A new report by the Capgemini Research Institute claims that blockchain could become “ubiquitous” by 2025, entering mainstream business and underpinning supply chains worldwide.
“Through investment and partnerships, the distributed ledger technology will dominate manufacturing as well as consumer products and retail industries, ushering in a new era of transparency and trust,” gushes the research team.
The report, Does blockchain hold the key to a new age of supply chain transparency and trust?, provides what it says is a “comprehensive overview into the businesses that are ramping up their blockchain readiness”. It predicts that blockchain will enter mainstream use in supply chains by 2025, in a wave of transformation that will begin rising in 2019, as experimental programmes come to an end.
Scale vs experiments
Currently, just three percent of organisations that are deploying blockchain do so at scale and 10 percent have a pilot in place. The vast majority – 87 percent of respondents – are in the early stages of experimenting with the technology.
But how many organisations are deploying blockchain at all? The report doesn’t say. The research was conducted among 731 organisations that have existing or planned initiatives, and focused on 447 of them. The precise methodology is unclear from Capgemini’s description.
While the findings are valuable and reveal strategic thinking and promise, therefore, Capgemini appears to have extrapolated global predictions from the handful of trailblazers that are implementing the technology at scale. The report lacks a true global context, which weakens it considerably.
But the findings themselves are interesting.
First, the UK is leading the world in blockchain adoption, with 22 percent of blockchain adopters reporting at-scale or pilot implementations, followed by the US (18 percent) and France (17 percent). The US is front-runner in terms of funding blockchain initiatives, says the report.
These ‘pacesetters’, to use Capgemini’s term, are optimistic that blockchain will deliver on its potential, with over 60 percent believing that the technology is already transforming the way they collaborate with partners.
The study found that cost savings (89 percent), enhanced traceability (81 percent), and improved transparency (79 percent) are the top three drivers behind current investments in blockchain, with the aim of overcoming existing supply chain problems.
Other supply chain challenges that could benefit from blockchain deployments include: the risks involved with multiple stakeholders; the burden of manual processing; regulatory compliance; and the challenges of reconciliation.
A single source of truth?
Blockchain’s claimed ability to provide an automated and inviolable audit trail via a “single, shared source of truth” could tackle all of these problems, suggests Capgemini.
However, this sidesteps the issue that the very concept clashes with GDPR’s Right to be Forgotten, a challenge that providers are generally overcoming with greater design complexity, which mitigates against the idea of a simple audit trail. This issue was explored in depth in an Internet of Business report earlier this year.
Complexity is certainly an issue, acknowledges Capgemini’s report. It lists some of blockchain’s key benefits, such as managing contracts and tracking provenance or inventory under ‘high complexity’ tasks. Meanwhile, the abilities to track asset maintenance and component quality, for example, are seen as having relatively low complexity.
Capgemini says that the technology can be applied to critical supply chain functions, from tracking production to monitoring food-chains and ensuring regulatory compliance within these industries. Enthused by the results they are seeing, the pacesetters identified in the study are set to grow their blockchain investments by 30 percent in the next three years, says the report.
The catch in the can
Some of the case studies in the report are revealing, for a number of reasons.
The report highlights that consumer product organisations are focused on using the technology to help trace and identify products, with Nestlé, Unilever, and Tyson Foods among those implementing blockchain trials. Meanwhile, retailers are focused on digital marketplaces and preventing counterfeits, with the likes of Starbucks also investing in blockchain trials.
Provenance and sustainability in food production is a growing trend that could benefit from blockchain, says the report. “An estimated €966 billion opportunity exists for brands that make their sustainability credentials clear”, explains Capgemini.
A London-based NGO has developed a system to track skipjack and yellowfin tuna, creating ‘catch-to-consumer’ transparency, says the report. The fishing crew attach an RFID tag to each fish and upload the information to the cloud using handheld devices. This data is added to the blockchain ledger, creating a tamper-proof audit trail. This helps in tracking the product as it passes from catch to canner, and on to the consumer.
Meanwhile, the World Wildlife Fund (WWF) has successfully piloted a similar ‘bait to plate’ project that helps track tuna on a blockchain platform that uses a combination of RFID tags and QR codes.
Meanwhile, Capgemini mentions that it has successfully deployed a blockchain solution in this sector itself, which enables traceability, provenance, and payments on a digital marketplace that connects farmers and fishermen with high-end restaurants.
Other examples of successful Capgemini projects are also slipped into the document. For example, “Capgemini is delivering a proof of concept for a pharmaceutical company, deploying a smart container management system based on blockchain technology,” continues the report.
“The combination of real-time data about container conditions and tamper-proof storage of that data on a blockchain is delivering unprecedented levels of transparency within the supply chain processes involved.”
All of these projects may be producing good results, but the impression that Capgemini is shoehorning its own marketing messages into its study is strong, and the document should be seen in this light. For “ubiquity” read “we can sell you this”.
The ROI problem
But the report isn’t a mere marketing exercise. It acknowledges that, despite the optimism surrounding blockchain deployments, concerns remain around establishing a clear return on investment, and interoperability between partners in a supply chain.
The majority of pacesetters (92 percent) point to establishing ROI as the greatest challenge to adoption, while 80 percent cite interoperability with legacy systems as a major operational challenge.
Additionally, 82 percent identify “the security of transactions as inhibiting partner adoption of their blockchain applications, undermining blockchain’s status as a secure technology”.
Sudhir Pai, CTO for Financial Services at Capgemini said, “There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organisation’s supply chain challenges.
“Blockchain’s ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption. Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realise its potential.”
Despite the barriers facing blockchain today, some organisations are trying to drive wider adoption now, while the technology is in its infancy. One example is the Mobility Open Blockchain Initiative (MOBI, see Internet of Business passim), the growing consortium of automotive and tech companies that aims to get carmakers to assign digital identities to vehicles so that cars and systems can transact with each other.
Internet of Business says
In all, Capgemini’s report identifies 24 use cases for blockchain, ranging from trading carbon credits, to managing supplier contracts and preventing counterfeit goods. But while the report is useful, insightful, and contains some original case studies, it suffers from being noisy and marketing-led in places, while failing to present a full, trustworthy global picture.
In this, it is far from alone. In August 2018, professional services company PwC published global research suggesting that 84 percent of organisations are experimenting with blockchain technology. One-quarter of organisations have projects that are either live or at the pilot stage, it said, while 32 percent have projects in development, and a further 20 percent are researching the market.
But in May analyst firm Gartner published a very different set of findings. Its 2018 CIO survey said that only one percent of CIOs report live blockchain programmes within their organisations, and only eight percent are either planning blockchain initiatives, or looking at or experimenting with the technology.
According to Gartner, 77 percent of CIOs say their organisation has no interest in the technology at all and/or no plans to investigate it or develop projects.
Two reputable organisations, two global surveys, and findings that completely contradict each other – just three months apart. These extremes of claim and counter-claim have typified discussions about the technology. However, Gartner’s latest Hype Cycle report, published at the end of August, at least acknowledged that blockchain is a fast-maturing technology.
Capgemini has added to the debate, but failed to move it forward. For a report subtitled ‘How organisations have moved from blockchain hype to reality’, that’s really not good enough.