Blockchain Project Initiation and Execution: Decision-making Practices

and Perceptions

Bolatzhan Kumalakov

1 a

and Yassynzhan Shakan

2 b

Atyrau Oil and Gas University, 45A Baimukhanov str., Atyrau, Kazakhstan

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,

https://orcid.org/0000-0003-1476-9542

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

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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