On blockchain, technologists are usually part of one of two camps: it's either an overhyped trinket or a problem-squashing solution.
Among developers, the majority (61%) see blockchain as a potentially game-changing technology, while 39% say it's all hype, according to a Stack Overflow survey. But both absolutes miss the nuance of what business leaders want to know — where is the return on investment (ROI) on blockchain implementation?
"In terms of ROI, only specific projects have crossed the Rubicon," said Rajesh Kandaswamy, distinguished research VP at Gartner.
Just around one in five executives expect to see return on investment on their blockchain projects in the next four to five years, according to an IBM study. That ratio rises to nearly two-thirds among companies that join existing blockchain networks when asked about ROI expectations more than 10 years out.
Blockchain's pending task is to consistently deliver ROI throughout applications, but there are common traits across use cases that signal the potential for value. Challenges and friction are most likely to appear when trying to bring together stakeholders — external and internal.
Companies implementing blockchain are vying for a piece of the technology's projected added value. Gartner expects blockchain added value to reach $3.1 trillion by 2030.
Spotting ideal projects
In 2021, a year expected to bring economic recovery to many industries, the challenge assigned to technology leaders is to keep executing on urgent technology priorities — while remaining conservative with spending.
Accurately predicting the potential ROI from blockchain is a complex exercise. But it's clear that projects where companies do find value share a set of common traits, according to Kandaswamy.
Successful blockchain implementations:
Are applied across multiple entities that have dissonance in terms of their transactions;
Enter a space where other technologies have failed before;
And are deployed in a project large enough to support economies of scale.
One example where there's a good use-case fit is TradeLens, a blockchain platform for the supply chain space, said Jonathan Knegtel, co-founder and general manager at Blockdata. The system, developed by Maersk and IBM, uses blockchain technology as a way to exchange information across the global supply chain.
"It's being used ever-increasingly, and they're onboarding ecosystem partners onto their platform," said Knegtel.
Because of the multiparty requirements ideal blockchain projects, CIOs seeking ROI from blockchain face one critical step — connecting stakeholders.
"The No. 1 thing is clearly understanding who are all the constituents that need to make this project work, getting them in a room, getting their commitment and agreement to do the project," Kandaswamy said.
That strategy applies to external stakeholders, but internal friction can keep companies from seeing their investment dollars return, according to Knegtel. Misalignment can happen when organizations don't see ROI straightaway, and then ditch the project.
"Technology isn't really the problem in 2021, it's getting the internal buy-in," said Knegtel. "Blockchain is a really long-term commitment that these companies have to make, and that's where the biggest hurdle is right now."