In the latest blockchain spending forecast from IDC, the company expects enterprise spending to reach $1.5 billion this year and $11.7 billion by 2022. The 2018 figures will represent 100% growth over 2017.
These figures represent a massive increase compared to IDC’s initial forecast at the end of January. At that stage, IDC predicted 2018 spending would reach $570m.
Startup investment comparison
Although the numbers seem substantial, they’re small relative to the amount of money going into startups. IDC didn’t make the enterprise to startup comparison.
By mid-May this year, venture capital companies invested $1.3 billion in blockchain startups according to Techcrunch. This does not count ICOs.
Using an estimate of $9 billion invested in ICOs in the first half of 2018 and adding the venture capital figure above, gives a startup investment of more than $10 billion. That compares to an enterprise forecast of $1.5 billion for the entire year.
ICO figures are variable depending on the source. Excluding Venezuela’s Petro ICO, the numbers for 2018 to date are between $6 billion and $12 billion.
The comparison of startup investment to enterprise spending isn’t really like-for-like. That’s because the startup funding should cover multi-year expenditures. However, it highlights the potential commitment going forward for enterprises.
The IDC predictions show the US will account for 36% of spending followed by Western Europe, China, and the Asian Pacific.
IDC’s Stacey Soohoo commented: “Regulatory concerns and industry standards continue to hinder widespread adoption as governments around the globe work with enterprises to formulate policies and governance. As such, cross-business collaboration and blockchain interoperability are emerging as key aspects in the growth of the distributed ledger technology (DLT).”
Growth by sector
Sector-wise, financial services will account for the largest slice at $552m of spending in 2018. The common use cases will be regulatory compliance, cross-border payments and settlements, custody and asset tracking, and trade finance and post-trade/transaction settlements.
The second largest sector will likely be the distribution and services sector which is expected to contribute $379m. This includes retail and professional services which IDC expects to make up the largest slice. The third biggest industry is forecast to be the manufacturing and resources sector at $334 million in 2018.
For both of these sectors, IDC sees the prominent use cases as asset/goods management and lot lineage/provenance.
IDC predicts the most significant use cases overall will be cross-border payments and settlement ($193 million), and lot lineage and provenance ($160 million). The third biggest will be trade finance and post-trade settlement ($148 million). The same three are expected to take the top slots in 2022.
“We continue to see the greatest spending and growth for blockchain around lot lineage and asset and goods management. Highly visible scandals combined with complex supply chains and incomplete information set the stage for investments and projects in these areas,” said Jessica Goepfert, program VP, IDC.
“End to end, the stakeholders have a vested interest in solving these issues. Manufacturers want to ensure products arrive where they are supposed to arrive. Retailers and wholesalers seek assurance around the validity and quality of the products they are selling. And consumers are demanding greater transparency from providers.”
IDC anticipates seventy percent of spending will be on IT services and business services. After these two, the next largest outlay will be on Blockchain Platform software. The company predicts the fastest growth rate will come from both platform and security software.