Gartner Survey: 90% of blockchain-based supply chain projects are in trouble

The lack of well-identified use cases is causing “blockchain fatigue” to set in; caution urged for early adopters

Ninety percent of blockchain-based supply chain projects are faltering because they cannot figure out important uses for the technology, research firm Gartner said on May 7.

As a result of this inability to identify strong use cases, “blockchain fatigue” will begin setting in over the next five years, according to “Predicts 2019: Future of Supply Chain Operations,” a survey of the wants and needs of more than 300 executives involved in blockchain projects worldwide. In large part, this is due to blockchain suppliers’ inability to live up to the technology’s hype, said Alex Pradhan, a senior principal research analyst at Gartner.

Despite the great amount of time and effort invested in pilot projects aiming to use distributed ledgers to verify authenticity, improve traceability, and build more trust into supply chain transactions, only 19% of respondents ranked blockchain as a very important technology for their business, the company said in a release. Only 9% have invested in it.

Most of these 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,” Pradhan said. “Inevitably, this is causing the market to experience blockchain fatigue.”

One big factor, Gartner found, is that blockchain vendors are still struggling to develop off-the-shelf product offerings, win market share, establish industry standards, and identify specific high-value use cases. And, the blockchain products on offer remain complex, Pradhan added.

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

Simon Whitehouse, Accenture’s senior managing director for financial services, growth, and strategy, made much the same point about complexity (but not Gartner’s overall point) at the Business of Blockchain conference hosted by MIT Media Lab last week. Most companies are still struggling to understanding blockchain itself, he told attendees, adding “[t]here’s still a giant learning curve right now…in corporations.”

Because of this immaturity and lack of understanding, companies are finding themselves, “forced to run multiple development pilots using trial and error to find ones that might provide value,” the survey found. “Gartner recommends that organizations 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.”

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

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.