Friday, 10 May 2019 05:14

Gartner says 90% of blockchain supply chain initiatives will go nowhere

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Gartner says 90% of blockchain supply chain initiatives will go nowhere Pixabay

The world may be looking to blockchain technology to solve problems faced by businesses, but technology research firm Gartner is unimpressed, with the company predicting that 90% of supply chain initiatives based on the technology will suffer "blockchain fatigue" by 2023 due to a lack of strong use cases.

The company said in a statement that while blockchain remained a popular topic, supply chain leaders were failing to find suitable use cases.

A supply chain technology survey of user wants and needs found that only 19% of respondents ranked blockchain as a very important technology for their businesses and only 9% had invested in it. The survey was conducted between November 2017 and February 2018 among 303 respondents from North America, EMEA, Asia/Pacific and South America.

Gartner said this was because supply chain blockchain projects were very limited and did not match the initial enthusiasm for application of the technology in supply chain management.

“Supply chain blockchain projects have mostly focused on verifying authenticity, improving traceability and visibility, and improving transactional trust,” said Alex Pradhan, senior principal research analyst at Gartner.

“However, most have remained pilot projects due to a combination of technology immaturity, lack of standards, overly ambitious scope and a misunderstanding of how blockchain could, or should, actually help the supply chain. Inevitably, this is causing the market to experience blockchain fatigue.”

The research outfit said the budding nature of blockchain made it almost impossible for organisations to identify and target specific high-value use cases.

"Instead, companies are forced to run multiple development pilots using trial and error to find ones that might provide value. Additionally, the vendor ecosystem has not fully formed and is struggling to establish market dominance. Another challenge is that supply chain organisations cannot buy an off-the-shelf, complete, packaged blockchain solution," the company noted.

Pradhan added: “Without a vibrant market for commercial blockchain applications, the majority of companies do not know how to evaluate, assess and benchmark solutions, especially as the market landscape rapidly evolves.

“Furthermore, current creations offered by solution providers are complicated hybrids of conventional blockchain technologies. This adds more complexity and confusion, making it that much harder for companies to identify appropriate supply chain use cases.”

Gartner recommended that organisations remain cautious about early adoption and not rush into making blockchain work in their supply chain until there was a clear distinction between hype and the core capability of blockchain.

“The emphasis should be on proof of concept, experimentation and limited-scope initiatives that deliver lessons, rather than high-cost, high-risk, strategic business value,” said Pradhan.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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