The Truth About Blockchain: Prove The Value
By George Bailey, Forbes
The hype surrounding Blockchain has set records both for the incredible level of noise and the revolutionary claims attached to this emerging technology.
Yet, to my knowledge there are almost no major corporate operations on Blockchain. There have been pilot projects to determine if the technology is viable performed at most major companies around the world. But most companies have not progressed beyond that stage and do not see a clear advantage over traditional systems and solutions.
Why is that?
When it comes to evaluating Blockchain technology too many companies focus on proving the technology works rather than assessing the value that Blockchain can bring to their enterprise. But if approached correctly, significant value can be generated.
Here are our observations:
Blockchain is a transformation tool
Blockchain excels at tasks that cut across organizational silos. It provides for information exchange and management of operations between disparate parties. It is not a substitute for a database or other automation tools you may currently use, but rather provides unique capabilities and excels where information is shared across enterprises and democratized participation is advantageous.
The technology is proven – it works
Blockchain works as advertised; there is no reason to test the techology. Instead, conduct a pilot project that generates observable business value by identifying Key Performance Indicators (KPIs), comparing current performance with the desired result (gap analysis), and structuring the business case. Make sure to partner with an experienced Blockchain integrator for key skills and tools. With a partner's experienced resources, a pilot can be executed in six to eight weeks.
If you’re waiting for winners to emerge from the 17 blockchain technology platforms available in the market, don’t. Ultimately, the industry will consolidate and Blockchain platforms will either interconnect directly or via specialized “smart-platforms” that provide connectivity and governance.
Solve a business challenge
Too frequently, companies focus on duplicating an existing automated business process during a pilot with Blockchain rather than testing a business challenge that would provide real benefit if successful. Blockchain success is best achieved when you select a pilot project that crosses enterprise boundaries, has less than optimal performance, a high return to your business if improved and is not well-automated. The provenance of goods, supply chain visibility and manufacturing flow are frequent examples of areas that are well-suited to Blockchain.
It’s all about the ecosystem
It takes a Blockchain ecosystem and success of the ecosystem will depend on participants behaving in an orchestrated manner. Members of the ecosystem will come and go, and as Blockchain adoption accelerates new business, regulatory and legal frameworks will be required to deal with data ownership, information sharing, data storage, participant responsibilities, IP ownership, legal jurisdiction, cybersecurity and other critical, but yet to be identified elements.
Gain senior management support.
Form a cross-functional steering committee. Blockchain is not an IT or R&D project. It is fundamental business transformation which, if properly implemented, will significantly impact revenue and cost. Multiple organizations, business functions and external parties may be affected and buy-in is required to be successful.
Scale for Production
The complexity and key to a successful implementation of Blockchain lies not in the technology, but in the governance of the ecosystem and sharing of data across logical and physical boundries. After you’ve conducted a successful pilot project, here’s what you should consider as next steps:
- Build Blockchain competence. Establish an internal Blockchain unit to ramp up capability and build competence and skills.
- Design for information sharing. What information will be shared and with whom? Suppliers and customers alike will question the benefit for them and the need for transparency. E.g., Why would a supplier be willing to share their capacity?
- Set corporate standards. How will blockchain be deployed. What platforms will be used. Are ecosystem and data sharing standards required? What about audit and compliance impact? What terms should be included in information sharing agreements? How do you ensure compliance with evolving regulations (e.g., the European Union’s General Data Protection Regulation) in multiple jurisdictions. How will data be controlled and compliance certified?
- Determine ecosystem governance.What will your Blockchain network look like? Who will participate and how will it be governed? Will it be led by you, a consortium or a third party and how will you incent customers and suppliers to participate? How will new participants enter and exit your Blockchain network?
- Adapt as Blockchain platforms evolve. There is no standard Blockchain platform so consideration needs to be given to the potential impact on your implementation as linkages and standards evolve. This factor alone has had a major impact on limiting widespread Blockchain adoption.
Blockchain is a powerful transformation tool that provides competitive advantage, significantly increases revenue and reduces cost. Keep your focus on business benefit and execute fast. Don't wait for an industry standard platform to evolve. You want advantage and Blockchain can create it for you now.