According to a survey conducted by Deloitte of 308 senior executives at U.S. companies with $500 million or more in annual revenue, almost two in five (39%) of senior executives indicated they had little or no knowledge about blockchain technology. On the flip side, 28% of respondents report investing $5 million or more in blockchain technology, while 10% have invested $10 million or more. An interesting dichotomy to be sure.
Another survey conducted by IBM and billed as “the largest study to date among C-suite executives seeking their perspective on blockchain” is more positive on blockchain awareness and acceptance. One third of almost 3,000 executives surveyed are using or considering blockchain in their business.
According IDC, as reported in WSJ, corporate spending on blockchain software is expected to reach $2.1 billion this year, up from $945 million in 2017. Quantifying the value of technology innovation rather than the dollars spent on it, Gartner expects the business value-add of blockchain to grow to more than $176 billion by 2025, and to exceed $3.1 trillion by 2030, as reported in NYT.
Rosy predictions aside, it is clear that greater understanding is key if blockchain is to become part of the mainstream business culture.
Blockchain first made the scene in 2008 when a person or group of people known by the pseudonym Satoshi Nakamo unveiled a project dubbed Bitcoin, “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
In essence, blockchain is a novel enhancement of the traditional ledger concept expanded to an open, distributed ledger across two (or more) parties running on a peer-to-peer network. The ledgers maintain details of every step of a transaction, with each step (block) supplying unique information to the next step. None of the steps of a transaction can be altered as they are linked to every prior step that has happened in the transaction chain; hence the term Blockchain. Blockchain enables an open set of parties to maintain a safe, permanent, and tamper-proof digital ledger of transactions, without a central authority. The ledger itself can also be programmed to trigger processes automatically, adding speed and eliminating costs from complex, high-volume transactions. Blockchain is a mutual, trustworthy, shared data source that can unleash trapped value in key operational processes and help businesses collaborate more effectively and efficiently.
Blockchain’s business value
Beyond the cryptocurrency craze and putting aside Silk Road or Mt. Gox infamy, the potential for blockchain is very real, and very big. By establishing a “trusted” ledger, blockchain’s potential is unleashed. Any process that requires numerous entities sharing real-time, accurate data in complete trust and transparency can potentially benefit from blockchain’s distributed ledger technology. The key design element is the independent verification of the chain of ownership of every transaction at every stage of the process, eliminating the age-old (and expensive) challenge of maintaining and synchronizing multiple database platforms.
The possibilities across government, industrial, commercial and consumer-driven applications continue to fuel multiple start-up companies, as both entrepreneurs and industry leaders, such as Oracle, look to secure their place in the blockchain-driven society.
Generally speaking, common business challenges ripe for a blockchain solution include:
- High transaction costs of data processed through intermediary agencies
- High governance costs due to regulatory and auditory compliance requirements
- Slow transaction speeds due to multi-party checks and approval
- Risk of fraud due to immutability or non-transparency of information
Promising blockchain applications span almost every industry, particularly those with multiple parties in the value chain. Organizations across financial services, healthcare, consumer products, manufacturing, technology, media, and telecommunications are actively investing in blockchain.
As reported in WSJ, senior executives at large U.S. companies surveyed by Deloitte with knowledge of bitcoin deem the technology crucial for their companies and industries. 55% think their companies would be at a competitive disadvantage if they failed to adopt the technology; 42% believe it will disrupt their industries.
IDC research predicts that at least 25% of Global 2000 companies will use blockchain services as a foundation for scalable digital trust within three years, as reported in Forbes.
While most business leaders are still trying to figure out how to put blockchain technology to work, consensus is growing that blockchain has the potential to unlock vast value trapped in business operations.
Here’s just a small selection of potential industry and business applications for blockchain:
- The value of blockchain technology for financial-services industry applications comes from the security, efficiencies, cost-savings and data validity inherent in the technology. According to a Santander FinTech study, distributed ledger technology could reduce financial services infrastructure cost between US$15 billion and $20 billion per annum by 2022.
- Legal work which involves tracking transfer of ownership – for example intellectual property law, or real estate deeds – will also be made more efficient through the implementation of distributed ledgers.
- In healthcare, blockchain can improve electronic medical records and allow patients’ records to be accessed securely by any provider who needs them, saving time, money and possibly lives. As reported in Healthcare IT News, IDC predicts that 20% of organizations will have moved beyond pilot projects and will have operationalized blockchain by 2020.
- Any business that relies on a supply chain can use blockchain to track transactions. Greater transparency via blockchain can dramatically improve key supply chain segments including track-and-trace, warranty and recalls.
- In business networks, buyers and sellers alike benefit from blockchain’s power to lower operational costs, streamline collaboration and speed up payments for goods shipped and delivered.
- Smart contracts on blockchain-enabled networks that automatically trigger activities can quickly transform dated business process.
Oracle and AST investing in blockchain
Not surprisingly, industry leaders Oracle and AST are partnering with customers to advance blockchain technology and tailor value-added blockchain services to address specific customer needs.
In October of 2017, on the first day of the OpenWorld conference, Oracle rolled out its Oracle Blockchain Cloud Service (BCS), an enterprise-grade, distributed ledger platform designed to support new distributed ledger technology (DLT) applications and extend ERP, supply chain management (SCM), and other enterprise software-as-a-service (SaaS) and on-premise applications by enabling enterprises to conduct business-to-business transactions securely and at scale across a trusted network with tamper-proof digital records.
Oracle SaaS and on-premise application suites are used in many industries as a backbone of enterprise information systems. Extending these systems with blockchain capabilities through BCS provides significant value to Oracle’s customers and can lower many of the risks inherent in adopting new technology.
With Oracle Blockchain Cloud Service, enterprises and service providers can build blockchain ledgers and networks by quickly provisioning one or more instances of BCS with all the required infrastructure provided out of the box. Designed for connecting with counterparties, customers, and suppliers in a permissioned network with multiple confidential channels, BCS enables firms to deploy smart contracts to create a custom application solution at scale with simplified operations, API-driven integration, and built-in monitoring.
Announced as a platform-as-a-service (PaaS) offering in the Oracle Public Cloud, Oracle BCS will also be available on-premise via the Oracle Cloud Machine as part of the Oracle Cloud at Customer offering.
Understanding the ability of blockchain architecture to support and integrate cloud, M2M and IoT applications reveals seemingly endless industrial, commercial and consumer-driven possibilities. While blockchain is essential to support these digital tools, the business-process expertise and cloud experience of proven system integrators such as AST is vital to realizing the full potential of this nascent technology.
To this end, AST is committed to the development and standardization of blockchain platforms that are compatible with highly reliable systems. We are equally committed to working closely with our Oracle customers to identify use case opportunities that address their unique business challenges and goals.
Is blockchain ready for primetime?
To be sure, interest (and investment) in blockchain is strong. Across industries, numerous proof-of-concepts are underway. Blockchain is very much real and the potential benefits are substantial. However, blockchain use in the enterprise is just beginning.
Limited agreed-upon technical standards, regulatory uncertainty, power requirements, storage costs, transparency and scalability questions are challenges, among others, that need additional work. Many barriers—technological, governance, organizational, and even societal—will have to be overcome for blockchain to realize its full potential. Yet, blockchain technology continues to garner excitement and investment, inspiring industry collaboration, all built on the premise of “establishing trust” on a global scale.
For business leaders, this presents a dilemma: They are keen to exploit the advantages that blockchain purports to offer, yet they are simultaneously — and justifiably — wary of the potential risks within a complex landscape, both from a new technology and a business investment standpoint.
Our advice…. Join the blockchain discussion, learn and ask questions. Take a moment to understand and appreciate the blockchain landscape and potential innovations within your industry. Identify one or two business processes that would benefit from sharing real-time, accurate data in complete trust and transparency. Tap the expertise of proven consultants, such as AST, to validate your findings, evaluate options and build a proof-of-concept.
Contact AST today to learn more about how blockchain can improve your business.