Gartner believes enterprises will need to rethink blockchain solutions
ENTERPRISES are finally beginning to really understand blockchains and learning how to leverage the technology to create useful and practical solutions.
The hype-cycle for blockchain seems to be dying down, and real-world implementations are making their way into the world of business — some are even at the early stages of achieving scale — especially in the financial services and logistics sector.
However, according to a new report by Gartner, all that progress might not go very far.
By 2021, Gartner predicts that 90 percent of current enterprise blockchain platform implementations will require replacement in order to stay competitive, secure, and avoid obsolescence.
What the company’s analysts are finding is that blockchain offerings are currently fragmented and often overlap, causing companies to use them in a haphazard manner.
Obviously, this is also making technology choices confusing for IT decision makers.
“Many CIOs overestimate the capabilities and short-term benefits of blockchain as a technology to help them achieve their business goals, thus creating unrealistic expectations when assessing offerings from blockchain platform vendors and service providers,” said Gartner’s Senior Research Director Adrian Lee.
According to Lee, another major challenge that CIOs and IT decision makers currently face is that blockchain platform vendors often use (marketing) messages that don’t link to a target buyer’s use cases and business benefits which adds to the confusion around blockchain capabilities and how they augment existing processes.
Despite the challenges, Gartner feels that as enterprises’ interest in blockchain technology increases, the number of blockchain platform vendors will continue to grow, with more new entrants joining the ranks every month.
“Due to the lack of an industry consensus on product concept, feature set, core application requirements, and target market, we do not expect there to be a single dominant blockchain platform within the next five years. Instead, we expect a multiplatform world to emerge,” said Lee.
According to another of Gartner’s estimates, the business value added by blockchain will grow to slightly more than US$176 billion by 2025 and surge to exceed US$3.1 trillion by 2030.
Lee, therefore, advises product managers to prepare for rapid evolution, early obsolescence, a shifting competitive landscape, future consolidation of offerings, and the potential failure of early-stage technologies/functionality in the blockchain platform market.
While Gartner’s forecast doesn’t sound very positive, it actually is good news for businesses awaiting implementation of the technology.
Given the transparency and reliability blockchain technology offers, it can really help drive interesting projects such as real-time cross border payments, paperless supply chains, and 100 percent authenticity guarantees on life-saving pharmaceuticals.
The chaos in the blockchain solutions market is expected to only be a momentary challenge, one that will pass as the hype-cycle dies down, and leads to more stable, enterprise-wide or rather industry-wide applications.
In the future, more intelligent blockchain applications are expected — again, in line with Gartner’s predictions — especially as we move past “inspired solutions (phase 2)” by 2022 and get well into “complete solutions (phase 3)” as we move into 2025.
“CIOs and business leaders must not underestimate the radically disruptive nature of blockchain-complete and blockchain-enhanced solutions,” Gartner’s VP Analyst Rajesh Kandaswamy said recently.
“Within three to five years, many of blockchain’s core technical challenges are likely to be resolved.
“Business leaders who fail to do sufficient scenario planning, experiment with the technology, and delay consideration of decentralization and tokenization risk significant long-term disintermediation.”
CIOs and IT managers, therefore, must continue to make progress with their blockchain projects, despite the lack of visibility.