s blockchain matures, companies built on the technology can demonstrate to larger organizations its potential to enable new functionalities and revenue streams, among other benefits.
Companies that built their business models on blockchain are not only potentially more fluid and agile than larger enterprises but also show signs of reinventing existing business models and creating blockchain-enabled solutions that are valuable across organizations and industries, according to respondents to Deloitte’s 2019 global blockchain survey.¹
Eighty-seven percent of these emerging blockchain disruptors strongly believe the distributed-ledger technology will enable advanced business functionalities and revenue streams in their industry, as compared with 54% of enterprise respondents. Forty-five percent of emerging disruptors have already brought blockchain into production, well ahead of the 24% of enterprise respondents who report doing the same.
Perhaps because they are accustomed to operating nimbly and moving quickly, disruptors’ blockchain implementation time frames vary appreciably from those of enterprises. While 81% of emerging disruptors expect measurable and verifiable ROI from blockchain within three years, only 61% of enterprise respondents anticipate results in that time. Moreover, 90% of emerging disruptors are currently hiring staff with blockchain experience, versus 46% of enterprise respondents.
When asked for blockchain’s most significant advantage over existing systems, disruptors are considerably more focused on new business models and value chains, which 42% cited as the biggest benefit. Respondents from enterprise organizations, meanwhile, indicate relative parity among several advantages, including new business models and value chains (23%), greater security and lower risk (23%), and greater speed compared with existing systems (17%).
While enterprises typically seek ways to integrate blockchain into their existing business models—or, more accurately, to transform existing processes and systems to work with blockchain—disruptors are generally less constrained and therefore able to envision and tackle more innovative applications, according to Linda Pawczuk, a principal at Deloitte Consulting LLP and U.S. blockchain leader.
“As pioneers of blockchain exploration and implementation, emerging disruptors play an important role in the larger ecosystem,” Pawczuk says. “Given their exclusive focus on blockchain, they tend to be more advanced than enterprise organizations in developing and implementing new solutions to leverage the technology’s potential in new ways.”
“There is little in blockchain’s underlying technology—for instance, cryptography or data transaction—that’s new,” adds Rob Massey, a partner at Deloitte Tax LLP and tax leader for blockchain and cryptocurrency. “What is fresh is the disruptive potential emerging companies are driving to help organizations get things done.”
Blockchain Challenges Persist
Disruptors may be more confident in their grasp of the technology, yet they can be hampered in some ways larger enterprises are typically not, Massey notes. “Emerging disruptors are facing big-company challenges at an early stage, often with smaller staffs and limited financial resources. Placing big bets on blockchain is an investment disruptors hope will provide a measurable return,” he says. Moreover, “their innovations can quickly grab the attention of a market and a large user base, putting strain on their technology infrastructure and business processes.”
‘As pioneers of blockchain exploration and implementation, emerging disruptors play an important role in the larger ecosystem.’
—Linda Pawczuk, principal, Deloitte Consulting LLP and U.S. blockchain leader
According to survey respondents, challenges persist across the blockchain landscape, with varying perceptions among enterprises and disruptors. When enterprise executives consider perceived organizational barriers to blockchain investment, there is little consensus: The most frequently cited choices, implementation and regulatory issues, each garner only 30%, with potential security threats (29%), lack of in-house capabilities (28%), and uncertain ROI (28%) very close behind. In contrast, an overwhelming number of emerging disruptors (71%) cite regulatory issues as the greatest barrier to blockchain investment, likely owing to concerns about new rules that could hamper the technology’s continued adoption.
Enterprises and disruptors also possess diverging attitudes toward blockchain-enabled security. While 71% of enterprise organizations believe blockchain provides greater security than conventional IT solutions, only 48% of emerging disruptors feel the same. “While we cannot fully explain this differing viewpoint, it is still a noteworthy difference that merits further consideration,” Pawczuk says.
Despite these and other deviations, disruptors and enterprises hold many similar opinions on issues such as blockchain models of focus, the value in consortia, success metrics, and individual regulatory concerns. And it is worth noting that disruptors are nearly as reserved as enterprises about approaching the technology. Nineteen percent of disruptor respondents strongly believe blockchain is overhyped, only one percentage point behind enterprise respondents (20%). “So, even as disruptors seek to reinvent business as usual using blockchain, some maintain more pragmatic, even skeptical, impulses as well,” Pawczuk says.
With their emphasis on using blockchain to enable new business models and value, disruptors are likely to continue being among the first to identify and test viable solutions that larger organizations can then adopt on a wider scale. In that way, Pawczuk says, “the two kinds of organizations can form a symbiotic relationship that drives continued blockchain innovation.”