Results from the 2018 Gartner CIO Agenda Survey are in, and for blockchain the numbers are stark. Despite its popularity as a news item, only 1 percent of responding CIOs indicate any kind of blockchain adoption, and only 8 percent of CIOs are in short-term planning and pilot execution of the technology. Additionally, 77 percent of responding CIOs say their enterprise has no interest in blockchain and/or no action planned to investigate or develop it. There appears to be limited differentiation regarding interest from CIOs between industry segments.

It is important to note that this data reflects responses from a randomized group of executives as opposed to those based on blockchain knowledge — the results are reflective of market conditions. The Gartner CIO Agenda Survey includes the views of 3,160 CIOs across 98 countries, representing $13 trillion in revenue of public-sector budgets and $277 billion in IT spending. The data represents all major industry groups. Respondents came from companies ranging in size from less than $100 million to $50 billion or more.

Despite its low adoption rates to-date, the term “blockchain” is the No. 1 most searched term on the Gartner research portal among subscribers in 2017 and early 2018. Client inquiries reflect a high demand to respond to questions from the C-suite on what blockchain is, how it can be applied, and how firms can extract value from it.

Making sense of the hype

The industry hype surrounding blockchain could lead businesses to rush its adoption — a dangerous situation that could lead to significant problems of failed innovation and wasted investment. While the CIO Survey illustrates the industry is safely not rushing adoption, we want to avoid business leaders mistakenly overlooking or rejecting one of the most innovative sets of technology capabilities the world has ever seen.

So, why are levels of implementation and active piloting at a lower rate than is generally assumed? The data implies three things:

  • Enterprise executives need more help understanding what blockchain is and its applicability to their business and technology context.
  • The value proposition remains poorly articulated and not visible to the business, especially compared to existing similar technologies.
  • Enterprise readiness and the capabilities to adopt blockchain and resultant new business/operating models are not apparent and/or possible at an individual enterprise level, let alone in the context of broad-scale community adoption.

In general, CIOs from smaller enterprises report less interest in blockchain; they view the technology as an equal opportunity as opposed to a competitive differentiator. While CIOs from large enterprises report a greater propensity for short-term planning and active experimentation, there is not significant activity noted for the medium or long term.

The blockchain vanguard

Financial services and insurance firms are leading the industry in terms of blockchain planning and experimentation. Transportation, telecom, government, and utilities sectors are becoming more engaged. This is likely due to the heavy focus on process efficiency and supply chain and logistics management. For telecom, the interest is in a desire to “own the infrastructure wires” and grasp the consumer payment opportunity.

There appears to be limited differentiation regarding interest from CIOs between industry segments. In general, blockchain hype is now a global, all-industry phenomenon. At some point in the next two years, the regulatory landscape will start to influence the speed and depth of activity.

As blockchain is likely to impact every enterprise across every geography, the importance of first-mover advantage to exploit or mitigate the impact of blockchain will be more apparent than with other technology shifts.

The value proposition

However, the question remains, what is the value proposition for blockchain in an enterprise context? Interoperability initiatives between ledgers and between non-blockchain systems and those ledgers are immature. Moreover, no common language or legal framework exists for smart contracts across ledgers or industry contexts. User interfaces and convenient wallets for the masses are yet to be developed. Software development toolkits are nascent. None of this gives CIOs comfort when trying to rebase their mission-critical priorities on a fragile/uncertain architecture and platform environment.

Decades if not century-old business, governance, and operating models designed and implemented for predigital business will take time to re-engineer. This is not solely because of technological adjustment but also because of the ramifications blockchain has in respect to control and economics.

Therefore, while many industries indicate an initial interest in blockchain initiatives, it remains to be seen whether they will accept decentralized, distributed, tokenized networks or stall out as they try to shoehorn blockchain into legacy value streams and systems.

Planning is essential

Given the immaturity of blockchain technologies, going from proof of concept to at-scale deployment will require a coordinated effort for any organization, and potentially across organizations in specific consortia. Investments will be needed to address issues such as professional services implementation, security, ecosystem management, data management, and legacy system remediation costs.

Moreover, any organization implementing an enterprise-scale solution must perform deep integration with its systems of record. Otherwise, the organization runs the risk of a discrepancy between the two systems — especially when current governance models are ill-formed or inadequate.

Despite industry hype, the “aha” moment for blockchain hasn’t happened yet, not surprisingly. Most CIOs have yet to shift priorities and make material investments in blockchain that would demonstrate confidence in potential outcomes. Executives will thus need to balance their fear of missing out (FOMO) with their desire to capture first-mover advantages. Long-term scenario planning is essential, and closely managed pilots and experimentation critical to determine individual value and to educate internal stakeholders.

David Furlonger is a vice president and Gartner Fellow. His research focus is as a futurist, analyzing how long-term business and technology trends strategically impact industries and organizations. He also co-leads Gartner’s blockchain Center of Excellence.