Category

Blockchain

How GICs are Unblocking Blockchain Value | Sherpas in Blue Shirts

By | Blockchain, Blog, Shared Services/Global In-house Centers

At a NASSCOM-hosted event earlier this year, I moderated a roundtable discussion on “Blockchain: Looking beyond the hype” among executives from 20+ GICs. The discussion quickly elevated from the “what” to the “how and how not” to do blockchain initiatives.

Here are some of the key take-aways from the session, in part sparked by discussions on some of our blockchain research.

Blockchain is Inching Closer to Prime Time

Blockchain has crossed the chasm: With the definitive number of live deployments and successful PoCs, we believe that the early adopters will be able to demonstrate early results by year’s end. Because timelines for technology evolution have compressed, we also expect a wave of fast followers will invest in this space.

GICs are Taking the Lead

GICs’ innovation can transform them into Global Capability Centers (GCCs): GICs are leading blockchain initiatives, from education, evaluation, use-case design, and PoCs to live deployments. They are also externalizing the technology solutions to create newer business and revenue models, and driving blockchain adoption at speed and scale. And their R&D investments are extending beyond live blockchain deployments to patent filings to retain competitive advantage.

Building a business case: GICs are researching every possible use of blockchain in their industry. We are seeing GICs helping enterprises across a variety of use cases in insurance, capital markets, banking, supply chain, education, and technology – and one leading financial services GIC prioritized four use cases from a long list of more than 40. A framework, like the one we recently published, will help firms prioritize business use cases that are ripe for blockchain adoption.

GICs and the ecosystem: Blockchain adoption requires significant orchestration among governments, regulators, technology vendors, enterprises, startups, and customers to create a win-win environment for all. GICs are not just consortium and forum participants; they are highly active contributors to the advancement of blockchain technology maturity.

Talent is not a huge roadblock: Leading adopters have started by building a core blockchain team that invests its time in understanding the ecosystem, undergoing training, and exploring multiple use cases. Lead steers we’ve spoken with stated that re-skilling efforts to build a blockchain developer pool have not been the uphill battle that leading blockchain consulting firms hypothesized. They’ve approached re-skilling by driving blockchain awareness to a broader group in the firm, and then identifying a pool of talent with adjacent skills, e.g., Angular JS developers to be trained on solidity, for the first wave of training. More developers join these teams as they scale up. Enterprises are conducting a series of hackathons to tap into the talent pool – both in the GICs and the extended ecosystem – and provide on the job training opportunities.

On the Technology Front

Evolution of the enterprise blockchain technology stack: Enterprises are taking a fundamentally different approach than the public or cryptocurrency related initiatives in building their blockchain technology stacks. Blockchain-as-a-service vendors have helped manage the complexities of the blockchain stack for early trials and pilot stage activities. However, early stage trials that did not plan for the blockchain technology stack for the live deployment phase have found it difficult to scale up their pilots. Node-level identity and access management, interoperability, quality assurance for smart contracts, and current scalability limitations of existing blockchain consensus mechanisms and transaction validation protocols are some of the key challenges highlighted by early adopters.

Sidechains are a key feature of the enterprise blockchain tech stack, not limited to cryptocurrencies: Several enterprises are solving the data privacy issues by creating both off-chain and side-chain applications that can then write final-hash on the blockchain network. This unique approach can accelerate blockchain adoption for specific use cases. However, interoperability on different blockchain platforms is a key challenge.

With all this, there should be little doubt that GICs are quickly evolving into global capability centers that further the digital transformation agenda for the enterprise.

As we continue studying enterprises’ and GICs’ blockchain journeys, we’d love to hear about yours. Please share it with me on [email protected].

And please participate in our ongoing GIC Digital Maturity Pinnacle Model™ survey to learn more about successful GICs’ digital journeys and see how your GIC compares.

Bitcoin is to Blockchain What A5 was to GSM – A Parallel from Digital History | Sherpas in Blue Shirts

By | Blockchain, Blog

The mobile communications industry provides a historical example of how it solved a real problem with cryptography, overcame complexity, and transformed a market once viewed as a niche into something the world takes for granted. Blockchain has a way to go.

Blockchain is no longer just Bitcoin. Medical records, claims handling, fraud checking, supply chain management, national identity records and personnel background checks: all need to access data from multiple sources between multiple entities, in a secure, efficient way.

But all technology adoptions face challenges. An article by Iansiti and Lakhani in the February 2017 edition of Harvard Business Review presented that complexity and novelty are the two principal challenges. Complexity is defined as “the number and diversity of parties that need to work together to produce value with the technology.” Successful adoption requires a huge effort of co-ordination. The more parties involved in the technology ecosystem, the longer it takes.

Novelty translates as “is this a solution looking for a problem?” In other words, does the technology solve a real problem, or one that’s manufactured to accommodate the technology? The ecosystem needs to understand the problem and recognize the solution.

With that stage-setting, let’s take a look at an historical precedent that shows how a complicated technology that required multi-party cooperation and adherence to a common standard overcame complexity and addressed novelty to make the long journey from concept to successful adoption.

GSM: Global System for Mobile Communications, nee Groupe Speciale Mobile

In February 1987, the European Conference of Postal and Telecommunications Administrations (CEPT)published the first draft of a specification for mobile telephony, GSM, which had been conceived in 1982. At that time, mobile radio was a well-established, if niche, expensive, and technologically imperfect phenomenon. CEPT recognized that business people needed to use a phone connected to a public telephone network while on the move, and sought to improve its use in several ways.

Because phone call privacy was critically important to business users, CEPT specified a stream-cipher technique called the A5 algorithm (“A5”) at the February 1987 meeting. When the first GSM networks were launched commercially four years later, users simply understood that with a GSM phone, it was impossible for anybody with a $50 Tandy scanner to listen in on their phone calls. Cryptography had found a receptive marketplace, and the prevailing term “digital” sold the idea that conversations on the move were private and secure.

Because successive organizations that promoted GSM lined up a pool of telecom operators willing to buy, technology manufacturers organized themselves into consortia to share the risk, and invested heavily in turning GSM into physical equipment in just four years. National regulators then set the conditions for the licensing of competitive carrier models. With these moves, GSM had overcome complexity in its ecosystem “to produce value with the technology.”

Five years after its commercial launch in Finland in November 1991, GSM with A5 had been adopted by 200 carriers in 100 countries. Just under half of the world’s mobile phone subscribers were connected to a GSM network by 1996. By the end of 2008, when Bitcoin was creeping onto the world stage, an evolved set of standards based on GSM had become a de facto global standard for mobile.

Users of most of the world’s five billion active mobile phones don’t know or care why A5 was specified, that it can now be processed in real time by security services, or that it has been routinely hacked by cryptographers since the late 1990s. But in recognizing that a solution was required for an easily understood problem – air-interface privacy – CEPT had kick-started a market, assisted by cryptography, with scale and application way beyond the problem which the technology originally solved.

But, even with a highly orchestrated ecosystem, it had taken 26 years.

Back to Blockchain

Blockchain technology has arrived, and proofs of concept and enterprise-specific applications abound. IBM and Maersk will establish a joint venture to develop a trade platform for the global shipping industry. Australia’s stock exchange, ASX, is deploying blockchain to replace its existing registry, settlement, and clearing system. Nation states following Estonia’s lead are considering using blockchain to build their entire e-government infrastructures.

Blockchain as a broad technology will certainly end up as a solution to thousands of parochial problems. But the back to the future lesson from GSM and A5 is that for Blockchain to emerge as a transformative solution on a global scale, it needs a single big ecosystem (banks?) to identify a single problem (interbank settlement?) and to adopt a single standardized approach (Ethereum? Ripple? Iroha? Corda?  Quorum? Sawtooth? Et al?). That ecosystem must have convinced regulators at worst that the approach will be compliant, and at best that the approach is mandatory. It must then agree timelines for implementation and adoption, and stick to them.

Will it take 26 years? I guess we’ll all have to shine up our crystal balls.

To learn about our practical five-point framework for understanding business processes that are best suited to blockchain adoption, please see our November 2017 viewpoint, “Unblocking Blockchain Adoption“.

Blockchain: Making the Global Supply Chain Healthier | Sherpas in Blue Shirts

By | Blockchain, Blog

In 2015, Denver-based Chipotle Mexican Grill suffered a major crisis with an E. coli outbreak that left 55 customers ill. Sales plummeted, news stories and investigations shattered its reputation, and the restaurant chain’s share price dropped 42 percent, to a three-year low, where it has languished ever since. Why couldn’t Chipotle prevent or contain it? What triggered it?

The answer lies in an ever-present scenario companies face – dependence across multiple vendors and lack of transparency and accountability across complex supply chains. A radical solution, using blockchain technology, is rapidly emerging, and is being explored by a slew of startups and corporations.

Blockchain allows supply chain managers to attach digital tokens – a unique, negotiable form of digital asset – to intermediate goods as they progress along the production, shipping, and delivery phases among different supply chain players. This gives businesses far greater flexibility to find markets and price risks, by capturing the value invested in the process at any point along the chain.

Blockchain in Action

One example of blockchain in action is Walmart working with IBM and Beijing’s Tsinghua University to follow the movement of pork in China. Another is BHP Billiton, a mining giant, using the technology to track mineral analysis conducted by outside vendors. Everledger, a dynamic startup, has already uploaded unique data on more than a million individual diamonds to a blockchain ledger system, thus developing quality assurances and helping jewelry market associations comply with regulations barring “blood diamond” products.

“Smart contracts,” an application based on blockchain technology – buoyed by advances in chip and sensor technology – is an especially powerful option providing traceability and automation benefits. These contracts can grant different vendors special, cryptographic, and encrypted permissions, can be automatically executed by an autonomous system, and provide visibility on each other’s activity to all members of a supply chain community.

Smart contract definition

This kind of provable, transparent credentialing will be especially important for additive manufacturing, which is central to the dynamic, on-demand production model of the burning Industry 4.0 movement. For instance, operations and maintenance crew in an aircraft carrier need to have absolute confidence that the software file they downloaded to 3D print a new part is safe and not hacked. One of the most compelling arguments for blockchain is that it can help eradicate the trust problem in supply chains, without which the sophisticated, decentralized, IoT–driven economy many are projecting might be impossible.

Obstacles to Overcome

While the need for efficiency improvement and information aggregation suggest blockchain technology could deliver vast supply chain savings for companies everywhere, there are formidable obstacles to overcome first, such as:

  • Development and governance of the technology is a big concern, with two imperatives – global supply chains anchoring to a public blockchain (that no entity controls) to encourage free access and open innovation, and private or closed ledgers to protect companies’ market share and profits. This conflict leads to a couple of challenges:
    • Achieving global economic capacity for the most significant public blockchains, digital currency and smart contract platforms becomes constrained by divisions in open-source communities, making it difficult to agree on protocol upgrades
    • There needs to be interoperability across private and public blockchains, and this will require standards and agreements
  • There exists a complex array of regulations, maritime law, and commercial codes that govern rights of ownership and possession along the world’s shipping routes and their multiple jurisdictions. It will be extremely difficult to marry this old-world body of law, and the human-led institutions that manage it, with the digitally defined, dematerialized, automated, and denationalized nature of blockchains and smart contracts.

Despite these challenges, positive steps are being taken. For example, Hong Kong recently formed a Belt and Road blockchain consortium that seeks to bring a structure and order along with ICANN (Internet Corporation for Assigned Names and Numbers), an international, private sector–led global administrator and adjudicator.

While it might be too early to say that blockchain entirely solves the global supply chains issues, we believe any system that promises to enhance transparency and control for businesses and their customers, while also countering inter-commercial trading frictions, is worth exploring.

An increasing number of investors, businesses, academics, and even governments are starting to view blockchain technology as a much-needed platform…are you with them?

What Matters Most for Success In Using An Incubator For Blockchain Or Other Innovative Technology? | Sherpas in Blue Shirts

By | Blockchain, Blog

Is innovation to improve competitive positioning at the top of your company’s agenda? A common approach is to look at the technologies leading companies use to transform their business, then set up an incubator or innovation lab (either internally or externally in a service provider’s business) and provide funding to experiment with the technology. I’ve observed incubators and innovation labs for almost 10 years. Unfortunately, very few of them resulted in meaningful changes to competitive positioning of the company. Let’s look at what you need to bake into your strategy at the outset so you can capture the greatest value from an incubator or innovation lab.

Proponents argue that it’s a cost-effective way to gain clarity on the risks and challenges around implementing a new technology, and they see it as an opportunity to gain greater understanding of the possibilities of new technologies. It’s also a way to identify myths vs. facts around an emerging technology. Certainly, these are wise steps in a business where new technologies have to win the battle for attention among other priorities. But they largely fail to succeed.

 

Read more Here

Blockchain-enabled “Smart Contracts” Solve Problems in Administering IT Ecosystem Services | Sherpas in Blue Shirts

By | Blockchain, Blog

Businesses are moving into a software-defined world with usage-based service contracts and an “Everything-as-a-Service” ecosystem of providers. But there’s a problem: Contracts have not kept up with the desire to buy things in an as-a-service model in an ecosystem. Thus, the contracts provide no accurate way to account for usage adjustments that need to be made. This is a huge, nettlesome problem for service providers and customers, which I’ve recognized for years. Now there is finally a powerful solution, and I’m excited to share with you how blockchain-enabled “smart contracts” can solve this dilemma.

Read more at my CIO Online blog

The Primary Challenge To Blockchain Technology | Sherpas in Blue Shirts

By | Blockchain, Blog

Any emerging technology goes through a hype stage. It takes a while to get the kinks out and for pilots and proofs of concepts to prove use cases and shift the curve to broad adoption. The power and disruption of blockchain is evident in the news almost daily, and people are beginning to understand how blockchain distributed ledger technology works. I’ve previously blogged about soaring investments in pilots and proofs of concepts (POCs) on its security and examples of use cases. Even so, there are several issues currently slowing adoption.

Blockchain adoption is currently crossing the chasm, and I believe the next two years will be critical for resolving issues now slowing broader adoption.

Read more at Forbes blog

Bitten by the Blockchain Bug | Sherpas in Blue Shirts

By | Banking, Financial Services & Insurance, Blockchain, Blog

The business world is abuzz with the potential benefits of blockchain distributed ledger technology and the wave of disruption it will bring in not just payment transactions but also sharing information of value to participants in a distributed ledger. The media are already referring to it as an “internet of value.” Even though Blockchain is still nascent, a research report predicts the blockchain market will be worth $5.4 billion by 2023. In this blog post, I’ll highlight how some organizations around the world have decided to capture value from blockchain.

Although blockchain first captured attention of banks and other financial institutions, the use cases have expanded far beyond the BFSI industry. In all corners of the world, organizations have been conducting blockchain pilots and proofs of concepts, evaluating its validity, security and how it stacks up against delivering on their business objectives. Need evidence? Look at the following examples.

Blockchain use cases

Secure Communications. Since they invented the internet, you probably remember DARPA (Defense Advanced Research Projects Agency) the research unit of the U.S. Department of Defense. Now DARPA is funding startups to develop blockchain to ensure secure communications in the area of weapons systems development and in storage. In the intelligence arena, blockchain could help determine data integrity and whether hostile players have viewed or modified information.

Discover Issues in Mission-Critical Process. Lockheed Martin recently announced it is incorporating blockchain into its operations to improve efficiency and cybersecurity in its systems engineering processes, supply chain risk management and software development efforts. In addition to its operations in developing military weapons, the firm is involved in several NASA space projects requiring smaller, nimble operations.

Improve Transparency in Internal Workflows. Software giant Oracle was granted a patent to use blockchain to improve real-time transparency and keep data on employees’ tasks in a workflow. Another benefit? Protecting proprietary or sensitive information in workflows.

Raise Funds. Crowdfunding is an obvious use case for blockchain. But the World Bank is taking this application further. It plans to use blockchain in issuing bonds to help Kenya’s government. The concept was already tested by Australia’s Commonwealth Bank regarding a provincial treasury service.

Sharing Medical Information. In April 2017, a Japanese insurance company, Tokio Marine & Nichido Fire, won the second annual Efma-Accenture Innovation in Insurance awards. The company created a blockchain-based platform for sharing patient’s medical information among relevant parties. It’s being touted as a “new best practice.”

Healthcare Incentive Programs. I blogged before about blockchain being ideal for incentive programs. That use application is now evident in healthcare. Healthcoin is a blockchain-enabled platform focusing on insurers and employers incentivizing people to make lifestyle changes to prevent diabetes. Patients earn tokens they can cash in for rewards.

Reconciliation Among Reinsurance Companies. The reinsurance business involves complex relationships among insurance companies, a tedious, multi-ledger process of calculating multiple exchange rates and currencies, transaction costs – those aspects that I refer to as “friction” in a business process. Currently, a group of 15 of the world’s largest insurance companies are working on a blockchain-based prototype designed to simplify the process. The group hopes to reduce the transaction time from seven weeks to almost instantly. One of the companies had already completed its internal blockchain pilot for handling bonds for catastrophic events.

Assets Sales Transactions and Government Records. Malta plans to use blockchain in its Lands Registry and national health registries. Sweden, Honduras and Brazil are among the countries exploring how to use blockchain to track progress in real estate or other asset sales transactions.

Contributions Transactions. The United Nations has a cross-agency blockchain working group, which is analyzing the use of a blockchain distributed ledger system in international assistance. The UN is considering blockchain for the digital currencies, supply chain management, self-auditing of payment, identity management and data storage aspects of the potential system.

The United Nations is also studying how to rethink cash-based transfers. Within that study, the UN’s World Food Program is conducting a proof of concept (and an upcoming pilot) using blockchain to improve security and eliminate administrative fees in distributing humanitarian aid.

Service Providers’ Incubators. All major service providers have conducted in-house proofs of concept and pilots for various use cases. Some have taken this strategy a step further and are creating environments (or incubators) where their enterprise clients can experiment with blockchain technology for their own applications.

Blockchain as a Service (BaaS). IBM is one of the service firms providing client support of blockchain production pilots in a low-risk, fail-fast platform in its Bluemix cloud. Recently Big Blue boosted this Blockchain-as-a-Service platform to provide even more value by enabling multi-company blockchain networks across Bluemix regions and subscriptions.

What you need to know

So, what’s the big takeaway that emerges from this glimpse into current trends in blockchain adoption? The use cases are quickly expanding to more industries and governments, and I’m seeing a lot of activity across the board from different kinds of players. Yes, it’s still in an early growth stage. But if you were to ask me what’s really happening with blockchain technology now, I’d say organizations are finding more and more ways to capture business value from it. Creating new value is a prime focus for most companies, so I look for blockchain to be highly disruptive and the adoption pace to quickly grow.

Is Blockchain Technology Secure for Your Company’s Transactions? | Sherpas in Blue Shirts

By | Blockchain, Blog

Blockchain technology is hard to ignore as practically everybody’s talking about it. That’s understandable because it’s predicted to disrupt the value flows that underpin business transactions and economies as well as create new business models. It has enormous power to solve business problems. But is a blockchain “distributed ledger” secure?

Blockchain is still in its infancy, so company leaders are naturally concerned about whether it can be manipulated. Organizations worldwide are seeking to take advantage of the new opportunities and disruptive power of blockchain — organizations that understand the magnitude of potential security issues. It has been rigorously tested in pilots and at scale by many governments, institutions and companies that have found the technology is incredibly secure.

Read more at Peter’s CIO.com blog

How Blockchain Technology Applies to Your Company | Sherpas in Blue Shirts

By | Blockchain, Blog

Blockchain technology is a red-hot topic in the news these days and in many C-suite discussions. It has wide applicability to many industries and most companies. Like any emerging technology, companies that aren’t first movers tend to look for proven use cases and often wait for the technology to mature. But that may not be your best strategy with blockchain. Adoption has accelerated, and new use cases occur almost daily showing blockchain’s potential for revolutionizing a business as well as creating new markets. I believe every organization needs to consider how it might apply to their business. Let’s look at what the technology is and several examples of how your company could benefit from it.

What is blockchain?

Blockchain is a decentralized digital distributed ledger shared by a peer-to-peer network of computers. It’s a mechanism that brings efficiencies, transparency, security, auditability and trust into shared business processes at a very broad level. The business process could be internal to an organization, or it could be among different external parties. The transactions are verified and recorded in the ledger almost instantly.

Read more at Peters CIO.com blog