Anyone who grew up watching Marty McFly and Doc Brown in the Back to the Future series has probably felt a bit disappointed that we still don’t have hoverboards and flying DeLoreans. It’s been 35 years since the first film, after all – what’s the hold-up?
For people interested in Blockchain, the feeling can be somewhat similar. The technology has hovered just on the brink of widespread adoption for 10 years now (since Bitcoin first erupted into public awareness), and every year we read reports like Deloitte’s 2019 Global Blockchain Survey where the majority of business leaders call Blockchain a ‘strategic priority’ with a ‘compelling business case’, yet only 23% have initiated a Blockchain deployment to date.
Mainstream adoption always seems to be a couple of years away. There are, of course, early adopters who are providing much-needed case studies for Blockchain, as well as dispelling some of the hype by discovering the technology’s limitations. But even in industries that have an urgent need for the transparency and traceability Blockchain can provide – think conflict minerals and human rights abuses in Apparel supply chains – adoption seems to be progressing at a snail’s pace.
The goal in Apparel, for example, would be to provide as much information as possible to the customer at the point of sale, either printed on a tag or accessible via QR code. Early adopter H&M already shares detailed information at the point of sale about the garment’s country of origin, the name of the supplier, the factory name, location and number of workers. According to McKinsey, there’s an expectation that it will become standard practice for the Apparel industry to report supplier information to at least tier two by 2025, but on the cusp of 2020 only two percent(!) of surveyed CPOs report they are currently using Blockchain in Apparel sourcing.
What’s slowing down adoption?
Apart from a few non-believers who say the tech is unproven or overhyped, there is general agreement that Blockchain can do the job. There are dozens of start-ups offering Blockchain-based solutions to help tackle conflict minerals, which shows that it isn’t a lack of technology providers holding back adoption. So, what’s the hold-up?
According to Deloitte, organisational barriers to Blockchain adoption include:
- Implementation (replacing or adapting legacy systems): 30%
- Regulatory issues: 30%
- Potential security threats: 29%
- Lack of in-house skills and understanding: 28%
- Uncertain ROI: 28%
- Concerns over sensitivity of competitive information: 25%
- Lack of a compelling application: 23%
- The technology is unproven: 20%
- Not currently identified as a business priority: 17%
Many of these barriers appear to be endemic to large enterprises, as confirmed by the difference between adoption rates in disruptors (45%) versus enterprises (24%).
In procurement’s case, it may also come down to a lack of influence. CPOs are not the decision-makers when it comes to Blockchain implementation. When Deloitte asked which group is making key decisions about Blockchain, procurement tied equal-last at a disappointing 2%.
- IT: 47%
- Management (CEO/Chair): 30%
- R&D/Innovation: 8%
- Finance: 6%
- Tax: 2%
- Procurement: 2%
- Supply chain: 2%
- Operations: 2%
This is despite more than half of Blockchain’s use cases being extremely relevant for procurement and supply. For example, supply chains would benefit from Blockchain data validation, data access/sharing, payments, digital currency, track and trace, certification, record reconciliation, and time stamping.
Deloitte concludes its report with the note that nobody can accurately predict the future, hedging with the words: “We will refrain from predicting a precise timeline on Blockchain’s greater adoption.”
What we can expect is a few more years where we are promised that Blockchain’s mainstream adoption is just around the corner.
- Read the full Deloitte 2019 Blockchain report here: https://www2.deloitte.com/content/dam/Deloitte/se/Documents/risk/DI_2019-global-blockchain-survey.pdf
- Read McKinsey’s 2019 CPO Survey on sustainable apparel sourcing here: https://www.mckinsey.com/industries/retail/our-insights/fashions-new-must-have-sustainable-sourcing-at-scale