DLT adoption will move from irrational exuberance to realistic assessment in 2020.
In the world of enterprise blockchain, the shift from irrational exuberance to realistic assessment is almost complete. While we still see a lot of excitement around what DLT can or could do, the focus has expanded to include questions about how DLT is going to deliver a particular benefit.
There’s also been a shift away from r&D-type exploratory proof-of-concepts (PoCs) run in isolation. early adopters now focus much more on the end-to-end process to which DLT is being applied; they also understand that nontech issues are the biggest hurdle they need to overcome and that they need to tackle these business and regulatory challenges from the beginning of the project.
Fewer companies are now embarking upon blockchain projects than in 2016 to 2018, especially in North America and Western Europe. But, those that do, are taking a more informed and strategic approach. We predict that in 2020:
Over 80% of blockchain deployments will be hybrid or multicloud — or both. Networks with stringent data sovereignty and confidentiality requirements will clearly have chosen frameworks that support these; they will also opt to run their nodes on-premises if there’s no in-country public cloud option or if risk management and compliance and integration requirements call for doing so.
As networks expand, we’ll also see nodes distributed across multiple cloud providers. This applies even if a network leverages the managed blockchain offering from a services provider. enterprises have made it amply clear to technology vendors that it’s not acceptable to only offer blockchain as-a-service in that provider’s cloud; any vendor that hasn’t already upgraded its capabilities accordingly will have to follow suit.
The frameworks will continue to battle for dominance, with possible surprises. During 2019, the platforms we most frequently encountered in advanced pilot projects or production deployments were Hyperledger Fabric, Ethereum/Quorum, R3 Corda, Digital Asset (DA), and MultiChain, with Hyperledger with Sawtooth also gaining traction.
We also saw DA shift its focus to DAML, its smart contract scripting language, which has already led to several integrations with other blockchain frameworks. During 2020, the main stage contest for mind- and market share will continue to be between Fabric, Ethereum/Quorum, and R3 Corda, with MultiChain holding its own.
But it’ll only take one major project committing to a new constellation (e.g., a combination of DAML and VMware’s blockchain) to expand the field. In Asia Pacific and especially China, we will continue to see more companies embracing homegrown frameworks like ant financial’s blockchain platform and Ping An Technology’s FiMaX to address enterprise needs.
Interoperability will take center stage. It’s already clear that there are several networks covering identical or similar functionality (e.g., trade finance, invoice factoring, shipping documentation, product provenance); equally, it’s obvious that there are networks with adjacent functionality (e.g., supply chain track-and-trace and financing). To deliver on the promise of frictionless processes, these networks will need to talk to each other somehow.
Much of the debate for 2020 will be around exactly what this means: simple message passing? transfer of value between chains? interoperability at state level? We’ve already got a plethora of startups and other initiatives promising (sometimes miraculous) solutions; expect the battle to heat up, but don’t expect neat, widely applicable solutions.
Ties will strengthen between DLT and the existing business management solutions. DLT is an automation technology, focused on inter- rather than intra-company processes. But, even if it’s only used for notarization or time-stamping purposes, there are clear links between existing business process management (BPM), digital process automation (DPa), and contract management solutions.
Blockchain pure-plays don’t have the required process management and integration experience, while BPM/DPa vendors are under pressure to improve their capabilities to address complexity across organizational and national boundaries. While some established vendors will build out blockchain capabilities for existing solutions in-house, others will move into the space through collaboration, investment, or acquisition.
Executive teams will be drawn into permissioned vs. public network debate. Blockchain-based applications will continue to fall into two categories: consumer-focused DApps, which mostly use public, permissionless blockchains; and enterprise applications built almost exclusively on permissioned networks using enterprise DLT frameworks. But, there’s already a debate as to whether this is sustainable in the long term.
Rather than having a plethora of Intranet-like silos, wouldn’t enterprise networks be better off leveraging public blockchains? While that’s not a realistic proposition today, it’s an important strategic consideration; newcomers like Hedera Hashgraph and Kadena will further draw attention to the debate. Given the implications for process and risk management (to mention just a couple of key areas), it’s not a tech decision. For now, only the most forward-looking enterprises and their technology partners will go where others fear to tread, but the topic is no longer off the table.
Focus will shift to integration and interoperability: Continued hype notwithstanding, enterprise DLT teams are focusing on realistic use cases and bringing existing projects closer to, or into, production. This means more emphasis on how frameworks perform and how well they integrate with existing systems and, potentially, each other.
Permissioned vs. public blockchain
Will heat up and reach executive teams: Multiple networks already exist for some of the most popular use cases (such as supply chain or trade finance), and proliferation will continue. should you focus on getting these to interoperate, or would it be better to consider bringing public blockchains into the equation? We won’t see any definitive answers in 2020, but expect plenty of debate and exploration.
— By Martha Bennett and Charlie Dai, Forrester.