Blockchain: The (Technology) Hype Cycles
The other day while reading “Blockchain: What’s it good for? Absolutely nothing” on the website of ComputerWorld, I bumped on quite an intriguing graph: The Gartner Hype Cycles.
Okay, let’s backtrack for a second. I know you’re all stuck on the title of the ComputerWorld article. The purists will think Edwin Starr. My generation will fight tooth and nail to convince you the Frankie Goes to Hollywood version is not a cover. The Nostalgic of “Must See TV” every Thursday night on NBC will instantly think of a Seinfeld episode entitled “The Marine Biologist,” where Elaine Benes (Julia Louis-Dreyfus) sustains before her boss and a Russian writer that Tolstoy initially wanted to name War and Peace, “War, What’s It Good For?”
Alright, enough pop culture. Back to the Gartner Hype Cycles. Here it is:
How must this Hype Cycles be interpreted?
Per Gartner, “clients use Hype Cycles to get educated about the promise of an emerging technology within the context of their industry and individual appetite for risk.”
When confronted to a new technology, the two main questions that come up inside the minds of an Executive Team are: (1) Do we make an early move? (2) Do we wait for the technology to mature? And as we all know, making an early move is much riskier yet the rewards of early adoption can be great. On the other hand, the choice of waiting for the technology to be fully proven and see for a fact the tangibility of what it brings comfort the need to wait for further maturation.
This graph works around 5 key-phases of a technology’s existence:
Innovation Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable product exists, and commercial viability is unproven.
Peak of Inflated Expectations: Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.
Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.
Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology's broad market applicability and relevance are clearly paying off.
The goal the Gartner’s Hype Cycles graph intends to achieve is to assist Executives (1) put things in perspective, (2) reduce the risk associated to investing in the new technology, and (3) compare one’s understanding of the technology with what analysts think of the same technology.
Now, where does Blockchain technology fall?
Avivah Litan (a Gartner Vice President and Analyst) said, "Back in early 2018, we'd already said... 99% of enterprise projects are dead end; 99% don't need the technology; they don't get out of the lab. They're a result of CEOs fear of missing out – the FOMO phenomenon (…) Having said all that, it's a very valuable technology. People started trying to use it before it was ready for prime time. That's true in the cryptocurrency world and in the enterprise blockchain world.
In most of the blogs about Blockchain I posted this year, I stated that Blockchain is not for everyone. As most of you already know, here at Amalto we’ve been very active in the Blockchain ecosystem for more than a year through Ondiflo and Platform 6. For that reason, we’ve been approached by businesses asking us to build for them a Blockchain platform and/or a Blockchain-based application. And several times, after an hour of discussions, our answer was unambiguous: “You don’t need to be on the Blockchain.” That’s the FOMO phenomenon to which Avivah Litan refers.
With our partner ConsenSys we’re currently developing a Blockchain application for one of the biggest Oil and Gas operators in the world. What prompted this giant enterprise to partner with Ondiflo to revolutionize the way order to cash processes for water hauling are managed? The operator and its trading partners clearly identified key-requirements that solely Blockchain technology could address. Only then did it make sense to kick the project off.