and April 5, 2018. The sur­vey polled a sam­ple of 1,053 se­nior ex­ec­u­tives in seven coun­tries (Canada, China, France, Ger­many, Mex­ico, the United King­dom, and the United States) at com­pa­nies with $500 mil­lion or more in an­nual rev­enue. Re­spon­dents had at least a broad un­der­stand­ing of blockchain and were fa­mil­iar with and able to com­ment on their or­gan­i­sa­tions’ blockchain in­vest­ment plans. CIOs and CTOs rep­re­sented 26 per­cent of re­spon­dents.

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