From financial services to pharmaceuticals to healthcare and more, industries around the world are more intently considering blockchain technology to improve the security and transparency of business transactions.
Blockchain uses cryptography to track, authenticate and record digital assets in a distributed ledger that is for all practical purposes tamper-proof. Originally developed to support bitcoin and other cryptocurrencies, blockchain is being harnessed by organizations in traditional industries and in government to streamline internal processes, increase the speed and security of financial and other types of transactions (such as data transfers or the movement of physical goods), and reduce costs.
A recent global survey of business and IT leaders shows that 44 percent of organizations are experimenting with or deploying blockchain, despite adoption barriers such as security concerns and lack of in-house skills. Enterprises are finding applications for blockchain in accounting, legal (smart contracts), supply chain management, tracking renewable energy usage, and in supporting cryptocurrency, among other innovative uses.
Solve real business problems
It is that same adaptability across business units and processes, however, that makes it imperative to have a clear set of goals and implementation plans before launching any blockchain initiative. Indeed, lack of focus and purpose can undermine a blockchain program’s effectiveness, leading decision makers to draw the wrong conclusions about how the technology can benefit their enterprises.
“You really need to look at what business problems you’re trying to solve,” says Tom Hetterscheidt, chief technologist and industry leader in banking and capital markets in the Americas region for DXC Technology. “You don’t want to do blockchain just because you can do blockchain.”
Practical applications of blockchain range from streamlining supply chain management and other business processes to sharing data quickly and easily with less familiar entities outside the organization that you may not yet trust.
Start small and iterate
Once you determine which business problems you want to solve with blockchain, you need to plan and implement a pilot or test program. This gives you an opportunity to build skills and knowledge — and make mistakes — without disrupting the business.
“Typically, what we’re seeing is organizations starting with a small proof of concept to kick the tires and understand how the business process might be implemented on blockchain,” Hetterscheidt says. “You build out a prototype, and you iterate and keep adding functions and features to prove the system is doing what you want it to do and is solving a business problem. Then when you get to a certain point, you take it to full-blown production.”
For that to happen, though, enterprise decision makers must be sold on the benefits of blockchain, so it’s critical to have measurable goals to gauge return on investment (ROI). Fortunately, for many organizations one of the main objectives of a blockchain deployment is cost reduction, something that can be readily assessed.
Use the right skills and tools
Another key aspect of devising a blockchain strategy is determining the skills needed to launch and build a program. If an organization lacks the skills in house, it must decide how to fill the gap. Given the shortage of skilled blockchain workers, many enterprises opt to either grow talent in house or work with an external partner with experience in blockchain strategy, development and implementation.
Better tools are on the way to help enterprises build blockchain apps and manage deployments, Hetterscheidt adds. “You’re going to see frameworks and software development kits emerge to make it easier to build a blockchain-based application,” he says. “So, as the underlying technology and the tools mature, it is going to make it easier to implement — and, more importantly, to run — [such an application] in an ongoing fashion.”