Enterprise blockchain adoption hinges on use case fit

Fibo Quantum

As technology matures and hurdles toward adoption clear, industry watchers are expecting blockchain to spend at least another three years stuck in the experimentation phase.

Even after 2028, when the technology is projected to become technically scalable, full adoption at the enterprise level is unlikely to happen without a cultural shift among decision makers.

Enterprise leaders “don’t want to partake in a revolution where they lose all control of their destiny,” said Avivah Litan, VP and distinguished analyst at Gartner, speaking at the Gartner IT Symposium/Xpo in Orlando, Florida, in October. 

That shift is a key part of Web 3.0, the projected next era of the internet which calls for distributed structures, slick mobile interfaces and user control of data through interoperable networks.

Cultural shifts aside, the success of blockchain application in enterprise depends on alignment between the context of the problem at hand, the capabilities of the specific technology and the resources deployment would require.

Failing to balance these three elements means a mismatch between the technology and the problem it’s suited to solve, a disconnect that can lead to further sunken costs and friction during adoption.

Use case roadmap

Ledger technologies, a family of which blockchain is one element, are a group of distinct applications. IBM’s “Blockchain for Dummies” handbook breaks the technology into four buckets:

  • Public blockchain networks: One that anyone can join and participate in, such as Bitcoin. They require substantial computational power and lag in terms of privacy or security.
  • Private blockchain networks: A decentralized peer-to-peer network in which one organization governs the network, and can control which members are allowed to participate in it. Private networks can run behind a corporate firewall or live in an on-premise framework​.
  • Permissioned blockchain networks: This type of network places a restriction on who is allowed to participate in the network, and only in certain transactions. Participants need to obtain an invitation or permission to join.
  • Consortium blockchains: In this setting, multiple organizations share the responsibilities of maintaining a blockchain. The members of the consortium select who can submit transactions and access the data.

Blockchain is just one type of distributed ledger technology, and it comes with scalability limitations in the enterprise context.

Decentralized nodes in a blockchain system must download the entire ledger, and every node in the network must validate a transaction before it’s finalized, said Litan.

“There are a lot of innovations in the technology that are getting us up to 10,000 transactions per second in certain architectures, but that’s still a fundamental design flaw for public blockchains in terms of scalability,” said Litan. 

Using information from the National Institute of Standards and Technology (NIST), Gartner crafted a decision tree to guide leaders as they navigate distributed and centralized ledger technology.

Roadmap for blockchain adoption in the enterprise context.

Gartner, with data from NIST

 

Distributed ledger technology makes sense in the enterprise context when:

  • Solving a problem requires multiple entities having shared access to a single version of a “truth” value supported by hash.
  • No single entity is in control of what information gets added to the data store.

Technical qualities of a use case aside, leaders cannot afford to keep business outside of the decision framework. 

Considering blockchain as the potential solution to a problem should rely on a combination of the company’s business requirements, appetite for risk and approach to innovation, said Martha Bennett, VP and principal analyst at Forrester, in an email to CIO Dive. 

“I’ve seen many blockchain projects get derailed because IT wasn’t involved early enough, and issues around integration, security and other enterprise system requirements couldn’t realistically be addressed,” said Bennett.

Early use cases of enterprise adoption point to asset tracking and provenance as ideal areas for distributed ledger technology application, Gartner data indicates. 

A few examples of that include Cargill’s traceability program to track the origins of turkeys, Walmart’s move to verify the provenance of leafy greens from providers and Bumble Bee Foods’ yellowfin tuna tracking platform. Last week, Walmart Canada announced it launched a blockchain platform to enable real-time invoicing, payments and settlement among its 70 third-party trucking companies.