Organizations Should Not Overestimate the Short-Term Benefits of Blockchain
Only 1 percent of CIOs indicated any kind of blockchain adoption within their organizations, and only 8 percent of CIOs were in short-term planning or active experimentation with blockchain, according to Gartner’s 2018 CIO Survey. Furthermore, 77 percent of CIOs surveyed said their organization has no interest in the technology and/or no action planned to investigate or develop it.
“This year’s Gartner CIO Survey provides factual evidence about the massively hyped state of blockchain adoption and deployment (see Figure 1),” said David Furlonger, vice president and Gartner Fellow. “It is critical to understand what blockchain is and what it is capable of today, compared to how it will transform companies, industries and society tomorrow.”
Mr. Furlonger added that rushing into blockchain deployments could lead organizations to significant problems of failed innovation, wasted investment, rash decisions and even rejection of a game-changing technology.
The rocky road to blockchain
Among 293 CIOs of organizations that are in short-term planning or have already invested in blockchain initiatives, 23 percent of CIOs said that blockchain requires the most new skills to implement of any technology area, while 18 percent said that blockchain skills are the most difficult to find. A further 14 percent indicated that blockchain requires the greatest change in the culture of the IT department, and 13 percent believed that the structure of the IT department had to change in order to implement blockchain.
“The challenge for CIOs is not just finding and retaining qualified engineers, but finding enough to accommodate growth in resources as blockchain developments grow,” said Mr. Furlonger. “Qualified engineers may be cautious due to the historically libertarian and maverick nature of the blockchain developer community.”
CIOs also recognized that blockchain implementation will change the operating and business model of the organizations, and they indicated a challenge in being ready and able to accommodate this requirement. “Blockchain technology requires understanding of, at a fundamental level, aspects of security, law, value exchange, decentralized governance, process and commercial architectures,” said Mr. Furlonger. “It therefore implies that traditional lines of business and organization silos can no longer operate under their historical structures.”
Financial services and insurance companies lead the way
From an industry perspective, CIOs from telecom, insurance and financial services indicated being more actively involved in blockchain planning and experimentation than CIOs from other industries.
While financial services and insurance companies are at the forefront of this activity, the transportation, government and utilities sectors are now becoming more engaged due to the heavy focus on process efficiency, supply chain and logistics opportunities. For telecom companies, interest lies in a desire to “own the infrastructure wires” and grasp the consumer payment opportunity.
“Blockchain continues its journey on the Gartner Hype Cycle at the Peak of Inflated Expectations. How quickly different industry players navigate the Trough of Disillusionment will be as much about the psychological acceptance of the innovations that blockchain brings as the technology itself,” said Mr. Furlonger.
Business, governance and operating models, and designed and implemented predigital business will take time to re-engineer. This is because of the ramifications blockchain has concerning control and economics. “While many industries indicate an initial interest in blockchain initiatives, it remains to be seen whether they will accept decentralized, distributed, tokenized networks, or stall as they try to introduce blockchain into legacy value streams and systems,” Mr. Furlonger concluded.