Many CIOs are Ignoring Blockchain, but Why?

In a Gartner survey taken last year, only 1% of over 3,000 CIOs have any kind of blockchain adoption, reports the WSJ. Over a third say they have no interest in it. The rest are vacillating between planning for it or just having it on the radar. The question is, why the apathy?

»Read the Wall Street Journal article here: Amid Blockchain Hype, Few Deployments, Limited Interest, Survey Finds

“CIOs have trouble seeing a use for it at the moment. It’s limited to high encounters and mindsets,” says Pam Baker, author of the book Data Divination: Big Data Strategies. For the most part, CIOs are typically focused on managing efficiency. “They’re working in the API economy, and that’s a huge thing. APIs are actually gaining monetary value.”

According to Baker, top of mind for CIOs are tasks like moving things to the cloud and managing multiple clouds. They’re focused on management roles and increasing efficiency. She points out, “When you are focused on making everything run better, eking out every possible penny benefit from your investments, and then along comes blockchain… and you’re like, what the hell is that?”

The issue is a difference in mindset. The C suite has seen a dilemma of disruptors in recent years. Take, for example, Uber’s almost single-handed destruction of the accepted transport business model that’s causing taxi companies to go bankrupt everywhere. And that’s only the disruption of an industry. Blockchain has the very real potential of disrupting entire currencies and economies.

Here’s the disconnect: CIOs see blockchain as a distributive ledger, which is what it is, but they’re thinking in terms of accounting instead of in terms of disruption. Bad actor countries can use bitcoin to avoid sanctions placed on them by global entities and other countries. It can also be used by individuals who are tired of being in the data fishbowl. For instance, someone may be fed up with their bank selling their financial transactions and history to somebody else, say their insurance company. If the insurance company can buy information on their spending habits, perhaps they see this individual is buying junk food at 7Eleven and going by the liquor store too often, so their health insurance premiums can go sky high. Baker points out, “If you buy it with bitcoin, there’s no record of it, okay? You get your data privacy back. These are just a couple of ways that blockchain can disrupt everything and not just one industry.”

Bitcoin proved the value of blockchain initially but blockchain has since moved beyond that single use case, and they’re no longer joined at the hip. Many different kinds of blockchain have emerged to meet new use cases like supply chain management and parts authentication; data ownership tracking; battling counterfeit products and validating authentic products (like medicines but also branded clothes); proving green labels (for environmentally concerned consumers or compliance with regulations); maintenance records (on everything from planes to cars to entire factories); etc. Essentially, blockchain is viable anywhere you might want a verified chain of facts. This exacerbates the disconnect: blockchain requires serious new IT skills to develop and implement projects that are expensive and hard to find, and technology components are immature. These factors compound to make IT projects involving blockchain implementation costly, with the real possibility of failure.

Even though the challenges seem daunting—no standardization, no canned models, no pressing need, not enough talent to figure it out and keep it operating, and nothing on the As-a-Service menu—as long as CIOs look at blockchain as an accounting-only tool, they’re shortchanging themselves. The biggest oversight is in not recognizing the impact of blockchain on the bigger market. They’ll get caught behind the business curve as customers demand they adjust their payment models to accept bitcoin and other digital currencies, authenticate goods and services, and facilitate the transfer of data ownership back to individuals. Blockchain is here. It’s ready to be put to use in more imaginative ways. Putting one’s head in the sand and ignoring it is dangerous.

Baker believes CIOs can benefit, not only from looking at blockchain but looking at technologies in general through a new lens. She points out that high tech companies are now actively searching for and recruiting people with training in the arts. There’s a need to be able to look at the same thing from a different perspective, because technical people tend to be very detail-oriented, with linear ideas. “For example, techies move from step A to step B to step C, to optimize or leverage something to make it better, whereas creative thinking tends to be non-linear and imaginative and figuring out, projecting a potential impact. This isn’t something a [traditional] CIO would naturally want to do.”

CIOs don’t technically, as part of their daily responsibility, consider the entire economy. “Being able to look at things beyond your purview with the understanding that it will come back and will be in your purview at some point, is critical,” Baker emphasizes.

It’s only pragmatic to remember where technology is headed. Blockchain will one day be part of a CIO’s job. Baker lays it on the line, “Your value as a worker, whether you’re a CIO or do anything else, is in your creative ability. Your ability to imagine and innovate. That is your bottom line value.

”Alyson Behr is a tech writer and editor with deep roots in testing, industry competitive analysis, and product reviews. She has written for numerous IT publications, including Ars Technica, PC Magazine, Computerworld, and Information Week.