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Blockchain Fatigue To Hit Most Supply Chain Initiatives, Says Gartner

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Blockchain seems to be a very hot topic which many believe can change the way we do business in a matter of years. But a recent Gartner study sees that business leaders are failing to find suitable use cases with the technology. By 2023, 90% of blockchain-based supply chain initiatives will suffer ‘blockchain fatigue’ due to a lack of strong use cases, says Gartner.

Gartner researchers found that only 19% of respondents ranked blockchain as a very important technology for their business, and only 9% have invested in it. 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 Alex Pradhan, senior principal research analyst at Gartner.

“However, most have remained pilot projects due to a combination of reasons. These include 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,” adds Pradhan.

The budding nature of blockchain makes it almost impossible for organizations 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. Additionally, the vendor ecosystem has not fully formed and is struggling to establish market dominance. Another challenge is that supply chain organizations cannot buy an off-the-shelf, complete, packaged blockchain solution.

According to a separate research report released last year by GlobalData, the cost and complexity of implementing blockchain solutions becomes apparent. As a result, most of the blockchain projects will either be put aside in favor of more traditional approaches or they will be worked out in a manner which minimizes their dependence on blockchain technology.

“While the market is filled with absurd claims about the benefits of blockchain technology, there are some key domains where the ability to execute distributed transactions without relying on a single central authority will bring significant value,” the GlobalData report says.

“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.”

As blockchain continues to develop in supply chains, 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. “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,” Pradhan mentions.

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