Blockchain has the potential to become the next underlying technology platform, accelerating innovation and fueling global industry within the next few years.
This technology’s inherent ability to package, distribute, secure and visualize critical data can be quite useful. But how useful varies greatly from one use case to the next, requiring businesses to embrace thoughtful implementation. Here are a few accessible — and, more important, actionable — tips for companies deciding if blockchain is right for them.
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Is Blockchain Right For Your Business? Questions to Ask
Before implementing blockchain, carefully evaluate your business needs. This may sound simple, but understanding blockchain’s applicability for specific industries and applications presents a key challenge for organizations exploring the technology’s viability and impact. On top of that, the needs of every company with digital assets and operations differ. The initial step to take is twofold: First, rally around a specific problem that needs to be solved and then solidify the future you want to achieve with the help of blockchain and/or other new technologies and underlying platforms.
While most business planning requires executives and specific vertical teams to look at how to address present-day issues to prepare for the future, blockchain requires companies to look to future issues to prepare for uncertain times ahead. Security offers an important through-line for companies that helps simplify future prediction efforts as blockchain enters the picture. Ensuring the security of company and staff data is of the utmost importance — and a prerequisite for successful enterprise blockchain implementation.
Once the need for security is established, companies should ask the following questions to determine whether or not blockchain adoption is right for them:
- Where is my industry headed? What role will technology and data play in that future?
- How can my company use blockchain to improve data movement, security and transparency?
- Specific to our work, how many players are involved?
- Does our work involve a database — or multiple databases?
- How many parties will be using the database(s)?
- Do we have any concerns about the trustworthiness of any parties might access the database(s)?
- What type of information, like invoices or employee records, needs to be stored?
- Should proprietary information be public or private?
It’s also crucial to note there are many different ways to incorporate blockchain into a company’s processes and productivity streams. For example, the technology’s application will materialize differently for supply chain companies than it will for transportation or finance organizations. There may be simple problems that can be solved without blockchain. Complex issues involving multiple stakeholders, suppliers, cross-border transactions, sensitive invoices and/or confidential databases might be excellent candidates for blockchain support.
Other considerations for businesses debating if blockchain is a fit include factoring in the overall costs beyond licensing, hosting and implementation. Energy and storage costs can grow considerably and as with all new technologies, the allure of implementing technology before establishing a clear business case can be strong — don't fall into that trap.
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Decide Between Public, Private or Hybrid Blockchain
Businesses nearing the procurement stage will need to consider which blockchain is right from them — public, private or hybrid. Each type of blockchain presents its own opportunities and challenges for enterprises. Business leaders need to take extra steps to fully understand what each type offers and how they function in the real world.
A public ledger allows anyone to access your record of transactions. For most businesses, this level of transparency isn’t possible because they must keep sensitive customer or third-party information private and secure. However, there are some instances in which all information is already made publicly available and there is no need to privatize the blockchain. For example, the records of an automobile auction are public and can be validated using a public blockchain without compromising private information.
On the other end of the spectrum, private blockchain networks must be validated by the creator of that network or by a set of predetermined rules. To access this ledger, you must be specifically invited and validated by the owner. For most businesses, a completely private blockchain will be too limiting because it does not allow for interaction with third parties or government officials.
A hybrid blockchain, also referred to as “private permissible,” is the most commonly used option in business because it ensures sensitive information remains secure but allows third-party participants to access relevant transactions and play a role in maintaining the blockchain in a decentralized fashion. Private permissible networks set restrictions on who is able to participate in the network and who is able to access specific transaction ledgers. Permissions can be determined on a case-by-case basis, depending on the level of trust between the owner of the blockchain and the third-party contributor.
While a hybrid blockchain is likely the best solution for most use cases, it’s important to recognize challenges on the horizon. With no standard solution, businesses will need to consider what happens when a customer or partner maintains a separate network using an entirely different blockchain. Integrations may bridge the gaps, or partners can explore merging ledgers.
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Establish a Blockchain Implementation Strategy, Supported by Research and Modeling
The biggest hurdle in implementing blockchain is adapting business models accordingly. It’s a monumental shift that will supersede enterprise efforts to embrace the cloud. The best thing companies can do is to speak with a blockchain expert. Prior to selecting a blockchain and implementing the technology into your workstream, make sure to speak with a company or two that delivers implementation services to ensure you are on the right track. At Sage, we brought in a professional to talk to us about the technology and current use cases have relevance to our work in the financial and accounting world.
From there, develop a carefully produced business case for blockchain that takes the realities facing your company’s future into account and sets a swift pace for blockchain adoption. Start the process with a problem statement: X is the problem that we will solve with blockchain. Use the business case to model implementation and confirm blockchain is the way to go, then begin moving company data and processes to the selected platform.
Blockchain is actively transforming how information moves through internal company departments, international supply chains and across globally accessible digital properties. And blockchain still has massive untapped potential. Companies need to understand whether blockchain will help or hinder their specific business, and they need look to use cases in their industries or similar industries to validate the technology’s usefulness. Companies should take steps to determine whether blockchain will help eliminate unnecessary intermediaries, protect sensitive information and connect the right people with the right information. Businesses need to confirm the appropriate level of trust and transparency needed from blockchain implementation — and then work back from there to make the final decision about whether blockchain is right for them.