10 ways the enterprise could put blockchain to work
Despite the hype, enterprise blockchain adoption remains limited: Only 1 percent of more than 3,100 CIOs surveyed recently by Gartner said they had implemented some kind of blockchain within their organization, and just 8 percent said they were in short-term planning or active experimentation with the technology.
The distributed ledger technology has the promise to make many operations more efficient and enable new business initiatives. But limitations in the technology itself as well as the business issues that arise with its implementation have curtailed mass adoption, said David Furlonger, vice president and fellow at Gartner.
"All firms can do right now is experiment," Furlonger said. "They have to look at multiple offerings in the marketplace and understand the different governance models, data management architectures, security levels, and how it impacts their business."
A large number of companies are now inquiring about the technology, said Martha Bennett, principal analyst at Forrester. "Many of the firms I speak with have projects going on, but not always with a firm view on whether to operationalize them," Bennett said. "There are a few highly ambitious projects under way, but these haven't gone live yet."
SEE: Quick glossary: Blockchain (Tech Pro Research)
Putting blockchain to work depends on the use case, Bennett said. "If there is a use case that calls for multi-party collaboration around shared trusted data, with or without an added element of automation, then that's worth pursuing if the existing system is error-prone, full of friction, or otherwise deficient," Bennett said.
However, with the hype around blockchain, many companies are looking to implement the framework without a strong reason, said Michela Menting, digital security research director at ABI Research. "I think a lot of those will be failed projects," Menting said. "The companies asking themselves, 'What problem can I solve with blockchain that existing solutions can't solve?' are the ones that are going to succeed."
Here are 10 ways the enterprise can put blockchain to work now, or in the near future.
1. Supply chain management
Supply chain management is one of the most promising areas for blockchain initiatives, Bennett said.
Centralization is sometimes a problem, because you don't have visibility to all of the parties involved. But blockchain can enable each party to see what others are doing on the same ledger, Menting said. "It doesn't mean that all their data has to be visible, but data about the specific product or service that they're manufacturing or selling can be visible to everyone," she said. "It means you can trust things like quality and control, and that the third-party contractor is qualified and is adhering to standards."
This could also be useful for tracking any product, from food to cars. "You can see the chain of trust all the way from the first person who starts in that supply chain, whether it's the farmer, or the manufacturer in China, or whatever," Menting said. "Anything where companies want more visibility into something where there's lots of different parties is one of the use cases where blockchain can really help solve a problem."
2. Payments
One of the largest current use cases for blockchain is in financial services, said HMB consultant Brett Koenig. This year, blockchain spending will be led by the financial sector, spending $754 million in 2018 and driven largely by rapid adoption in banking, according to IDC. Banks including Barclays and JP Morgan Chase have blockchain initiatives, and the technology can enable easier payments across international borders.
Blockchain adoption is most common among large enterprises like national banks, which are large enough to absorb some risk if a project fails, as well as among startups with high flexibility, Koenig said.
3. Data governance
Blockchain can be particularly useful for countries that are focused on data protection and privacy, like the EU with the General Data Protection Regulation (GDPR). "We'll see blockchains where the control of the user data is back in the user's hands, and then users can decide who has access to that data," said ABI Research's Menting. This includes providing consent to share your data with third parties, as well as revoking that access. It would also allow users to see where their data is being shared with third parties, instead of having to check website terms and conditions.
"I think we'll see some very interesting use cases around data management and companies, either the social media-type companies changing to adapt to a blockchain, or new companies coming up and then giving back that control to the end user, so they can do what they want with their data," Menting said.
SEE: IT leader's guide to the Blockchain (Tech Pro Research)
4. Smart contracts
With blockchain, businesses could code payments, delivery, and transportation of goods into a smart contract, along with maintenance, Menting said. For example, say a robotic arm in a factory has a bolt that is wearing down. The factory operator could look into their code for the smart contract that says they can buy a replacement from the manufacturer, and the smart contract would trigger the buying process. The manufacturer could deliver the part, and a currency would be exchanged between the smart contract, the factory, and the manufacturer.
Similar use cases will exist for consumers as well, Menting said. For example, if you rent a vacation home, you might sign a smart contract with the rental agency that unlocks the door for you after you've made a payment.
5. Identification
Microsoft and Accenture recently announced a partnership to use blockchain technology to provide a legal form of identification for 1.1 billion people worldwide as part of the global public-private partnership ID2020.
"You're giving an opportunity to people to interact in a marketplace where they have not been able to before," said Gartner's Furlonger.
The United Nations (UN) is also currently using blockchain across 16 agencies for humanitarian causes, including the World Food Program, to help refugees purchase food with only an eye scan.
6. Shared processes
Blockchain can help organizations better collaborate, Furlonger said. "If enterprises could turn off existing siloed systems and share among themselves a more inclusive back office processing operational type system, it would in theory produce more efficiency and cost-effectiveness," Furlonger said. The question that remains is whether or not companies would then pass those savings on to their customers, he added.
7. Disrupting business models
Blockchain could allow for the removal of intermediaries, as well as the associated costs and frictions in terms of the creation of new forms of assets and expanding a company's overall economic footprint, Furlonger said.
8. Food safety
IBM is partnering with food suppliers including Dole, Nestlé, and Walmart to better regulate food safety using blockchain. In the global food supply chain industry, this means all growers, suppliers, processors, distributors, retailers, regulators, and consumers can gain permissioned access to information about the origin and state of food in their transactions. All members of the ecosystem can use the blockchain network to trace contaminated foods to their source in a short amount of time, to ensure they are quickly removed from store shelves.
"They are able to speed up how long it takes to get data about where their products are at through transit, and see more data about what temperature the food was kept at and different food standards," said HMB's Koenig.
9. Digital rights access
Blockchain can help professionals track their intellectual property, Koenig said. For example, Kodak is working on a platform called Kodak One that allows photographers and artists to manage digital rights and access to their work, so that they can better track who is using their pictures, and make sure that people aren't infringing copyright restrictions, he added.
10. Medical records
Doctors' offices own patient medical records, but because people typically see a variety of different doctors and specialists over their lifetime, there is no single, easily-accessible record, Koenig said. Blockchain could allow for each person to have a single, shared medical record with every doctor, diagnosis, and medication.
However, due to the amount of regulation in the industry, it will likely be years before any true impact is realized, Koenig added.
Also see
- What is Blockchain? Understanding the technology and the revolution (free PDF) (TechRepublic)
- The enterprise shows little interest in Blockchain technology: Gartner (ZDNet)
- Blockchain: A cheat sheet (TechRepublic)
- What is Blockchain? And 5 other questions your boss needs answered ASAP (TechRepublic)
- The 6 best Blockchain jobs of the future (TechRepublic)