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Gartner warns organisation to be wary about blockchain adoption

09 May 2019
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Blockchain continues to be a hot topic in IT circles.

Despite this, Gartner says supply chain leaders are failing to find suitable use cases.

According to the research giant, by 2023, 90 percent of blockchain-based supply chain initiatives will suffer ‘blockchain fatigue’ due to a lack of strong use cases.

A Gartner supply chain technology survey of user wants and needs found that just 19% of respondents ranked blockchain as a very important technology for their business, and only 9% have invested in it.

Gartner says this is mainly because supply chain blockchain projects are very limited and do not match the initial enthusiasm for the technology’s application in supply chain management.

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

“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.”

Pradhan says the budding nature of blockchain makes 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.

Furthermore, 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.

“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,” says Pradhan.

“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.”

While blockchain continues to develop in supply chains, Gartner warns organisations to remain cautious about early adoption and not to rush into making blockchain work in their supply chain until there is 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,” concludes Pradhan.