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Channel cautioned as CIOs block blockchain deployments

Channel cautioned as CIOs block blockchain deployments

Rocky road to adoption ahead as businesses abandon emerging technology

Technology partners investing ahead of the blockchain curve are struggling to generate customer demand with only one per cent of CIOs indicating any kind of adoption within the business.

As providers and integrators assess the merits of being early adopters of emerging technologies, research suggests that a further eight per cent of CIOs were in short-term planning or active experimentation with blockchain.

According to Gartner research, the findings paint a worrying picture for partners moving into the blockchain space, with 77 per cent of CIOs currently holding “no interest” in the technology, with no action planned to investigate or develop it further.

“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,” Gartner vice president, David Furlonger, said.

Furlonger added that rushing into blockchain deployments could lead organisations to “significant problems” of failed innovation, wasted investment, rash decisions and even rejection of a game-changing technology.

Delving deeper into the research, 23 per cent of CIOs said that blockchain requires the most new skills to implement of any technology area, while 18 per cent said that blockchain skills are the most difficult to find.

From a channel perspective however, such a lack of skills can be seen as a positive for partners providing outsourcing and consulting services, alongside implementation and integration offerings.

But in a blow for forward-thinking partners, a further 14 per cent indicated that blockchain requires the greatest change in the culture of the IT department, and 13 per cent believed that the structure of the IT department had to change in order to implement blockchain.

“The challenge for CIOs is not just finding and retaining qualified engineers, but finding enough to accommodate growth in resources as blockchain developments grow,” Furlonger added.

“Qualified engineers may be cautious due to the historically libertarian and maverick nature of the blockchain developer community.”

Furthermore, CIOs also recognised that blockchain implementation will change the operating and business model of the organisations, citing a challenge in being ready and able to accommodate this requirement.

“Blockchain technology requires understanding of, at a fundamental level, aspects of security, law, value exchange, decentralised governance, process and commercial architectures,” Furlonger added.

“It therefore implies that traditional lines of business and organisation silos can no longer operate under their historical structures.”

Light at the end of the tunnel?

From an industry perspective, CIOs from telecom, insurance and financial services indicated being more actively involved in blockchain planning and experimentation than CIOs from other industries.

While financial services and insurance companies are at the forefront of this activity, the transportation, government and utilities sectors are now becoming more engaged due to the heavy focus on process efficiency, supply chain and logistics opportunities.

For telecom companies, interest lies in a desire to "own the infrastructure wires" and grasp the consumer payment opportunity.

“Blockchain continues its journey on the Gartner Hype Cycle at the peak of inflated expectations,” Furlonger added.

“How quickly different industry players navigate the trough of disillusionment will be as much about the psychological acceptance of the innovations that blockchain brings as the technology itself.”

Business, governance and operating models, and designed and implemented pre-digital business will take time to re-engineer.

For Furlonger, this is because of the ramifications blockchain has concerning control and economics.

“While many industries indicate an initial interest in blockchain initiatives, it remains to be seen whether they will accept decentralised, distributed, tokenised networks, or stall as they try to introduce blockchain into legacy value streams and systems,” Furlonger added.


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