Industries are ready for blockchain take off

An interesting study was released this week by Juniper Research. Given its findings this survey needs some more widely recognition and that’s why this blog. Named "Which industries are the best fit for blockchain", this study arrived to some interesting conclusions, that were broadly in line with my blog of early June (see: Blockchain technology by 2018: a breakthrough, June 3, 2017). Their findings may underline my statement that we are further in the Gartner Cycle and that 2018 may be the year of the real breakthrough for blockchain technology for a number of industries. But for who? Let’s have a look.  

First the study and its main finding

The survey's main finding is that almost 40% of all interviewed (almost 370 executives, managers and IT profs) including 56% of the largest companies were either “considering” or "were in the process of employing blockchain solutions". 

This indicates that a majority of companies nowadays have a much greater understanding of blockchain and distributed ledger technology. They are recognizing that blockchain has the " potential to be deployed in a variety of use cases". There is also increased awareness amongst industries to consider deployment to gain competitive advantage. 

Other findings

This "dramatic" increase in awareness  is shown by the outcome that more than 80% of the surveyed companies have 'a little' or 'a good' understanding of blockchain

“It is clear that companies across the board have a significantly greater understanding of blockchain technology than was the case 12 months ago,” Juniper’s report

More than three quarter of the respondents believe that blockchain could be 'very useful' or 'quite useful' for their company.

The time of exploring what blockchain is and what corporates can do with it lies largely behind us. It is now more of: what blockchain systems to choose and how to integrate it in their legacy systems. Or as the study stated "It's now much more geared to competing protocols, or the vetting of use cases ...".

Companies anticipating integration of blockchain

The survey also shows that many corporates are actively considering blockchain deployments. 

Amongst the largest companies even 54% are in the so-called Proof of Concept (PoC) stage, while a further 16% is already involved in blockchain trials.

And those who already are in the PoC stage, two-thirds expect blockchain will be integrated in their legacy systems by the end of 2018.

While 81% of the smaller companies surveyed expect integration to be completed by the end of 2018, almost 60% of the large companies surveyed say they will reach that stage at that date. 

Corporates and disruption

Despite the dramatic increase in blockchain awareness and identified benefits over the past 18 months, however, it is “critically important that companies consider all alternative options before deciding whether or not to deploy blockchain” according to the report.

Juniper mentioned that companies should consider whether blockchain is the necessary solution to their needs, as some companies under-estimate the challenges of deployment. They should seek “systemic change, rather than technological” innovation.

That “might be a better and cheaper solution than blockchain, which could potentially cause significant internal and external disruption.” Juniper report

One main concern for the surveyed companies is in what way, who and where blockchain might disrupt not only their legacy systems but also their relationships with their clients. This is in part due to their fears around interoperability. Customers’ systems may no longer integrate with (or be compatible with) their upgraded systems.

The survey further shows that:

• 35% of all corporates surveyed are considering or actually deploying blockchain and feel it will cause  'significant' disruption (in general)
• And more than half of these corporates considering or actively deploying blockchain feel it will cause 'significant' disruption to their partners/customers
• 42% of them were concerned that the reluctance or refusal  of their clients or partners to deploy blockchain might cause them difficulties , compared with a quarter of all companies surveyed.

 “Companies may have underestimated the scale of the blockchain challenge. For issues such as interoperability, the proportion of survey respondents expressing concerns progressively increased as companies proceed towards full deployment, while concerns also rose sharply regarding client refusal to embrace blockchain”. Juniper research

Who are the industries with largest blockchain opportunities?

This is a very interesting part of the survey. Jupiner Research conducted a comparative assessment of blockchain' potential's  across 9 key industry areas. Main conclusion is  that "In most cases, the more a vertical (industry) is suited to blockchain deployment, the greater the degree of implementation challenges". 

"Essentially, blockchain offers particular benefits to improve efficiency and corporate transparency; if an enterprise is heavily dependent upon paper-based storage and has high volumes of transactions or transmitted information, it can be especially effective." Windsor Holden, blockchain specialist at Juniper

Deployments in verticals such as Utilities and Content Publishing do not pose the scale and variety of challenges involved in Financial Settlement, according to the survey. They however “will not achieve the extent of gains, cost savings, efficiencies and risk reduction as is possible in the financial settlement industry”, according to the Juniper Research survey. 

And what industries are (already) fit for blockchain

According to the survey, when challenges are measured against the scale of the opportunity, industries like Automotive, Financial Settlement and Land Registry emerge as particularly interesting prospects for blockchain application. This compared to other segments such as Utilities, Telcos a.o.

This is not that strange as next to the relative successes achieved in blockchain integration especially in the financial sector thus far, blockchain may bring more benefits as it will be a real problem solver for these industries challenges.  While the inherent characteristics of these sectors make them more  suitable for blockchain technology.

What is further needed?

But that is not the whole storey. Corporates are not isolated entities. To be successful corporates should raise the awareness of blockchain’s capabilities at their customers. And before integrating blockchain in their own systems they should get a greater understanding of the scale of potential hurdles.