How to accelerate time to value for blockchain initiatives
Enterprise-grade blockchain solutions are one of this year's trending topics. Blockchain's viral presence and overinflated hype have given the perception that it solves almost any challenge. But while blockchain as a concept has the potential to drive efficiencies across a broad set of use cases and industries, companies struggle with advancing use cases beyond the prototype to production.
Blockchain does have the potential for real sustainable value, and what differentiates it from other ephemeral technology trends is its relevance in providing the attributes required to achieve sustainable business outcomes.
So when the hype settles and reality sets in, what's left? How can you progress blockchain use cases to production, to achieve real and sustainable business value?
What it takes to deliver enterprise-blockchain solutions
This is a question that has been endlessly debated, and I would argue that the majority of discussions have been academic, many focused on hypothetical rather than quantifiable business outcomes, with little or no thought given to what it takes to deliver enterprise-grade blockchain solutions.
There is a perception that blockchain itself is transformational. However, blockchain by itself isn't transformational. It is foundational because it provides an enabling platform to achieve value both in the transformation of existing business models and the creation of new business models.
Blockchain investment has risen dramatically over the past two years, yet the industry has seen a number of false starts. These should not be perceived as a futile exercise, since blockchain’s evolution as a foundational innovation is not much different from what was experienced with innovations in materials science, internal combustion engines, computer technology, and networking. The difficult part is evolving a foundational innovation to support high-value, pervasive, production-ready solutions.
What is different now is the impact of digitalization, which has broken down many of the traditional barriers to compete. In addition, digitalization has increased business agility, enabling enterprises to increase the velocity of change. This has led to the expectations of a corresponding acceleration for time to value on blockchain initiatives. In the digital, hyperconnected world, complexity has risen as one of the major barriers to overcome, amplifying the need for building a collaborative ecosystem including suppliers and solution providers. Blockchain can give you the technical foundation for building these ecosystems.
Blockchain adoption barriers
The most significant barriers to blockchain adoption are business- and operational-related. As a foundational innovation, blockchain's value can be fully realized when the business process is transformed to take advantage of its capabilities, leading to an increased ROI for existing business models and the ability to create value through new business models. Without transforming the business process, blockchain only offers the potential of incremental value in reducing total cost of ownership.
Blockchain proof of concepts (PoCs) have stalled due to lack of critical mass around IT architecture and operations. They lack a catalyst that will progress an initiative beyond the PoC. The challenge becomes more acute when looking at a growing number of use cases within an enterprise. Without incorporating blockchain into the strategic IT architecture and operating model, an enterprise will fail to achieve the inflection point where blockchain’s business value becomes pervasive and sustainable.
Catalyst required to move beyond the proof of concept
The challenge is to define that catalyst. I am proposing that the catalyst consists of developing two concepts: a proof of value (PoV) and a class of service (CoS) for each blockchain use case.
The PoV establishes a working model that can validate a quantifiable business outcome for the use case. The CoS is a set of technical attributes, business dependencies, and a governance model that defines the appropriate blockchain platform along with the IT architecture and operating model required to support the use-case business outcome. These two concepts are co-dependent, forming the catalyst necessary to accelerate the realization of true business value.
For example, in the financial services industry, real-time gross settlements (RTGS) is an ideal use case for blockchain. RTGS requires high resiliency, rapid settlement finality, high volatility in the volumes of transactions and integration with non-blockchain-based data lakes. This leads to an architecture that supports fault tolerance with a deterministic, less decentralized consensus algorithm using a highly elastic infrastructure that is based on a composable architecture.
For the rest of 2018 and into early 2019, expect to see a continuation of PoCs with few, if any, production use cases. It is likely we will see companies demonstrating some live transactions flowing through a live ecosystem, though these will be very narrow in scope and limited in scale.
It will not be until mid-2019 that initial production use cases begin to achieve positive business outcomes on a small to medium scale. By 2020, blockchain use cases will begin to scale, and we will start to see companies deploying more complex use cases to production. These will include use cases with complexity in business models, use cases with explicit regulatory implications, and production ecosystems being supported by a hybrid IT model.
Blockchain will be in a nascent state in 2018 and 2019. However, within the next 18 to 24 months, a convergence will happen along with enhancements to blockchain platforms to support enterprise-scale use cases. The journey will consist of competing platforms (as we see now), interoperability between platforms, and ultimately market forces driving the industry to standardization. At that point, the value will be in the solutions built on top of blockchain, with the winners being those currently focused on solutions that are portable between the various blockchain platforms.
Accelerate time to value for blockchain initiatives: Lessons for leaders
- Blockchain has the potential for real sustainable value.
- A catalyst is required for each blockchain use case, which consists of two concepts: a proof of value and a class of service.
- Within the next 18 to 24 months, a convergence will happen along with enhancements to blockchain platforms to support enterprise-scale use cases.
This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.