Blockchain Project Initiation and Execution: Decision-making Practices
and Perceptions
Bolatzhan Kumalakov
1 a
and Yassynzhan Shakan
2 b
1
Atyrau Oil and Gas University, 45A Baimukhanov str., Atyrau, Kazakhstan
2
Faculty of Information Technologies, Al-Farabi Kazakh National University, 71 Al-Farabi ave., Almaty, Kazakhstan
Keywords:
Blockchain, Software Engineering, Decision Making.
Abstract:
Blockchain promises to revolutionise the way data management is perceived by business entities. Nonetheless,
we know little of how to decide which data to protect, such that added value exceeds technology introduction
and ownership costs. Paper presents our attempt to approach the issue via conducting an international online
survey in Kazakhstan, Kyrgyzstan and Russia in late 2018 and early 2019. Paper contributes to the body of
knowledge by establishing that up-to-date blockchain introduction is - de facto - an unguided process. Despite
multiple efforts to come-up with a decision framework, real-world projects are initiated with little - if any -
guidance on potential costs and benefits.
1 INTRODUCTION
Blockchain is expected to redefine “trust in the new
generation systems” (Koteska et al., 2017) because it
“allows parties to transact with others they do not trust
over a computer network in which nobody is trusted”
(Mendling et al., 2018). Academic literature already
reports its successful application in finance (Judmayer
et al., 2017), healthcare (Zhang and Lin, 2018), edu-
cation (Duan et al., 2017) and other areas.
Nonetheless, we have not been able to identify
sources that provide guidance on corporate decision
making with respect to blockchain protection such,
that merits exceed the costs.
Paper reports an attempt to explore current prac-
tices of employing blockchain in business environ-
ment and reasoning behind them. Our investigation
started by conducting a preliminary set of one-to-one
interviews with industry professionals, who have had
blockchain project experience. Further, preliminary
findings were used as an input to design a question-
naire for an international online survey.
Survey revealed that:
there is a market-wide Babylonian confusion with
respect to the term blockchain between manage-
rial and technical staff,
a
https://orcid.org/0000-0003-1476-9542
b
https://orcid.org/0000-0002-9111-2264
only a handful of companies use structured ap-
proach to deciding weather to employ blockchain
or not, mostly its “hype-driven,
choice of the business process to protect is mostly
forced “top-down.
Paper contributes to the body of knowledge by es-
tablishing that up-to-date blockchain introduction is
- de facto - an unguided process. Despite multiple
efforts to come-up with a decision framework, real-
world projects are initiated with little - if any - guid-
ance on potential costs and benefits.
Remainder of the paper is organised as follows:
Section 2 defines research design and includes: re-
search questions, approach and participant demo-
graphics. Section 3 sets conceptual foundations and
explains survey design. Corresponding findings and
relevant discussion is presented in Section 4. Finally,
Section 5 concludes the paper and lists its limitations.
2 STUDY DESIGN
Due to its nature, blockchain is expensive in terms
of storage and computational complexity, but is also
tamper-resistant and irrevocable. Its adoption is a
strategic decision that influences company costs struc-
ture and its risk exposure. To gain understanding of
such decision making we conducted an international
online survey, which covered industry professionals
478
Kumalakov, B. and Shakan, Y.
Blockchain Project Initiation and Execution: Decision-making Practices and Perceptions.
DOI: 10.5220/0009860604780483
In Proceedings of the 15th International Conference on Software Technologies (ICSOFT 2020), pages 478-483
ISBN: 978-989-758-443-5
Copyright
c
2020 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
with prior involvement in blockchain projects from
Kazakhstan, Kyrgyzstan and Russia.
The investigation consisted of two stages. First,
a pilot enquiry involved a preliminary set of one-to-
one interviews with industry professionals, who have
had blockchain project experience. The goal here was
to identify potential issues, test initial hypotheses and
get better understanding of the research domain. Sec-
ond stage consisted of designing and implementing a
questionnaire, designed to conduct a quantitative test
of finalised hypotheses.
Throughout the paper we will put forward our
initial assumptions, finalised hypotheses and survey
findings with relevant discussion and conclusions.
2.1 Research Questions
Decision making is a complex process which involves
technical assessment and phenomena of social nature.
Through preliminary interview series we got an im-
pression that blockchain functionality was perceived
differently by managerial and technical staff. To test
this hypothesis we formulated RQ1 as follows:
RQ1: Do technical and managerial employees per-
ceive blockchain functionality differently?
Second, preliminary study developed an impres-
sion that the decision to employ was a top-down and
hype-driven process. RQ2 and RQ3 respectively seek
to investigate if companies on a larger scale had a for-
mal way of making the decision and clearly defined
input parameters:
RQ2: What serves as an input to choose business pro-
cess for blockchain protection?
RQ3: What is the process or an informal sequence of
steps to make a decision?
2.2 Study Approach and Participant
Demographics
We conducted the online survey between December
2018 and March 2019. It was designed and imple-
mented in two steps. First, we conducted a series of
interviews (preliminary study), which provided initial
insides into industry perceptions and major drivers.
Second, compiled a series of questions and uploaded
them to the SurveyMonkey, an online tool with some
built-in analytical capabilities.
The study targeted professionals, who have had
experience in blockchain projects. Perspective candi-
date addresses were collected using professional so-
cial media (LinkedIn) and groups (Google Groups,
Telegram channels), national IT associations and re-
searchers’ personal connections. We approached
1200 companies and approximately 3000 profession-
als (some invitations were sent out by partner IT as-
sociations) using e-mail. Tables 1 and 2 present study
participants breakdown by their role in the project and
the company size.
Table 1: Table presents distribution of study participants by
their role in the blockchain project. In the text CEO, CTO
and Project managers will be referred to as “managers” and
the remaining participants as “developers.”.
Role %
CEO 34%
Team leader 21%
CTO 17%
Project manager 13%
Designer or Architect 2%
Software developer 2%
Other 11%
In the remainder of the paper we differentiate
two main categories of interviewees: “managers” and
“developers. Managers include “CEO, “CTO” and
“project managers, while Developers include “team
leaders, “designers, “architect’s” and “software de-
velopers. Survey questions are identical for both
groups; except managers were also asked to pro-
vide comments on how organisational issues were dis-
cussed and handled.
In Table 1 Others constitutes a large proportion of
respondents at 11%. It includes researchers, product
owners, consultants, and IT professionals who chose
not to disclose their position in the project.
Company sizes in Table 2 range from small start-
up and spin-offs to large enterprises and public com-
panies. Majority of them is in fin-tech, logistics and
software engineering.
Table 2: Table presents distribution of study participants by
their company size.
Size %
Large enterprise (>249) 19%
Medium enterprise (50-249) 19%
Small enterprise (<50) 62%
Table 3: Table presents Survey statistics, including response
and completion rates.
Survey statistics
Invitations sent 3000
Response rate 6.2%
Completion rate 10.16%
Survey forms were filled out by 186 profession-
als from 142 companies ( see Table 3). In 45 cases
respondents did not indicate their company name,
Blockchain Project Initiation and Execution: Decision-making Practices and Perceptions
479
44 respondents solemnly represented their compa-
nies. Other companies were represented by 2 or more
members of staff.
3 THE BACKGROUND
3.1 Conceptual Foundations
Innovation diffusion takes place on three main levels
(Schiavone, 2010): market (macro level), in the social
system where potential adopters are located (meso
level) and individual company (micro) level.
Innovation adoption models (Rogers, 2003),
(Parasuraman and Colby, 2001) are key to conceptu-
alise technology life-cycle on the macro level. They
define the social processes - called “diffusion” - by
which ecosystem participants communicate and adopt
innovations over time. They map diffusion stages to
corresponding adopter (innovation user) profile and
characteristics. Evolutionary theories (Nelson and
Winter, 1985) then provide innovation with a path-
dependent process (Dosi, 1982) where they are devel-
oped through interactions between various actors and
then tested on the market.
On meso and micro level there are several
decision-making models. In (Koens and Poll, 2018)
authors present a comprehensive survey concerning
blockchain related decision making tools and arrive
to following conclusion:
1. most tools seek to answer three questions:
“Should you use a blockchain? If so, which
blockchain variant is best? If not, which alterna-
tive is best?”,
2. there are inconsistencies between the schemes,
where the same decision lead to different out-
comes, or, conversely, similar outcomes can be
reached with opposing decisions,
3. non-blockchain solutions are often a better choice
as they lack some of the downsides and limitations
of blockchain.
Since the goal of current investigation is to shade
the light on practical aspects of software project initi-
ation we extracted key decision making pivot points
from schemes, presented in (Birch et al., 2016),
(Koens and Poll, 2018) and (W
¨
ust and Gervais, 2017).
As a result, we implemented a set of questions that
seek to explore if real-world decisions were guided
by similar concerns.
3.2 Questionnaire Design
Survey contains three blocks of questions. First block
contains questions, formulated to evaluate respondent
category (manager/technical expert), position (CEO,
Software engineer, etc.) and employer organisation,
as well as dummy warm-up questions to set respon-
dent mind on topic:
Looking back, can you estimate (approximate
time) how much time it took for the project team
to gain common understanding of the scope of the
project?
Did the Project involve smart contract or token ex-
change?
The second block starts with the “Babylonian con-
fusion question”, which asks respondents to choose
blockchain properties from the following list:
1. protects data from theft
2. protects data from being corrupted or replaced
3. protects user identity
4. does not permit updating blocks of data
If the respondent chooses options 2 and 4 we will
put the answer down as “right, options 1 and/or 3 as
“wrong. Any other combinations will be “partial.
Further, we introduce questions that target deci-
sion making procedures using a mix of open- and
close-ended questions, targeted towards identifying
decision support tools and procedures, stakeholder in-
fluence. In particular, we were interested if companies
are using formal frameworks:
To the best of your knowledge, list stakeholders
who had the most influence to the decision when
adopting the blockchain.
To the best of your knowledge, which of
these were used when deciding to employ the
blockchain. Please, select items from the follow-
ing list:
Please, list frameworks, decision tree diagrams or
other tools that were adapted and used through-
out the process of initiating and planning the
blockchain project.
Survey participants were also allocated separate
space to list any additional information they would
think appropriate.
Third block was designed to explore if organisa-
tions followed certain logic, i.e. developed an infor-
mal guideline.
ICSOFT 2020 - 15th International Conference on Software Technologies
480
4 FINDINGS AND DISCUSSION
4.1 Blockchain Maturity Implication
Survey (Table 4) confirmed existence of the percep-
tion mismatch between managers and technical spe-
cialists.
Table 4: Table presents responses to the Babylonian confu-
sion question. Managers demonstrate clear misconception
of the blockchain functionality, whilst technical staff would
provide partially correct answer in of 4% of cases.
Right Partial Wrong
Technical staff 96% 3.7% 0.3%
Managerial staff 71.2% 28% 0.8%
We believe the mismatch is a result of the
blockchain position in the diffusion life-cycle. In
particular, it is in the late early adopters or begin-
ning of the early majority stage (1). Innovator stage
has passed because there are well-known adoption
use-cases, out-of-the-box and outsourcing solutions.
Early adopters are acting as leaders of the social sys-
tem, while Early majority are guided by available ex-
periences. Late majority, by definition, acquires new
technology when pressured by the competition. Since
this is clearly not the case, the stage has not been
reached yet.
Figure 1: Innovation Adoption Curve (Rogers, 2003). It il-
lustrates innovation diffusion as a sequence of stages and
provides adopter profiles. Early adopters of the blockchain
are acting as leaders of the social system, while Early ma-
jority are guided by available experiences. Late majority,
by definition, acquires new technology when pressured by
the competition. Since this is clearly not the case, the stage
has not been reached yet.
Such an early stage results in developers being
down to “ground work” and having to face technol-
ogy particularities and implementation details. On
contrary, managers operate using higher level abstrac-
tions, being influenced by marketing, oversimplifi-
cation and occasional misinterpretation of concepts.
The mismatch will naturally disappear as a result of
progression as defined by evolutionary theories.
4.2 The Decision Process
Blockchain related decision making tools utilise fol-
lowing key pivot points:
Access Control Requirement. That is if the sys-
tem should enable data access permissions or al-
low everyone to access it without restrictions.
Shared Write Access Requirement. Do all parties
that add and alter data share trust and pursue the
same goal?
Control Requirement. Is there a party that needs
to control the system?
Data Volume and Access Frequency Requirement.
How often data is added, altered and accessed?
Survey results indicate that access control require-
ment was considered at the project initiation stage in
87% cases, in 10% cases had to be considered at a
later stage of the project and in 3% had not been an
issue at all.
Shared write access requirement, on the other
hand, had been considered in 100% of cases at an
initiation stage of the project, while control require-
ment is indicated to become an issue in only 13.7% of
cases.
Survey results also indicate that data volume and
access frequency was a tricky factor to determine. Be-
ing only considered as a parameter in 31.3% of cases,
it was mostly determined by the “rule of thumb” (Ta-
ble 5).
Table 5: Table presents feedback on considering data vol-
ume (V) and access frequency (F) requirement at the deci-
sion making stage.
Positive response
F or V 28.6%
Both 2.7%
None 68.7%
Overall it was noted that none of the respondents
indicated having a structured decision making pro-
cess that would have a clear guidance on decision
paths. In pilot studies two interviewees outlined the
need to consider several factors (such as financial and
non-material benefits) that were not found in decision
making schemes, available online. In other words,
despite searching for a structured decision making
framework, market players did not get one, which
would satisfy stakeholder needs.
Blockchain Project Initiation and Execution: Decision-making Practices and Perceptions
481
5 CONCLUSIONS
Paper presents the result of an exploratory study to
evaluate blockchain related corporate decision mak-
ing. Having conducted a two-step enquiry we discov-
ered that:
there is a market-wide Babylonian confusion with
respect to the term blockchain between manage-
rial and technical staff, which is explained by its
early-stage in the technology diffusion cycle;
current decision making is mainly top-down and
hype-driven. Technology application scenarios
lack strong business use-cases and tools. Very
few companies employ structured decision mak-
ing schema, leading to inconsistency, when sim-
ilar reasoning leads to different outcomes across
reviewed companies.
In other words, we see that industry is at the early
stage of developing value perception and application
practices for the blockchain. Unfortunately, this is
happening - as it seems - with little integration be-
tween academic and industrial communities.
The study has several following limitations:
1. we realise that despite covering wide selection of
company types and major job roles, the survey
could reach better representative balance across
organisations and domains, if selection was tar-
geted by technology application scenario, for in-
stance;
2. data might be self-reported and indeed self-
selected. For example, it is possible that re-
spondents might be more likely to self-select, if
they were interested in or even sponsors of the
blockchain introduction in their company;
3. we realise that presented results may exhibit ar-
guable causality. The way to approach this is-
sue would be to design and conduct a multi-
criterion analysis with data from several indepen-
dent sources. Nonetheless, we do not see such an
option possible at the moment due to unavailabil-
ity of statistically significant amount of such data.
Further research will investigate aspects of decision
making that are not currently covered by available de-
cision making schemes. The findings will serve as an
input for the novel model and its application tools.
ACKNOWLEDGEMENTS
The research is funded under Kazakh Government
program-targeted funding for scientific and (or) sci-
entific and technical programs for 2018-2020. Grant
IRN: BR05236340. Project title: ”Creation of high-
performance intelligent analysis and decision making
technologies for the “logistics-agglomeration” system
within formation of the Republic of Kazakhstan digi-
tal economics.
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