Increasingly, organizations are turning to blockchain technology for a variety of business applications, such as audits, smart contracts, payments, securities and commodities trading, supply chain management, and more. This is evidenced by the fact that the market for blockchain technology is continuing to grow – from $7.4 billion in 2022 to the forecast $94 billion by the end of 2027.
Although there are numerous successful projects, many enterprise blockchain initiatives often end up on the scrap heap.
There are several reasons for their failure. For instance, they can be overly expensive, companies may not properly define their visions, or integration issues may arise.
In this article, we review four common reasons blockchain projects fail and how companies can avoid them and succeed with their projects.
Not Properly Defining Your Vision
Many of the challenges related to developing blockchain projects arise because organizations aren’t able to explain their visions clearly and outline what they expect to achieve using the technology.
Companies that plan to implement blockchain in their processes must clearly define the scope, objectives, and ultimate goals of their projects and identify which specific problems they want the technology to address.
Not only that but organizations that are unable to clearly articulate their visions for their projects might not sufficiently understand how blockchain works and what it needs to operate at more or less full capacity. Consequently, companies need to focus on the specifics of the technology and ensure that they have the necessary infrastructure to ensure it will function seamlessly.
Additionally, businesses should always deliver on the initial promises that they made to their customers as well as meet their expectations. This is an element of a well-defined vision, as organizations must understand all the related risks and be ready to react appropriately.
Along with considering this advice, companies should also aim to answer the following questions, which will enable them to create a broader vision of their projects and move ahead with clearer goals.
- Does your company have a lot of personal and sensitive data that needs to be recorded securely?
- Does your company plan to establish traceability of all processes and transactions across your entire business network?
- Is your company looking to expand the abilities of your business, for example, by introducing it to cryptocurrency capabilities, non-fungible tokens (NFTs), or tokenization?
- Are your employees ready to embrace and adopt blockchain, and do they need additional training to work with the ledger technology effectively?
High Implementation Costs
Before they embark on implementing blockchain technology, some companies tend to overlook or underestimate the total costs of their projects. For one thing, it can be expensive for companies to design solutions using totally new technology.
In addition, it takes a lot of money for organizations to train engineering teams, build ongoing relationships with their vendors, and continuously refine their solutions.
Blockchain developers and architects are expensive, and not all organizations can afford the high consulting fees larger integrators charge. As such, enterprises should look for enhanced blockchain-as-a-service (BCaaS) solutions that do away with the complexity by making the solutions accessible through application programming interfaces (APIs) every developer can use.
Companies must be sure to explore blockchain solutions that fit their budgets.
Choosing the Wrong Blockchain Platform
There are numerous platforms on the market today, each of which has its own features and characteristics. However, it’s likely that the projects of companies that select their blockchain platforms randomly will eventually fail.
Before beginning their blockchain projects, companies should analyze and compare the different platforms to determine which is the best for them.
To choose the right platform, organizations need to consider such blockchains characteristics as:
- Consensus mechanism, i.e., a system that validates a transaction and marks it as being authentic;
- Speed of transactions;
- Costs of transactions;
- Smart contract functionality.
When searching for blockchain solution providers, companies should also:
- Check out the vendors’ portfolios to understand which blockchain projects they’ve already successfully delivered;
- Read feedback from past customers to determine how they rate the work of the providers;
- Ask if the vendors have worked on projects similar to yours and what steps they took to achieve that success;
- Check if the blockchain technology providers also offer consulting services so they can evaluate the projects and describe the vision of the projects vision from a technical standpoint;
- Look for solutions that enable them to export their data anytime and anywhere.
When companies build enterprise blockchain applications, they must consider what other systems the technology has to work with.
Organizations’ legacy systems, data sets, and applications must integrate seamlessly with the blockchain platforms. Integrations that don’t happen smoothly cause a number of issues, including poor user experience, data inconsistency, poor performance, and increasing costs.
If not done correctly, integrating blockchain technologies with legacy systems can potentially sink companies’ blockchain projects.
Therefore, it’s critical that organizations let the development teams know about the other technology products they use and talk about how the blockchain tech should interact with those other systems.
Organizations should also do their own research and consult with experts to fully understand if the blockchain will fit smoothly into their existing processes.
Not Training Employees
Organizations must remember to educate their employees about blockchain since it’s likely that they’ll have issues adapting to the new technology and how it functions. Companies should provide their staff members with training sessions that go over the key aspects of the technology.
This will help employees have a good understanding of the distributed ledger concept so they can begin using it.
Although it’s still early days for blockchain, the technology has proven that it can work in a wide range of industries, and, as such, more organizations are moving to implement it in their operations.
For their blockchain products to succeed, companies must, in part, have clear strategic visions, accurately calculate spending, partner with the right solution providers, ensure the integration with legacy systems goes smoothly, and educate employees about the technology.