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Blockchain/IoT integration accelerates, hits a ‘sweet spot’ for the two technologies

Three-quarters of companies implementing IoT have already adopted blockchain or plan to use it by the end of 2020, an indicator of the growing connection between the two, according to a survey of 500 U.S. companies by Gartner.

While the marriage between the two technologies has been expected to be crucial for  industry digital transformation, the adoption rate is happening at a “much faster pace than expected,” Gartner said.

“Among the blockchain adopters, 86% are implementing the two technologies together in various projects,” Avivah Litan, a Gartner vice president and report author,  wrote in a blog. She called IoT integration “a sweet spot” for blockchain, the much-hyped distributed ledger technology.

Gartner blockchain graphic  >  IoT Implementers are Big on Blockchain Gartner

Among survey respondents, 63% indicated that the top benefit of their combined IoT/blockchain projects is increased security and trust in shared multi-party transactions and data. Fifty-six percent saw the top benefit as an increase in business efficiency and lower costs. Only 43% expected higher revenues and increased business opportunities, and just 37% cited improved constituent or participant experience.

Gartner surveyed C-Suite executives, as well as directors and senior level managers. Ninety-two percent of respondents worked within an IT organization and 62% were CIOs or CTOs.

Blockchain acts as an automated communication layer between IoT sensors as well as a repository for the data they produce and upload. For example, IoT devices in shipping containers can track not only location but monitor temperature, vibration and whether a package has been tampered with.

Earlier this year, FedEx touted a proof of concept involving “sensor-based logistics,” using two types of IoT sensors about the size of a stick of gum. One acts as a geo-sensor, the other automatically transmits data to a blockchain ledger.

Gartner is not alone in seeing a lot of activity related to IoT and blockchain. Last month, UK-based Juniper Research said in a report that the use of blockchain and IoT tracking technology will “revolutionize” the food industry, reducing food fraud by $131 billion in five years.

Currently, food-tracking systems rely on paper-based transactions to manually track goods throughout a supply chain, an inefficient system that allows records to be lost or unreconciled, according to Juniper analyst Morgane Kimmich. Additionally, paper-based records cannot be shared by all supply chain users, hindering visibility into the supply chain.

Gartner blockchain graphic  >  Increased Security, Trust and Lowering Costs Cited as Top Benefits Gartner

Ironically, the marriage between sensors and blockchain is happening just as the distributed ledger technology (DLT) has sunk into the “Trough of Disillusionment” in the Gartner Hype Cycle; that’s when interest in a technology wanes as pilots fail to deliver anticipated results. Tech providers either work out the kinks and improve the technology, or it ultimately falls short and dies out.

Promising projects with IoT, however, will start pushing blockchain up the “Slope of Enlightenment,” according to Litan, where instances of how the technology can benefit the enterprise start to crystallize and become better understood. 

“Blockchain networks have emerged as a promising innovation because of their ability to affirm the integrity of data shared among constituents in multiparty process collaboration,” Litan wrote. “IoT has emerged as a method for bridging the gap between resources (or “things”) and their associated business processes. Integrating IoT and blockchain supports trusted multiparty processes that bridge physical world things to business process computing environments.”

The combination of IoT and enterprise blockchain technologies is still relatively new and faces a variety of technical and business challenges, Litan said. The relative volatility of blockchain implementations involving protocol changes could be a challenge for long-lived IoT devices.

Gartner blockchain graphic  >  Art of the Possible: Farm to Table; IoT, AI, Blockchain integration Gartner

Some blockchain implementations struggle to scale to the transaction rates that can be generated by large numbers of connected things.

“In the long term, we expect the combination of IoT and blockchain to enable innovative devices and business models, but the necessary evolution in both blockchain and IoT will take five to 10 years to achieve maturity,” Litan said.

Through 2024, more than 80% of implementers will have to upgrade their combined IoT and blockchain solutions at least once or twice to address technical challenges such as throughput, scalability, security and reliability, according to Gartner.

One area of promise is standardization, enabling the exchange of data between ledgers regardless of the iteration. For example, FedEx has banded together with competitors DHL Express and UPS to hammer out blockchain standards that could be deployed industrywide. All three shipping giants are part of the Blockchain in Transport Alliance (BiTA), an industry organization with more than 500 members.

FedEx CIO Rob Carter believes the same thing needs to happen for blockchain to achieve widespread enterprise adoption; when that happens, blockchain will eventually become a foundational technology across industries that will lead to new business models.

The government should help to promote a blockchain platform based on open-source software and industry standards which will ensure process transparency and that no one entity profits from the technology over others, Carter said at a conference earlier this year.

“I think we’re in the state where we’re duking it out for the dominant design,” Carter said during a CIO panel discussion at the Blockchain Global Revolution Conference. “We’re not an organization that pushes for more regulatory control, but there are times regulatory mandates and pushes can be incredibly helpful.”

Copyright © 2019 IDG Communications, Inc.

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A blockchain/IoT combo could reduce food fraud by $131B in five years

Using blockchain and IoT tracking technology to trace the journey food takes from farms to grocery store shelves will “revolutionize” the food industry, reducing retailers’ costs by streamlining supply chains and simplifying regulatory compliance, according to a new study by UK-based Juniper Research.

The report said blockchain’s immutable ledger, combined with IoT sensors and trackers, is key to creating a more efficient food recall process.

Food fraud relates to mislabelled, diluted or substituted food and ingredients.

“For example, extra virgin olive oil labelled as originating from Greece when in fact it comes from somewhere else,” said Juniper analyst Morgane Kimmich. “Much of the interest in the technology also comes from the fact that blockchain has the potential to give more control to all actors involved in the process, from farmers to retailers, by providing them with a transparent and immutable platform offering full visibility of the supply chain.”

[ Read the Download: Beginner’s guide to blockchain special report ]

With adoption increasing in the supply chain industry, blockchain and IoT will create $31 billion in food fraud savings globally by 2024 by immutably tracking food across the supply chain. Substantial savings in food fraud will be realized as early as 2021 and compliance costs will be reduced by 30% by 2024.

Currently, food tracking systems heavily rely on paper-based transactions to manually track assets throughout the supply chain, an inefficient system that allows records to be lost or unreconciled, Kimmich said. Additionally, paper-based records cannot be shared by all supply chain users, which reduces the overall visibility of the supply chain.

Starbucks mobile app Starbucks

Starbucks’ and Microsoft are creating a mobile “bean to cup” tracking app that may look like this and enable customers to see where their coffee was grown and the journey it took to their cup.

“Furthermore, companies often have to rely on intermediaries to perform these tasks. All of this adds a level of complexity to the supply chain, which in turn increases inefficiency, fraud and waste,” Kimmich said.

Private or “permissioned” blockchains can be created within a company’s four walls or between trusted partners and centrally administered while retaining control over who has access to information on the network.

Blockchain can also be used between business partners, such as a cloud vendor, a financial services provider and its clients.

While IoT devices shipped with goods link the physical and digital worlds primarily via location tracking sensors and temperature and humidity monitoring, blockchain provides a place where the data can be stored and accessed by everyone on the ledger. Ledger users can also be segmented so sensitive business data isn’t exposed to competitors, the report said.

The distributed ledger technology’s innate capabilities have not been lost on enterprises as pilots and proofs of concept are sprouting up across the industry. Twenty percent of the top 10 global grocers will use blockchain by 2025, according to a Gartner study.

“Blockchain can help deliver confidence to grocer’s customers, and build and retain trust and loyalty,” Joanne Joliet, a senior research director at Gartner, said in a statement. “Grocery retailers are trialing and looking to adopt blockchain technology to provide transparency for their products. Additionally, understanding and pinpointing the product source quickly may be used internally, for example to identify products included in a recall.”

Juniper’s research found IoT and blockchain will add significant value to players in the supply chain, from farmers to retailers and consumers. By replacing lengthy procedures with automated smart contracts, blockchain and the IoT save money, reduce risk and bring transparency to supply chains.

Juniper Research recommended that blockchain vendors seek IoT partnerships to appeal to stakeholders across the food production market. In some cases, that’s already happening.

The supply chain industry has been active in the blockchain space for the past two years, according to Kimmich.

In 2017, IBM launched Food Trust, a blockchain network based on the Hyperledger protocol; since then, it’s attracted a large group of leading food suppliers who are piloting it as part of a consortium. The group includesDole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, and Unilever.

In October, IBM announced a blockchain-based supply chain service with AI and IoT integration, adding to the company’s existing blockchain cloud offering.

Last year, Walmart completed two pilots using suppliers of mangoes and pork; after a proof-of-concept, the food-tracking blockchain network is now in production. Walmart told suppliers of produce to get onto its blockchain by the September of this year. The products on the blockchain-based supply chain also powered by IBM’s Food Trust Solution range from poultry and berries to yogurt and lettuce. And Walmart Canada just launched the “world’s largest” blockchain-based freight-and-payment network.

“While IBM’s Food Trust is the current market leader in blockchain-powered food tracking with 188 organizations shaping its network, other players are building on their solutions this year,” Kimmich said.

Oracle plans on strengthening its existing asset tracking solutions with supply chain temperature monitoring along with warranty and usage tracking, Kimmich added, while SAP currently supports 565 different products and engages with 70% of the US market.

walmart shoot bison winnipeg blockchain Walmart

Bison Transport was a carrier partner in the Walmart Canada’s pilot for a new freight and payment network based on blockchain and IoT. According to Rod Hendrickson, vice president of finance for Bison Transport, the end result is “a mutually beneficial solution.”

Meanwhile, Starbucks has partnered with Microsoft to build a blockchain supply chain aimed at tracking coffee beans from farms to stores and create a mobile app that lets customers track the supply chain journey of the beans they buy and the coffee they drink.

GrainChain, a blockchain-based supply chain service based in McAllen, Texas, is also being piloted by roughly 10% of Honduras coffee growers, or about 12,000 farmers, with an eye on going into full production around April 2020.

“When coffee farmers don’t have access to formal financial systems and formal contracts for purchase, they are the ones pushed down in the industry,” Macias said. “One of the larger focuses in the overall industry…is to find solutions to not only have more financial inclusion but enhance the ability for coffee producers to have a marketplace.”

supply chain blockchain coffee beans hand with coffee cup of coffee by nathan dumlao via unsplash Frankie / Gerson Cifuentes / Nathan Dumlao / Modified by IDG Comm. (CC0)

Copyright © 2019 IDG Communications, Inc.

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