Tag: Blockchain

How GICs are Unblocking Blockchain Value | Sherpas in Blue Shirts

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

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“.

Have a question?

Please let us know how we can help you.

Contact us

Email us

How can we engage?

Please let us know how we can help you on your journey.