Assessing the Value of Blockchain for Your Business
With so much market attention and activity, blockchain is worthy of inclusion in your list of strategic focus areas.
Amid the growth of digital transformation initiatives surrounding payments and transactions today, it is important to take note of the drastically evolving technology underlying the digital transformation across industries. This technology has the potential to transform how we do business – securely – in the age of the Internet of Things, through the establishment of a database that potentially covers all facets of every transaction, from authentication through payment. That technology is blockchain, something you have no doubt heard of, especially if you work in the financial services or payments industries.
Blockchain is cryptographic technology that operates as an open, distributed ledger that can record transactions between two parties. Most notable for serving as the technology that underlies bitcoin, blockchain is continuing to spark investigation and integration of the ledger technology into alternative markets, including life sciences and healthcare, and the travel industry, to name just a few.
Many are unsure of its strategic significance, even as its usage continues to grow both in financial services and beyond. A key reason for its growth in popularity is that its applications can extend far beyond cash and currency methods that are currently on offer. It offers a way for people who do not know or trust each other to create a record of who owns what, that will ensure the approval and receipt of everyone concerned – a method of ensuring promises are kept – critical in today’s business world.
An exciting but disruptive proposition
Despite its rapid rise in usage, opinions are certainly still divided about blockchain, with some analysts touting its disruptive potential for private application into various ecosystems, and others warning that it may be a digital distraction and are advising to proceed with caution.
Regardless of your personal thoughts and opinions around blockchain, it is important for organizations to monitor developments in the technology as the market continues to mature. That way, if and when your organization is ready to go down the blockchain path, you’re not starting from scratch.
Here are four key elements to consider:
1. Make blockchain a strategic focus area in terms of market research
With so much market attention and activity, blockchain is worthy of inclusion in your list of strategic focus areas along with other emerging areas such as IoT and intelligent automation. Keep it on your radar and monitor customer and partner interest as well, exploring how it may align with and support your digital business strategy moving forwards.
2. Recognize blockchain’s current maturity and trajectory and act accordingly
As emerging technologies are adopted in the enterprise, much like surfing, there are generally three waves you can catch along the way. A particular trend in pioneer or early adopter status needs to be handled quite differently than when it has progressed into the early majority, or even the late majority. The kinds of benefits you can expect to obtain are quite different as well.
Blockchain technology is still very much in the first “emerging wave,” and there’s strong potential for business model transformation for pioneers who are willing to take the risk. If your organization is more conservative, you can wait for the second “differentiating wave” to extract competitive advantage as an early adopter, or the third “business value wave” to extract proven business value as part of the early majority.
3. Monitor emerging application scenarios and look for industry parallels
Tracking the momentum of the industry associations as well as the momentum of individual players and technology providers is also critical. This insight will not only help you track emerging scenarios and test beds, but will also help you identify which alternative blockchains (altchains) are becoming prevalent for different purposes.
4. Use as-a-service offerings for rapid pilots and proof-of-concepts
With the maturing tools, services and infrastructure available from technology providers in the form of blockchain-as-a-service offered via the cloud, you can take a lean approach to pilots and proof of concepts and validate your envisioned business models without having to build out expensive infrastructure.
Where are we heading?
When exploring a disruptive new technology, any business is often bombarded with an overwhelming amount of information and stark differences in opinion from industry experts. However, it’s worth looking at the facts and formulating a go-forward approach that reflects blockchain’s relative maturity in the market, and align it with your organizational goals and appetite for risk.
Of course, as you’d expect with any emerging technology, since blockchain is still in its relative infancy, there are still several business and technical issues to be explored and resolved.
However, you cannot simply turn a blind eye to the potential that blockchain technology can offer, and ignore the benefits it could bring to your organization. If you make it a strategic focus area, monitor the emerging industry and application scenarios, determine when you want to dive in, and take an as-a-service approach to pilots and proof of concepts – all these factors will put you in good shape to strike when the timing is right.