Digital Transformation Plans Cool on Blockchain

Blockchain concept as a digital chain connection as an internet banking or network security symbol as a 3D illustration.

Over the past year, more organizations are taking a wait-and-see approach to incorporate blockchain into their digital transformation strategies, according to research published by IDC.

In the analysis firm’s latest Semi-Annual Blockchain Spending Guide, which it published in July, the percentage of firms that expected to include blockchain within their digital transformation strategy in the next three to five years fell by 9% from 25% in 2018 to 14% in 2019.

At the same time, the percentage of companies stating that blockchain was not an area of focus grew 10% from 25% in 2018 to 35% in 2019.

The firms that reported that they had included blockchain in their digital transformation strategies increased a slight 1% from 50% to 51% over the same period.

“This tells me that those who did not consider blockchain early on might be a little unsure right now of its potential, and possibly even hesitating to consider the technology,” said Stacey Soohoo, research manager, customer insights & analysis at IDC, during a recent webinar. “It might be that other technology, such as artificial intelligence, the internet of things, or other things, are the driving force their digital transformation strategy.”

There is uncertainty in the well-hyped blockchain market, which is well warranted, according to James Wester, research director, worldwide blockchain strategies at IDC and who also participated in the webinar.

“There is still much we do not know about how it will develop, he said. “Honestly, that is okay or, at least, it should be okay. The disruptive potential of blockchain will completely change the way enterprise software is developed and distributed.”

However, global spending on technology shows no signs of slowing. IDC’s Soohoo expected spending on blockchain hardware, software, and services to grow at a significant 60.2% compounded annual growth rate over the next four years.

In 2018, organizations spent $1.5 billion on blockchain-related expenses and were expected to spend $15.9 billion by 2023.

The US market alone represented 37% of the global blockchain investment in 2018, while Western Europe and APAC ex-Japan invested represented 22% and 19% respectively.

“All nine regions that we cover in the Spending Guide are predicted to see a significant spending growth over the forecast period with Western Europe and Canada growing the fastest,” said Soohoo.