The World Economic Forum and Accenture this year released “Building Value With Blockchain Technology,” a white paper aimed at helping organizations evaluate blockchain’s benefits and build an effective business case.
The report—based on a global survey of 550 participants in 13 sectors, interviews with CEOs and public-sector leaders, and a detailed analysis of 79 blockchain projects—detected interest across industries for a more measured approach to the new technology.
Survey participants were asked for the top reasons that led their organizations to invest in blockchain solutions. Across industries, the top three priorities were traceability of information, the ability to ensure data hasn’t been tampered with, and increased security. New products or services ranked last among the options for investing in blockchain, suggesting that at this early stage, improving existing products and services is a higher priority than considering new business opportunities.
As is often the case, fear that the train is leaving the station is another powerful motivator for investing in a new, fast-growing technology. World-wide spending on blockchain solutions is expected to reach almost $3 billion in 2019 and close to $12.5 billion in 2022. Fifty-one percent of respondents mentioned “missing out on developing new products/services” as their top concern if they don’t invest in blockchain in the near future; 23% mentioned “missing out on efficiency gains”; and 15% were concerned with “missing out on cost savings.”
By analyzing blockchain projects and conducting dozens of interviews with private- and public-sector leaders, the study’s authors developed a “blockchain value framework.” The framework is aimed at helping organizations identify the concrete value of blockchain technology in their use-case proposals and build a corresponding business case.
The framework has three distinct dimensions: improved productivity and quality; increased transparency among parties; and reinventing products and processes. Let me summarize the key capabilities in each of the three dimensions.
Improved productivity and quality
- auditability – organizations can cut their auditing costs and raise confidence levels based on blockchain’s ability to provide a traceable shared ledger of transactions
- compliance – given that blockchain can’t be tampered with, it provides increased confidence while streamlining processes and reducing costs
- data security – blockchain’s use of cryptographic technologies reduces the risk of a data breach while limiting the damage should a breach occur
- process automation – business processes can be executed automatically via algorithmic-based smart contracts, improving efficiencies and worker productivity
- standards – organizations working together in a blockchain ecosystem must agree on a common set of protocols and rules by which they will work together
Increased transparency among parties
- data sharing – blockchain enables trading partners to share real-time data, as well as the history of that data, including any modifications; this facilitates the resolution of disputes among partners
- resilience – blockchain’s distributed ledger mitigates the risk of data loss or corruption due to natural or manmade disasters, hacking attacks, malicious or incompetent employees, or other such events
- trust – blockchain increases trust by cryptographically securing its information, thus mitigating business risks.
Reinventing products and processes
- new and enhanced products and services – digital assets, such as digital rights management and land titles, “can exist beyond the umbrella of one organization,” creating new potential business opportunities
- new and expanded partnerships – new partnerships can be formed more easily, given the increased confidence afforded by blockchain technologies, as well as more efficiently, given the ability to automate partnership interactions via technologies like smart contracts
- authentication – blockchain’s cryptographic technologies can help authenticated individual users across multiple networks, resulting in increased overall confidence
- identity management – blockchain improves the management and use of digital identities by relying on the cooperation of multiple institutions, instead of relying on just one institution
Finally, the white paper offers several recommendations:
Take time to understand the technology. It’s important to understand the characteristics and value drivers of blockchain, the potential business opportunities as well as competitive threats, and the overall impact on a given industry.
Set realistic expectations. “Ensuring everyone is on the same page from the beginning, both within one’s organization but also with external partners, will provide the greatest chance of overcoming impatience and unrealistic assumptions,” the authors write.
Align to strategic priorities. The decision to implement a blockchain solution should be based on having identified a specific use-case, as well as a concrete problem or opportunity for the business.
Evaluate blockchain’s value relative to other technologies. “For many use-cases, other technologies will be lower cost, lower risk, and implemented more quickly,” according to the report.
Remain agile in your approach. Even if there is no clear use-case or value proposition now, continue to monitor potential opportunities as blockchain technologies evolve and improve.
Think beyond your organization. “The decentralized nature of blockchain makes a transformation from an isolated approach to end-to-end value-chain integration within fragmented and complex environments more attainable,” the authors say.
Irving Wladawsky-Berger worked at IBM from 1970 to 2007, and has been a strategic adviser to Citigroup, HBO and Mastercard and a visiting professor at Imperial College. He’s been affiliated with MIT since 2005, and is a regular contributor to CIO Journal.