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Blockchain – What’s In It for Your Business?

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Blockchain is coming to your industry. Maybe not next week or next year, but soon. The time to start thinking about how to secure the best business outcomes from the technology is right now.

That can be a bit challenging, since many business leaders still associate Blockchain with bitcoin – accurately enough, since the distributed ledger technology is of course a core component of that cryptocurrency. But that doesn’t get us very far in understanding the business potential of a technology that’s being billed as the Internet of Transactions, Web 3.0, the Internet of Value, the Next Big Thing … a technology that’s drawing serious attention from all kinds of organizations, from music publishers to giant retailers to governments.

Here’s one way to think about Blockchain that I’ve found very useful when talking to business leaders. Blockchain is a way for companies that don’t have inherent trust for each other to work together directly. By providing a framework of trust – even if it’s temporary, which it can be – these systems bypass layers of intermediary processes and participants, simplifying and accelerating transactions, removing cost, and enabling new business opportunities.

Bypassing the middleman

HPE Pointnext IT Services.jpgHere’s an example of how this kind of disintermediation can work. Let’s say you’re an office manager in a large organization, and you want to buy some pencils. You go to the procurement department or the purchase portal, and because it’s a basic, standard item you get the order placed, no problem. But suppose the item you need is something weird and wonderful, say a specific type of lumbar-support office chair. Chances are it’s not in the purchase portal. You know there’s a couple of companies that make them, but they’re not approved suppliers. So now procurement has to jump through all the hoops, all the corporate policies, paperwork and legal materials, to make the transaction happen. You might decide it’s not worth it.

Or, a supplier may want the order, but they’re a small outfit, and they decide it’s not worth the cost of complying with your organization’s requirements. In short, it turns out that it’s not possible to do business with the people you would like to do business with (or vice versa.)

However, if your organization and the supplier are using the same Blockchain, procurement can simply say “We want to buy x amount of these chairs and we’re prepared to pay x dollars on such-and-such terms and conditions.” Then everybody who supplies the item can look at that, decide whether they want the business, and if so the transaction goes through. You don’t have to have a supplier agreement in advance with every person you might want to do business with; you can establish trust just for the purposes of that particular transaction.

A world of Blockchain opportunities

Once you grasp the possibilities of this kind of direct trust-supported transaction, you’ll likely start seeing examples of other potential applications everywhere.

HPE Financial Money Transfer.jpgTake international money transfers, for example. Anyone who’s been through this process is familiar with how the actual value of the transmitted funds gets whittled down by fees imposed by the banks at both ends, but in addition there’s complex intermediary activity going on behind the scenes, often involving multiple institutions. And that means delays. International checks can take weeks to clear, even if they’re written in the destination currency. Which is vexing from our point of view, as consumers, but it’s a huge challenge from the banks’ point of view, too. They would very much like to flatten the processes behind these and many other types of transaction, and they see Blockchain as a way to do it. So it’s no wonder that banks and other financial services firms have been in the vanguard of Blockchain development, though most still have a way to go before they’re ready to move into production.

The opportunities extend far beyond the financial services sector. Music publishers are investigating Blockchain to market their products directly and efficiently without going through intermediary online retailers. Large organizations are looking at ways to use the technology to simplify and strengthen their supply chains. Blockchain could even disrupt the ride-sharing industry by enabling drivers and customers to transact business directly.

Starting the Blockchain journey

Building a use case for Blockchain calls for some imagination – it’s a somewhat different way of looking at how business works. Here are some steps you can take to develop an initiative for your organization:

  1. Build a common understanding what Blockchain can do. Blockchain is a complex set of technologies, it’s changing all the time, and your colleagues will likely have a wide spectrum of ideas about what it is and how it works. It’s worth spending some time to make sure everybody’s on the same page. It’s important to understand what it can’t do, too. There will always be plenty of functions – core financial reporting, for example – that are best served by other technologies.
  2. Identify a business process that can be taken through to pilot. Map out all the steps in the process, including those that involve other parties. Then remap them as they would look if a Blockchain was in place. Some of the steps will be eliminated by the Blockchain; this will give you a good idea of the potential cost and time savings.
  3. Identify the benefit to other parties. Don’t forget the parties outside your organization who will still be involved in the new Blockchain process. Identify reasons why should they be interested in helping you develop the initiative. What’s in it for them? How can you make their participation worthwhile?

Above all, keep an eye on the space, and track developments that may impact your industry. The breakthroughs are coming thick and fast, and that’s only going to accelerate. For example, in June HPE announced a partnership with distributed ledger platform provider R3 to bring R3’s Corda technology to HPE’s mission-critical Integrity NonStop Platform. The combination of NonStop’s extreme fault tolerance and R3 Corda’s financial agreement-focused architecture opens some truly exciting new opportunities for financial services users to bring distributed ledger solutions into production. (And if you’re in that sector, you might want to check out our white paper We also announced our Blockchain Discovery Workshop to help businesses leverage new operating models and expertise to achieve game-changing business outcomes.

While full production deployments of Blockchain may be 12-18 month away, now is the time to understand its potential to transform your business, now is the time to align your business and IT behind Blockchain, and now is the time to look at some of the Blockchain solutions developed specifically to solve your business problems. Now that you understand what Blockchain means for you, will work with you to develop your Blockchain strategy, Blockchain deployment, and integration with your existing key business systems.

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About JamesJames Cohen_MG_6907.jpgHPE Chief Technologist, James Cohen

 James Cohen is a Chief Technologist, Hybrid IT. James joined HPE after a career in one the UK’s largest leisure companies. Since joining HPE in 1997, he has worked in the HPE Pointnext Advisory and Professional Services business, initially in the UK and since 2011 in a worldwide role. As well as developing HPE’s Data Center Transformation solutions, he has developed HPE Software Defined Infrastructure solutions and more recently HPE’s Blockchain consulting services.

 

 

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