The results of a recent Deloitte survey have pointed to blockchain technology emerging as a key business focus for U.S. companies in many industries, with numerous executives in the consumer products and manufacturing; and technology, media and telecommunications sectors planning to spend the most in 2017.
Commissioned by Deloitte last month, the survey polled a sample of 308 senior executives in the U.S. at companies with $500 million or more in annual revenue. Respondents were familiar with and able to comment on their company’s blockchain investment plans; however, understanding of the technology was uneven according to the survey. Many senior executives are reported to still know little about it, while others place it among their company’s highest priorities. Some of the main points found in the report around blockchain adoption and investment are summarised below.
Almost two fifths of senior executives at large U.S. companies surveyed indicated they had little or no knowledge about blockchain technology. The majority though, claimed blockchain knowledge ranging from broad to expert. Many of these blockchain-informed executives see the technology as crucial for their company and their industry. Fifty-five percent of this group said their company would be at a competitive disadvantage if it failed to adopt the technology. Forty-two percent of those surveyed who claimed some knowledge of blockchain believed it will disrupt their industry.
David Schatsky, managing director with Deloitte LLP, said: “It is fair to say that industry is still confused to a degree about the potential for blockchain. More than a quarter of surveyed knowledgeable execs say their companies view blockchain as a critical, top-five priority. But about a third consider the technology overhyped.”
One unexpected finding of the report was that, despite the relative immaturity of the technology, 21 percent of blockchain-informed senior executives across a wide range of industries indicated that their firms have already brought blockchain into production, and 25 percent plan to do so within the next year. This was put down to be partly due to investments many companies said they have already made. 28 percent of these respondents reported that their companies have already invested $5 million or more in blockchain technology, with 10 percent investing $10 million or more. Looking forward, 25 percent of respondents expect to invest more than $5 million in blockchain technology during the next calendar year.
Over a third of respondents credit blockchain with the potential for improving systems operations, either by reducing costs or increasing speed. Similarly, more than a third cite blockchain’s superior security features as the main advantage of the technology. And almost a quarter of executives surveyed highlight the potential for blockchain to enable new business models and revenue streams.
Schatsky remarked: “This diversity may be a testament to the versatility of the technology. But it is likely also a reflection of the fact that, despite the hype, the impact that blockchain will likely have on businesses in various industries is not yet fully understood.
Investment and adoption patterns vary by industry. Although the financial services industry was early to show interest in blockchain, and accounts for a significant amount of investment and activity, the survey revealed that other industries may be even more aggressive in pursuing blockchain strategies.
Eric Piscini, principal with Deloitte Consulting LLP and the global financial services blockchain leader, commented: “Most financial services companies have been involved in blockchain via their labs, investments and pilots for a while now. Other industries are now starting to realize the potential for disruption, as well as the new opportunities that blockchain creates.”
Executives surveyed in the consumer products and manufacturing industry, for instance, expressed the most bullish blockchain outlook, with 42 percent of respondents in this industry planning an investment of $5 million or more in the coming calendar year. Technology, media and telecoms execs followed at 27 percent, and financial services at 23 percent.
As with investments, the pace of blockchain technology deployment varies by industry, with technology, media and telecoms; and consumer products and manufacturing in the lead. About 30 percent of respondents in those industries say their company has already brought blockchain into production. In contrast, just 12 percent of surveyed financial services company executives say their company has deployed blockchain in production. Surveyed financial services firms aim to increase the rate of adoption: 24 percent say their companies plan to go live with blockchain in the coming year. Health care and life sciences have the most aggressive deployment plans of any industry: 35 percent of respondents in that industry say their company plans to deploy blockchain in production within the next calendar year.
Patent filings also vary sharply by industry. Twenty-one percent of respondents stated that their organizations have filed for blockchain patents. The most inventive industry as it relates to blockchain may be consumer products and manufacturing, where 38 percent of respondents say their company has filed patents. This suggests that industry may be on the threshold of a period of significant blockchain innovation.
While views on blockchain’s primary value vary, there is more consensus about the main barriers to its widespread adoption. Per the survey, a crucial obstacle is the lack of technical standards in a still-immature technology. More than half of respondents believe technical standards would create a “tipping point” leading to widespread adoption.
Another key barrier according the respondents is regulatory uncertainty. Nearly half of respondents say federal regulations that support the use of blockchain for business purposes such as contracts and financial audit will likely tip the scales in favour of mass adoption. Issues like if private blockchain activity represent an inherently reliable confirmation, or if a smart contract represent a legal contract in a court of law are seen as key points to be answered before mass adoption.