Now that the initial wave of blockchain hype has subsided, IT departments are beginning to develop greater understanding of the technology and its potential for enterprise applications. Though practical blockchain adoption is still in its infancy, it is no longer just a theory.
Over the last couple of years, the viability and range of blockchain solutions have become evident. Leading-edge enterprises are actively engaged in proof of concept projects, implementations and managing live solutions. Though Gartner reports that only 1% percent of CIOs said they have adopted blockchain within their organization, and a mere 8% are in short-term planning or experimentation with the technology, these numbers are likely to change quickly in the coming years. The technology is well on its way into the mainstream to change how database structures are thought of and used.
As adoption ramps up, CIOs and IT departments should begin thinking now about the types of applications that have emerged, and how they may benefit their own organization. While the opportunities are many, not every prospective application makes sense for every organization. In most cases, a blockchain implementation requires a technology stack, rather than just a single software platform. There are several open-source blockchain platforms, including Corda, Hyperledger and others that help enterprises begin laying the foundation for the use case they’ve identified. In other instances, custom applications or existing smaller, purpose-built software might be a more efficient approach.
Blockchain use cases
Walmart recently launched a food supply chain initiative using blockchain to improve transparency and make it easier to pinpoint sources of food contamination worldwide. In this use case, digital product information (for example, farm details, expiration dates, shipping information and more) can be tracked and permanently recorded on the blockchain through the entire process, bringing a new level of trust and security to food distribution. Food supply chain is only one of dozens of potential use cases for distributed ledger technology. The implementation of immutable, secure and automated transactions on the blockchain can streamline workflows for financial services, cybersecurity, IP licensing, manufacturing and any process that requires trust-based transacting of finances, agreements or information between multiple parties.
To unlock the same value that early adopters are seeing, CIOs must look at their business uniquely and consider how blockchain can improve processes specific to the organization. Once initial decisions and planning are in place, an enterprise can leverage open source solutions to get off the ground.
First and foremost is knowing which questions to ask during the process of making decisions about adoption. Without extraordinarily careful planning, blockchain implementations will most likely fail. The initial step in the planning process is to determine whether blockchain makes sense at all. Experts have established a litmus test for this, which includes the following questions:
1. Do you need a database?
2. Do many people need to write to that database?
3. Do those people need to trust each other?
4. If yes, do they have a mutual party/person that they trust?
Trust and transparency are arguably the most significant benefits blockchain enables, but there are many market benefits and monetary benefits to consider. If an organization answers yes to the questions above, particularly that there is a need for trust, but they do not have an existing mutual source or relationship of trust, blockchain will likely be useful.
Once that is established, determine the scope of business functions within the organization that would pass the above litmus test. Then, the potential use cases for those areas should be evaluated so the team can decide which make the most sense to pursue. Typically, at this stage, the organization would begin conducting a needs analysis for specific use cases. It’s important to thoroughly map the business process/opportunity that blockchain can enhance, innovate, or replace. Once the process is understood and a parallel blockchain process is compared, be sure to understand the monetary and business benefits you will gain by implementing a blockchain solution.
Planning is the most critical aspect of a successful blockchain implementation. Often, once the high-level need and interest have been determined, the team must bring in experts or add team members with the knowledge and experience in this technology and the nuances it introduces to the broader infrastructure. These nuances, specifically from a regulatory compliance and data privacy perspective, should not be taken lightly, but rather treated as important considerations on the journey toward blockchain adoption.
Steve McNew is a senior managing director within the technology practice of FTI Consulting and is based in Houston. He’s an expert in blockchain, information and data security, complex discovery, and digital forensics and hascompleted studies in blockchain and cryptocurrency at MIT. He has led engagements involving blockchain assessments, pilot projects, and software selection and implementation.