What you don’t know about blockchains in enterprises
ENTERPRISES have been talking about blockchain for years now — and many have reported successfully completing trials using the technology. Leaving Bitcoins aside, there’s hardly any real-world enterprise-driven blockchain-first solutions out there.
Standard Chartered Bank, DBS Bank, and Infocomm Development Authority of Singapore completed a Proof of Concept (PoC) way back in 2015.
In 2016, the National Australia Bank completed a successful internal money transfer using blockchain. In 2017 and 2018, several large enterprises announced successful PoCs and trials in supply chain, pharmaceuticals, and other functions — and yet, not many businesses have scaled up their PoCs and replaced their “old” system with the blockchain.
According to Adrian Leow, it’s because blockchain isn’t ready for enterprise prime time use. In an interview with Tech Wire Asia, the Gartner Research Director and Blockchain Subject Matter Expert said, “Trialing blockchain is great, but the risk of turning off existing systems is too great — which is why most businesses haven’t taken the leap.”
However, Leow is extremely optimistic about the technology and believes it can radically transform business if it is understood.
Leow echoes Gartner’s voice in its Hype Cycle for Blockchain Technologies 2018 study: “The lack of deep understanding among end-user clients of the potential and pitfalls of blockchain technologies need to be resolved before viable progress can be made.”
Gartner, whose analysts dug deep into the real-world deployment of blockchain solutions within enterprises, found that proof of concepts abound, but technical challenges remain in terms of scalability, security, interoperability, data management, standards and other areas necessary for large-scale enterprise use.
Furthermore, blockchain systems of record must integrate with existing accounting systems, which requires deep and broad integration with foundational — and possibly antiquated — systems.
Is blockchain really meant for enterprises?
Blockchain’s core features — decentralization and tokenization — seem to be what upsets most businesses. In fact, they completely disrupt the way traditional businesses operate.
As a result, Gartner believes that within established organizations, blockchain will primarily serve as an inspiration for replacement or rationalization of legacy systems.
However, Leow also points out that the very nature of blockchain also changes the nature of products and services due to decentralized, distributed peer-to-peer and autonomous decision-making constructs that offer opportunities for new business model construction.
As a result, mainstream adoption for mission-critical capabilities seems unlikely unless business leaders make sense of how to leverage such a system to transform its functions and business model.
Who’s going to lead blockchain eventually?
Well, as banking has been toying with the idea of deploying blockchain based solutions to bring in transparency and cost-efficiencies, they’re going to be the first to actually see successful deployments.
However, manufacturing and retail are not far behind.
“Blockchain is accelerating quite quickly in both of these industries and hence, enterprise-wide applications are expected soon. Since the return on investment and business benefit are more pronounced in retail and manufacturing than in other industries, the pressure to succeed makes commercial sense,” explained Leow.
However, from Gartner’s own research, it seems as though China is leading the rest of the world when it comes to blockchain implementation. Only 1 percent of CIOs surveyed across the world have already invested and deployed blockchain solution, but when drilled down, it seems as though that number is 6 percent for China.
Of the remaining, 34 percent of companies worldwide said they have no interest in blockchain, while only 19 percent of those in China had a similar response.
From the looks of it, the next real-world enterprise-wide use cases will emerge in financial services, retail, or manufacturing, and is likely to get started in China than anywhere else in the world.