Could Blockchain deployments in enterprises fail? The answer is absolutely yes. Can the risks of failure be mitigated? Again – absolutely yes!
It has been estimated that 92% of blockchain projects have failed in a period of one year. This is a stark portrayal of the broader complexities involved in the technology, coupled with a certain level of gullibility that enterprises have towards new technologies. With the initial excitement surrounding Blockchain fading away, many initiatives don’t make it to the final stages after the initial experimenting stage.
According to Gartner, “When considering a broad-scope, ambitious blockchain project, CIOs should view the blockchain portion to be less than 10% of the total project development effort.”
Some of the most common reasons why Blockchain deployments could fail are –
Absence of basic structure, norms, design, and purpose – Blockchain is not a magic wand. Let’s get that expectation set. Blockchain cannot succeed in the complete absence of norms, structure, design, and purpose. Enterprises considering Blockchain deployments need a clear vision and deep understanding of the potential of technology overall. Then comes the understanding of the fitment of Blockchain in achieving the vision and the needs.
Assumed as ready for production use – A common mistake is to assume that blockchain technology-based services have matured to the point for large – scale production. Blockchain deployments need security and network management services that are set up ahead of the deployment. If blockchain is attempted to be plugged into a vulnerable legacy system with weak cyber resilience, chances of failure are high.
Not Prepared for costs involved for legacy systems upgrades/replacement – Blockchain does need some amount of existing infrastructure to be modernized or upgraded. Legacy infrastructures do have the potential to infuse Blockchain, but there is most definitely some investments needed in upgrading / modernizing the infrastructure. When enterprises are not ready for this, the chances of a failed blockchain project are higher.
Blockchain interpreted as a complete system – When Blockchain is viewed as a complete application, enterprises are setting the wrong expectations, and thus there are bound to be wrong investments and the desired result is not per expectations. It lacks features like business logic, data persistence, user interface, and interoperability mechanisms. According to Gartner, “When considering a broad-scope, ambitious blockchain project, CIOs should view the blockchain portion to be less than 10% of the total project development effort.”
Ignoring cyber and data storage needs – Blockchain technology does not address security and data management needs – that’s a reality that enterprises need to understand. Blockchain projects need the support of solid cybersecurity tools, and practices, and data management separately to see the best results. When enterprises do not prepare with solid IT security and data management practices, blockchain projects are bound to fail in achieving the objectives.
It is important that Blockchain is interpreted as an augmenting technology rather than disruptive. Blockchain technology success depends on how carefully projects are designed, alignment of stakeholders’ objectives, tradeoffs understood, and testing well. Key is to work on the smaller project early on, test with a small group of users, gather enough feedback, and go over it again! Working with a deployment partner who is able to handhold, guide, and also help in setting up the required infrastructure in a legacy system is extremely crucial. Because it definitely needs a thorough vision, and many other factors that need deep attention, the adoption of Blockchain is calculated – and here are some of the reasons why!
MC.
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