According to a new survey, blockchain technology is set to have a promising 2017.
Published by Deloitte, the indepth study shows the distributed ledger emerging as a key business focus for US companies in many industries, with many executives in the consumer products and manufacturing; and technology, media and telecommunications sectors planning to spend the most in the next 12 months.
But understanding of the technology is uneven according to the survey. Many senior executives still know little or nothing about it, while others place it among their company’s highest priorities. And commitments to blockchain vary by industry, in ways that may be surprising.
Almost two in five (39%) of senior executives at large US companies surveyed indicated they had little or no knowledge about blockchain technology. The majority (61%), though, claimed blockchain knowledge ranging from broad to expert. Many of these blockchain-informed executives see the technology as crucial for their company and their industry. Fifty-five percent of this group said their company would be at a competitive disadvantage if it failed to adopt the technology. Forty-two percent of those surveyed who claimed some knowledge of blockchain believe it will disrupt their industry.
“It is fair to say that industry is still confused to a degree about the potential for blockchain.” says David Schatsky, managing director, Deloitte LLP. “More than a quarter of surveyed knowledgeable execs say their companies view blockchain as a critical, top-five priority. But about a third consider the technology overhyped.”
Deloitte conducted an anonymous online survey of 308 blockchain-knowledgeable senior executives at organizations with $500 million or more in annual revenue, designed to better understand the corporate sentiment and activities surrounding blockchain technology.
Solid progress on blockchain deployments
The survey revealed that blockchain investment and adoption patterns may be more complex than many observers believe. For instance, despite the relative immaturity of the technology, 21% of blockchain-informed senior executives across a wide range of industries indicated that their firms have already brought blockchain into production, and 25% plan to do so within the next year.
This progress around blockchain production is due in part to investments many companies say they have already made. Twenty-eight percent of these respondents reported that their companies have already invested $5 million or more in blockchain technology, with 10% investing $10 million or more. Looking forward, 25% of respondents expect to invest more than $5 million in blockchain technology during the next calendar year.
“This diversity may be a testament to the versatility of the technology,” continued Schatsky. “But it is likely also a reflection of the fact that, despite the hype, the impact that blockchain will likely have on businesses in various industries is not yet fully understood.
Significant activities outside of financial services
Investment and adoption patterns vary by industry, in a pattern that defies conventional wisdom. Although the financial services industry was early to show interest in blockchain, and accounts for a significant amount of investment and activity, the survey revealed that other industries may be even more aggressive in pursuing blockchain strategies.
“Most financial services companies have been involved in blockchain via their labs, investments, and pilots for a while now.” said Eric Piscini, Deloitte Consulting’s Global Financial Services Blockchain leader “Other industries are now starting to realize the potential for disruption, as well as the new opportunities that blockchain creates.”
Executives surveyed in the consumer products and manufacturing industry, for instance, expressed the most bullish blockchain outlook, with 42% of respondents in this industry planning an investment of $5 million or more in the coming calendar year. Technology, media and telecommunications executives follow at 27%, and financial services at 23%.
As with investments, the pace of blockchain technology deployment varies by industry, with technology, media & telecommunications; and consumer products and manufacturing in the lead. About 30% of respondents in those industries say their company has already brought blockchain into production.
In contrast, just 12% of surveyed financial services company executives say their company has deployed blockchain in production. Surveyed financial services firms aim to pick up the pace: 24% say their companies plan to go live with blockchain in the coming year. Health care and life sciences have the most aggressive deployment plans of any industry: 35%of respondents in that industry say their company plans to deploy blockchain in production within the next calendar year.
Patent filings are often taken as a measure of innovation. These, too, vary sharply by industry. Twenty-one percent of respondents stated that their organizations have filed for blockchain patents. The most inventive industry as it relates to blockchain may be consumer products and manufacturing, where 38% of respondents say their company has filed patents. This suggests that industry may be on the threshold of a period of significant blockchain innovation.
Barriers to adoption
While views on blockchain’s primary value vary, there is rather more consensus about the main barriers to its widespread adoption. Per the survey, a crucial obstacle is the lack of technical standards in a still immature technology. More than half (56%) of respondents believe technical standards would create a “tipping point” leading to widespread adoption.
Another key barrier according the respondents is regulatory uncertainty. Nearly half (48%) of respondents say federal regulations that support the use of blockchain for business purposes such as contracts and financial audit will likely tip the scales in favour of mass adoption.
For example, does private blockchain activity represent an inherently reliable confirmation? Does a smart contract represent a legal contract in a court of law? Answering these questions in the affirmative will likely require changes in regulations, laws, practices and protocols.