This is a guest blogpost by Greg Kefer, vice-president, marketing, Infor.
Blockchain is arguably, one of the most hyped technologies around. Despite the fact that Gartner believes that 90% of pilots will fail over the next 18 to 24 months, there is huge, sustained interest and the business value-add of blockchain is expected to grow to more than $176 billion by 2025.
Blockchain recently passed the “peak of inflated expectations” and is now making its way into the trough of disillusionment in the most recent Gartner Hype Cycle for Emerging Technology. Despite all the marketing hype, blockchain does represent a future technology that will mature and become commercially viable, we just don’t yet know where, or when, or how.
Supply Chain automation is one of the opportunity areas that has been associated with blockchain because of the decentralised processes associated with sourcing, manufacturing, shipping and paying for goods. The distributed nature of the technology has led to a great deal of speculation of supply chain applications for blockchain. Asset tracking, payments and intelligent contracts have all been proposed as possible deployments and there is no shortage of PR and event presentations that highlight the potential.
Despite the hype, the market is a long way from maturity in supply chain. Gartner predicts that mainstream adoption of blockchain in the supply chain at scale is likely 10 or more years away.
This reminds me of the early days of cloud. In the late 1990s the notion of renting advanced business software via the Internet saw tremendous VC investment and hype. Thousands of companies emerged, Super Bowl commercials were bought, new ideas surfaced, Y2K happened, and then reality began to set in. After most companies failed, business models were refined, and early adopters began to engage in cloud IT projects which matured the technology.
In the global supply chain arena, cloud computing represented an immense opportunity. Why? Because supply chains had become global, companies were producing and shipping goods all over the world, and they needed technology that could unite entire partner ecosystems together technologically – something enterprise software systems were never designed to do.
Despite superior IT economics and making the impossible possible, cloud still took a full decade to reach a level of mainstream adoption in the supply chain. Complexity was part of the reason. Security was also a concern. And most importantly, the notion of shifting mission critical operations – a company’s ability to deliver its products to the market – from the relative “safety” inside the four walls software systems to the cloud was still a scary proposition for most CIOs.
Powerful use cases began to emerge which showed the industry that connecting partners to a common network and shedding light on what is actually happening in the supply chain could unlock tremendous value.
Excellence in supply chain automation requires more the advanced software. The network is critical and that takes time to build. The reason Facebook is so valuable is not the software code, but rather the 2 billion active users. Same with LinkedIn. While there is no Facebook for supply chain yet, there are a number of network based solutions that have spent the past two decades steadily building up a network of buyers, sellers and partners that are actively engaged in the biggest supply chains on earth. Our GT Nexus Commerce Network is a prime example.
Blockchain will face a similar challenge gaining traction is the supply chain. It will take time.
Blockchain should also not be dismissed as pure hype. Expect to see companies engaging in projects with the multitude of new blockchain focused vendors that are emerging. As use cases make their way into the mainstream, more companies will jump into blockchain which will further prove out what works and what does not.
The degree of complexity in the supply chain will likely keep mass blockchain adoption a few steps behind some other business process areas, but something will happen eventually. It’s very likely that successful projects will be done in conjunction with some of the newer network-based solutions that have built in flexibility to operate alongside new technologies. We’re already seeing internet of things and advanced machine learning solutions being meshed with cloud supply chain platforms and there is no reason blockchain wouldn’t part of that evolution.
But companies should also not stand on the sidelines and wait. A lot of what blockchain promises already exists in some form. The ability to connect a supply chain to a single source of truth exists. Capabilities to monitor access and history exist. And the solutions are available anywhere, anytime via the Web are common today.
If companies are still e-mailing purchase orders and using spreadsheets to run their operations, they will not be in position to take advantage of blockchain. The supply chain has become a strategic advantage and those that don’t stay in front of innovation will find themselves getting disrupted into bankruptcy before Supply-Block-Chain becomes reality. It will be interesting to watch.