Distributed ledger technology like blockchain was only associated to the financial services until recently. However, companies in other industries are starting to understand its power, write MARY ANN FRANCIS and GILLES GRAVIER of Wipro.
Distributed ledger technology has, so far, been largely discussed only in the context of the financial services industry, specifically in the area of payments. Blockchain technology was popularised by its application in the wildly-popular new crypto-currency Bitcoin, for example.
But blockchain has many wondrous applications in a variety of other industries as well; where visionary firms are starting to understand its power to transform their operations.
Essentially, blockchain allows for the creation of timestamped digital assets, and digital records, which are impossible to tamper with, delete, or edit, commonly referred to as immutable.
So, for a vastly different scenario than moving currencies – imagine a diamond producer leveraging holographic identity technology, where a record of all transactions could be connected to this holograph, and entered into a blockchain. Consumers could see the public record of all prior transactions, and get assurance that the diamond was sourced ethically.
Following the same principles, a blockchain could be used by fine art distributors to confirm the validity of its pieces, or by lawyers to validate the accuracy of photo and video evidence, or by governments when issuing title deeds to homeowners.
The possibilities are endless. There are already companies, start-ups, offering products that cover these specific use cases.
Transparency and efficiency
As a distributed ledger, blockchain technology presents companies with an opportunity to fundamentally re-architect many of its internal processes, and the ways in which they interact with partners, suppliers, distributors, and others in the varied ecosystem.
Whether the use-case is smart-contracts, cryptocurrencies, proof-of-assets, or anything else that blockchains enable, companies are able to interact in a more collaborative, but highly-secure, trusted, manner.
But many CEOs remain reticent to seriously look at adopting blockchain technologies into the company’s business strategies. And it’s true that this area of technology seems to be moving at a rapid pace – zooming into mainstream conversations on the back of Bitcoin and other virtual currencies. To some, blockchain looks volatile, uncertain, risky.
However, blockchain technology can be applied to businesses in South Africa, to improvise record management and transactional efficiency in a wide range of different processes and value chains.
So just how quickly could blockchains take off in SA, considering the very many possibilities for the technology? At this year’s Gartner Symposium/ITxpo Africa, held in late-September in Cape Town, conference delegates showed overwhelming interest in its use.
From keynotes to sideline discussions, the enthusiasm for blockchain technology was palpable, making analysts more bullish on the prospects for blockchain in the short-term. Very possibly, the technology could grip the imaginations of business in a similar way to the Cloud revolution, for instance.
The best starting point is to research blockchain deeply and widely, understanding potential use-cases for your industry; and then looking at which internal processes and external transactions could potentially be improved. Which areas would benefit from greater transparency, greater collaboration?
Every company is different. Some rely more heavily on digital assets and services than others, others have embraced connected sensors and devices (the “Internet of Things”) more warmly than others, and some naturally have a more innovative leaning.
But in our experience there are exciting blockchain-related opportunities in even the most traditional organisations.
Following this discovery phase, it is critical to partner with an objective blockchain specialist that can help to craft the strategy. Firms that try to ‘rate their own work’ in this field often miss opportunities, or create blockchain plans that fail to respond to the most urgent business priorities. As we find ourselves in the top of the hype-cycle for blockchain, we still find ourselves in search of the app that brings maximum ROI.
It is recommended that businesses look for three key competencies in a blockchain partner:
• Thought-leading advisory and consulting services with the ability to design, implement and support blockchain initiatives, along with rich domain expertise in use cases across various industry verticals
• A deep pool of partners, start-ups and innovators with whom solutions can be created and tailored to the organisation’s unique needs
• The execution capability to actually run blockchain PoCs and evolve them into fully-fledged solutions – integrating the technology into existing operations.
With blockchain, the traditional principles governing ‘systems of record’ are fundamentally reversed, and many business leaders are still somewhat confused about how this highly-sophisticated shared ledger technology actually works.
But while it’s essential to read deeply and understand blockchain principles, for one’s end-client, we can refer to the analogy of the internet to explain why we don’t have to wait for clients wrap their heads around the technology.
Most of us do not understand the technicalities of the TCP/IP protocol, but that doesn’t hinder us from surfing the web and exchanging emails. In the same way, clients will come to trust blockchain, in the same way they trust the Internet.
Those organisations starting now on a blockchain journey will have a first-mover advantage over slower-moving peers, getting a jump start on the competition and repositioning themselves for a future where blockchains govern all sorts of interactions and transactions in the future. Scale use of blockchain is still a 3-5-year journey – starting now will lessen the urgency some are experiencing now.
* Mary Ann Francis, Executive Advisor and Practice Partner for Global Treasury, Payments and blockchain at Wipro Limited, and Gilles Gravier, Director and Senior Advisor for Open Source and blockchain at Wipro Limited