Blockchain goes beyond early adopters and into a wider range of companies. It has the potential to interfere with traditional methods, especially in the purchasing and supply chain. And it can reduce operation and cost efficiency and spark new revenue streams.
Blockchain is a technology that every company should look at. But it has also been overheated. As with big data and Hadoop before that, you can think you can do blockchain overnight – and without a legitimate business need – leading to failures, embarrassment, and cut budgets.
A blow-it-up and start with blockchain approach is intended to fail. A better way to test and build blockchain capabilities is through a series of small controlled explosions with a specific timeline. By using a measured method for blockchain, you can test the technology within the parameters of existing processes and systems to increase or improve selected areas of your company. If you can't prove blockchain is useful and cost effective in 1
One step at a time
Success does not require a comprehensive radical overhaul of existing technology by using blockchain as a rip and replacing the technology. On the contrary, when blockchain strategies are deployed as controlled explosions – small projects with limited blast radius – the law will better manage risks, learn and experiment and evolve into the ultimate goal: business-scale scale with real business impact.
Start with a vertical or functional area, preferably with a well-defined project that can be completed in 12 weeks. Blockchain, like any new technology, requires significant process design, cultural change and collaboration, so a smaller experiment provides the insights needed to successfully adapt to larger and comprehensive projects.
Based on several blockchain experiments I have seen in industries, such as industrial manufacturing, healthcare and telecom, 12 weeks gives a sufficient window to build, test and measure a proof of the concept while it is important to prevent over-investment in a failed project. In some cases, you may want to shorten this window to 10 weeks. A defined timeline activates blockchain teams to make quick assessments and adjustments, show a positive return and ensure that blockchain is built can eventually be transferred to implementation of production class. Put simply, if they cannot overcome the complexity of a small-scale blockchain project within a tax quarter, achieving a comprehensive corporate scale will be a challenging achievement.
These experiments can be done in one of the three main areas of the company: the front office (eg sales or customer management), middle office (eg procurement and supply chain business) and back office (corporate finance, accounting, HR. )
A well-defined project, piloted within the framework of a proven business resource planning framework (ERP), will have the best chance of reaping business value.
For example, drug recalls and fraud are a major problem that can be fatal – so the US Food and Drug Association revealed a new drug supply chain law (DCCSA) to help combat this issue and increase the visibility of the drug supply chain. Blockchain is actively used as a solution to help companies follow this new action – a step that can help save lives.
Fraud is also widespread in the high-end commodity market on things like art, jewelry, antiques and luxury fashion and is treated with blockchain. With increased traceability over the origin and ownership of the product, companies eliminate counterfeiting. In the future, blockchain will equip brands with greater knowledge of a product's history.
Finally, blockchain is used to help with the sudden and unpredictable changes in fees and taxes. The increased visibility of goods across borders allows companies to streamline their tax payments – a move that will reap significant benefits.
With the crypto-driven hype around blockchain decreasing, it's time to consider this technology in a more realistic context. By defining the parameters of when and how to use blockchain to solve a business challenge, companies will appreciate their value – in reshaping processes, introducing operational efficiencies, realizing cost savings, and creating new revenue streams.
Arun Ghosh is the US Blockchain leader in KPMG professional services.