The KPMG and HFS Research “Enterprise reboot” survey found that in March / April the average budget for blockchain was $18 million. The figure dropped to $6.5 million in May / June. The survey targeted 900 technology executives at large enterprises for changes in emerging technology strategies triggered by COVID-19 .
The March figures had blockchain at the top of the pile budget-wise compared to six other emerging technologies. But by June, blockchain was second last and had the highest percentage drop of all seven technologies. Despite this, KPMG says its survey shows spending will increase in the next 12 months and the cuts are viewed as short term rather than permanent.
Perhaps more important than the rapid budget decline is to understand why blockchain has faired badly compared to other technologies. The answer seems to be that it’s not viewed as a quick win.
57% of the executives said COVID-19 had significantly changed strategic priorities for emerging technologies. In the earlier survey, the priorities were cost reduction and improved brand value. Since May / June, emerging technologies are now assessed based on survival. In some cases, we suspect it’s not so much the company’s survival but the executives’ assessment of job security.
Of the seven technologies, five are seen as essential for future survival, and blockchain wasn’t one of them.
At the same time, 60 percent of executives said COVID-19 would result in accelerating digital transformation initiatives. Plus COVID-19 highlighted a link between digital preparedness and business resilience. Executives also noted that many of the emerging technologies are used in combination.
Ledger Insights analysis
Our interpretation is that blockchain won’t be cut across the board. As we’ve already heard in the marketplace, early exploration is the area most likely to be reigned in. Projects that are close to production or already live are less likely to be put on hold if they can show reasonably quick returns.
Blockchain tools that can help improve a company’s visibility into its own supply chain are the sorts of candidates that could attract budget. Applications that combine blockchain with other more “survival oriented” emerging technologies such as 5G and AI could also do better.
Ultimately it’s all about return on investment. The smaller the upfront budget commitment or the faster the payoff, the better. That may mean less ambitious, more targeted projects. Consortia are viewed as slow and sometimes require significant financial commitments. This environment favors software as a service solutions with low friction onboarding.
Recent blockchain surveys:
Accenture: blockchain for aerospace
Arthur D. Little / BITA: blockchain in transport
Boston Consulting Group: blockchain for transport and logistics
Cap Gemini blockchain survey
Deloitte 2020 blockchain survey
Deloitte 2019 blockchain survey
Deloitte 2018 blockchain survey
EY blockchain (finance and tech professionals) survey
EY fintech adoption survey
EY APAC blockchain survey
IDC Global enterprise blockchain spending forecast (May 2020)
IDC European enterprise blockchain spending forecast (May 2020)
IDC China enterprise blockchain spending forecast (Nov 2019)
IHS Markit survey
Juniper enterprise blockchain survey
KPMG technology industry innovation survey
PwC blockchain survey
PwC China blockchain survey
SAP blockchain survey
World Energy Council / PwC blockchain survey
WIPRO blockchain survey
Capital Markets & Digital currencies:
Swiss Stock Exchange trader survey
TD Bank payments industry survey
BNY Mellon payments survey
State Street digital asset custody survey
Friss insurance survey
BIS Central Bank Digital Currency survey
OMFIF/Ipsos Mori Digital Currency consumer survey 2020
IBM / OMFIF Central Bank Digital Currency survey 2018
IBM / OMFIF Central Bank Digital Currency survey 2019
ING general population cryptocurrency attitudes