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Blockchain worldwide spending is going up, up, up, but adoption is moving ahead with caution.
August 8, 2018
Less than a month ago, Oracle announced the general availability of its Autonomous Blockchain Cloud Service. The announcement follows the preview, last October, of the Oracle Blockchain Cloud Service. The vendor is in esteemed company when it comes to a blockchain-as-a-service (BaaS) offering, joining the likes of IBM, HPE, Microsoft, Amazon Web Services (AWS), and SAP.
As the chorus of blockchain aficionados grows louder, so does the hype — and potential disinterest.
But that hasn’t stopped the blockchain service providers from touting early adopters of their enterprise-class service. Take Oracle, which rattles off nearly a dozen businesses using its early-adopter technology: Arab Jordan Investment Bank, CargoSmart, Certified Origins, Indian Oil, Intelipost, MTO, Neurosoft, Nigeria Customers, Sofbang, Solar Site Design and TradeFin.
“We’ve seen particular interest in the supply-chain area and the financial industry,” Frank Xiong, group vice president, blockchain product development with Oracle, told us. Other Oracle customers are showing interest in blockchain, he noted, in areas such as identity management, property/land ownership, health care, pharmaceuticals, food safety, automotive and manufacturing.
Recent research from IDC shows that worldwide spending on blockchain solutions is expected to reach $11.7 billion in 2022, which represents a five-year compound annual growth rate (CAGR) of more than 73 percent. The U.S. leads in blockchain investments, accounting for more than 36 percent of worldwide spending throughout the forecast. Blockchain spending is set to double this year alone, compared to 2017.
Homing in on blockchain spending by vertical sectors, worldwide, IDC has the financial sector at the front of the pack with $522 million being spent in 2018, largely driven by healthy adoption in the banking industry. The distribution and service sector spend, $379 million in 2018, will see strong investments from the retail and professional-services industries, while manufacturing and resources sector spend, $334 million in 2018, will be driven by the discrete process manufacturing industries.
From a technology perspective, IT and business services, combined, will account for about 70 percent of all blockchain spending, with spending pretty much balanced across the two categories, according to the IDC forecast report. Blockchain platform software and security software account for the next biggest areas of spending.
It’s been difficult not to hear about all things blockchain lately. Despite all the noise – and excitement – a minuscule 1 percent of CIOs report any kind of blockchain adoption within their organization, according to Gartner’s 2018 CIO Survey. A mere 8 percent of CIOs were in short-term planning or active experimentation with blockchain. And a whopping 77 percent of those surveyed said that their organizations had no interest in the technology and/or no action planned to investigate or develop it. The survey is based on more than 3,000 responses.
“This year’s Gartner CIO Survey provides factual evidence about the massively hyped state of blockchain adoption and deployment,” said David Furlonger, vice president and Gartner Fellow. “It is critical to understand what blockchain is and what it is capable of today, compared to how it will transform companies, industries and society tomorrow.”
He also cautioned that rushing headlong into blockchain deployments could lead organizations to significant problems of failed innovation, wasted investment, rash decisions and even rejection of a game-changing technology.
Forrester principal analyst Martha Bennett expressed similar sentiments earlier this year. She predicted some serious pruning of projects in 2018, yet expects that work on enterprise blockchain projects currently underway will continue.
Bennett expects business leaders to take a harder look at blockchain initiatives and assess against standard business-benefit models. Projects will fall into three categories: pure R&D, immediate business benefit, and long-term transformational potential.
So, what does all the excitement and hype about blockchain technology mean to partners?
Partners need look no further than the IDC figures – 70 percent of blockchain technology spending targets IT services and business services – to realize there’s opportunity here. Oracle’s Xiong sees a big role for partners in both integration and application development for customers.
“Oracle partners traditionally do integration work. We view the blockchain platform as having a lot of room for the partners to develop solutions for their customers,” he said.
Partners interested in building a blockchain practice need to follow a road map that starts with education. Oracle University offers courses on blockchain technology and identifying use cases, for example.
IBM, too, offers a blockchain learning path for partners.
Organizations will need help with blockchain projects so, it’s never too soon for partners to begin learning about the technology and where their firms have a role to play.
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