News Supply chain Technology

Gartner predicts 90% of enterprise blockchain platforms obsolete in two years

obsolete cashregister

Blockchain has garnered much hype and expectation in recent times. However, new reports released by Gartner predict a more sober vision for the technology in the next few years. A May 2019 report predicts that 90% of blockchain based supply chain initiatives will suffer from ‘blockchain fatigue’ by 2023. Beyond supply chain, 90% of enterprise blockchain platforms will become obsolete within two years.

Last year Gartner stated that blockchain was already beyond the peak of expectations in the Gartner hype cycle and entering the trough of disillusionment.

Gartner attributes this ‘blockchain fatigue’ to a lack of strong use cases. Indeed, a survey conducted by Gartner found that only 19% of respondents had designated blockchain as ‘very important’ for their business, and only 9% had invested in the new technology.

Alex Pradham, a senior principal research analyst at Gartner, interprets this as a mismatch between expectation and reality – at least concerning supply chains: “Most [projects] 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.”

Furthermore, the ‘new’ part of this ‘new technology’, arguably truly what makes it exciting, is also at fault. Organizations are hard-pressed to pinpoint precisely where blockchain could make a difference and are forced to run multiple pilots and use trial and error to find the most valuable innovations.

Other problems, according to Gartner, include vendor ecosystems not being adequately formed and supply-chain organizations being unable to purchase an ‘off-the-shelf, complete, packaged blockchain solution.’

Consequently blockchain, as a use case for supply chains, is in a weird paradox native to all emerging technologies: It’s risky for organizations to throw resources at it because of its novelty however it can only shed its novelty once resources are thrown at it.

Ms. Pradham continues her analysis: “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.” She suggests companies should stick to experimentation or limited-scope initiatives.

While Ms. Pradham was focused on blockchain’s use in supply chains, Adrian Lee, senior research director at Gartner, looked at the enterprise blockchain platform market as a whole.

Enterprise blockchain platforms beyond supply chain

The conclusions are similarly sobering: By 2021, 90% of current enterprise blockchain platforms will require replacement within 18 months to maintain competitiveness.

According to Gartner, the nature of the blockchain platform ecosystem does not help. Platforms tend to overlap and are being used in a complementary fashion, thereby making IT decision makers confused at what to research and purchase. This could lead to poor choices that do not work out in the long term.

Mr. Lee particularly highlights the obscurity of blockchain’s jargon and capabilities: “Compounding this challenge is the fact that blockchain platform vendors typically use messaging that does not link to a target buyer’s use cases and business benefits. For example, ‘transactions’ was the term mentioned the most in relation to blockchain, followed by ‘secure’ and ‘security.’”

“While these may be functions of blockchain-enabling technology, buyers are still confused as to how these functions are achieved or what benefits blockchain adds compared to their existing processes.”

Crucially, Mr. Lee does not also see a ‘winner-take-all’ situation amongst platforms within the next five years. Instead, lack of industry consensus on product concept, feature set, core application requirements and target market will result in a multiplatform ecosystem.

Despite the predicted gloom and the mismatch between expectation and reality, blockchain still has a solid future. Gartner predicts that by 2025, the business value added by blockchain will exceed $176 billion. However, this will explode to $3.1 trillion by 2030.

Mr. Lee explains: “Product managers should 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.”

Image Copyright: dws / BigStock Photo