Earlier this year, Gartner, Inc. predicted that 90% of Blockchain-based supply chain initiatives would experience ‘Blockchain Fatigue’ by 2023. It was a survey that explored the role that technology plays in supply chains and how supply chain organisations leverage technology for competitive advantage. It also explored the changing views on how best to exploit technology in supply chain management organisations. Taking Gartner’s findings into account, I do wonder, are the results something we should be worrying about?
Blockchain Fatigue, Hype Or Eventual Reality
In the past couple of years Blockchain has become one of the most talked-about emerging technologies. This is because of the value it could bring to the fashion industry. A fan favourite among forward thinking companies, Blockchain technology promises to not only serve a new generation of infrastructure, but also has the potential to empower businesses to take positive steps towards changing how fashion operates as an industry.
So what is ‘blockchain fatigue’? Well, after some research I found that the overall definition was that it is the exhaustive use of Blockchain in supply chain management. On the topic Rushali Shome, who writes for btcwires.com, explained, “It [blockchain fatigue] occurs because supply chain managers and officials are now running out of ways to keep the blockchain bandwagon running. They are now finding it extremely difficult to look for suitable use cases where Blockchain may be useful”.
On their findings, Alex Pradhan, senior principal research analyst at Gartner, revealed: “Supply chain blockchain projects have mostly focused on verifying authenticity, improving traceability and visibility, and improving transactional trust“. Adding: “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.”
Taking a closer look at the Gartner report, I found four logical reasons that would most likely give fashion businesses pause for thought when it comes to investing in Blockchain technology. The first one being how the budding nature of Blockchain has made it almost impossible for organisations to identify and target specific high-value use cases. Secondly, the report points out that the majority of companies are using a trial and error method to run multiple development pilots so they can find the ones that might provide value, which can be quite time consuming. Thirdly, the vendor ecosystem has not yet fully formed and is, therefore, struggling to establish market dominance. Lastly, the one that stood out most for me was how the return of investment is not living up to the initial excitement for the technology’s value in supply chain management.
Challenges, Challenges, Challenges
With Blockchain showing no signs of stopping, Gartner did identify some challenges that supply chains would most likely face while using the technology. One of the challenges mentioned in the report highlights how businesses are finding themselves at a disadvantage because complete off-the-shelf packaged Blockchain solutions are not readily available. “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,” remarked Pradhan.
Other challenges pointed out include the fact that there is no vibrant market for commercial Blockchain applications. This is a problem that Pradhan explained is due to the majority of companies not knowing how to evaluate, assess and benchmark solutions, especially as the market landscape is rapidly evolving. “The emphasis should be on the proof of concept, experimentation and limited-scope initiatives that deliver lessons, rather than high-cost, high-risk, strategic business values,” explained Pradhan.
Having identified the challenges faced by businesses adopting Blockchain-Based Supply Chain, Gartner ended the report by recommending that organisations approach the technology with caution. By this they mean that companies should not rush into making Blockchain work in their supply chain. So if you are going to take anything away from the Gartner Blockchain echnology survey, it is this; until there is a clear distinction between hype and the core capability, you should proceed with caution.
Understanding Blockchain’s Future Potential
Although Gartner’s findings probably gave many businesses food for thought, one must bear in mind that the survey was only conducted among 303 respondents. The low number of participants in the research gives me hope that the prediction could be disproved as the technology advances and the kinks are ironed out. Therefore I do not think that businesses should be deterred from the idea of investing in Blockchain technology because it is still regarded as being capable of delivering efficiency to supply chains.
Also, it is worth noting that Blockchain technology’s ability to transform and simplify the supply chain could play a pivotal role in core areas of operations. Like any new(ish) technology there will always be blips but there are companies like Accenture who champion Blockchain-Based Supply Chain applications and are there to help businesses gain greater visibility and efficiency across their entire supply chain. This in the long run allows enterprises to deliver higher value to their customers.
Bringing it back to Gartner’s research conclusion that 90% of Blockchain-based supply chain initiatives will experience ‘Blockchain Fatigue’ by 2023, I do believe that it is can be an avoidable future. This is because once the majority of companies get their head around what Blockchain is, why it matters and where it is headed, they will be able to appreciate the fact that in the end Blockchain technology is capable of helping their supply chains be smarter and more secure.