Iliana Oris Valiente (CPA, CA, CBP) is a managing director and global blockchain innovation lead for Accenture's emerging tech division. She is also the founder and chair of the board at ColliderX Blockchain R&D Hub.
The following article is an exclusive contribution to CoinDesk's 2017 in Review.
While the price of cryptocurrencies and the ICO market tend to steal the spotlight, behind the scenes a growing number of enterprise businesses are evaluating blockchain technology.
These companies seek to enhance the business processes that impact our everyday lives.
Examples are processes that enable us to:
- Deliver products from a supplier to our homes in time for the holidays
- Make sure that financial payments are processed on time
- Provide music and media content for entertainment while making sure the royalties reach the artists
- Trace the quality and provenance of food from farm to table.
Large enterprise adoption of blockchain technology may not initially make as many waves as electronic peer-to-peer cash, but in many ways it's just as important.
For anyone who attended CoinDesk's Consensus conference in May, the growth in the number of attendees in business attire (relative to the number of technologists in the proverbial hoodies and jeans) did not go unnoticed. From the introduction of this nascent technology a few years ago, it's taken some time for the enterprise community to take a closer look and to recognize that many of the principles of blockchain technology, originally utilized in the bitcoin protocol, could be leveraged in the enterprise world.
For those unfamiliar, the enterprise blockchain adoption timeline looks something like this:
- 2013-2014 was characterized as a period of learning, understanding the distinction between bitcoin, the currency, and the underlying protocol.
- 2015 introduced the concept of permissioned or consortium blockchains, as well as the term DLT (distributed ledger technology).
- 2016 was the year of the prototype or POC (proof of concept), where success was measured based on how many use cases for an industry or company could be identified.
- 2017 was braver, focusing on how companies could move beyond a POC and into a pilot, in preparation for production-level deployment.
The state of play
Additionally, it was a year of technical advances that will enable those pilots to go further. Enterprise-grade version 1.0 implementations were released by Hyperledger Fabric and R3's Corda.
It could also be argued that periphery and supporting institutions such as law firms, regulators, insurers and other necessary (yet ancillary) organizations began to realize the benefits of blockchain. For example, today, many lawyers are studying the technology as a way to enhance the time it takes to finalize patents or resolve contract disputes (via smart contracts.)
Working at Accenture, we have the good fortune collaborating with some of the world’s largest organizations (our clients span the full range of industries including more than three-quarters of the Fortune Global 500).
Accenture’s blockchain practice incorporates alliances, partnerships and leadership positions in every aspect of the blockchain ecosystem including the Hyperledger project, the Enterprise Ethereum Alliance (EEA), the Blockchain Research Institute (BRI), the Hashed Health Consortium, plus a variety of start-ups, and open-source communities.
We have a neutral, big-picture view of the blockchain ecosystem.
As a result, that enables our team to make educated observations about a wide range of technology trends. For example, whereas the interest in blockchain tech started with financial institutions, this year we’ve seen growth in adoption across industries. Some of the most impactful use cases were found in the supply chain, identity management and the public sector – especially around registries (with Delaware, Estonia, and the Province of Ontario for instance).
The one sentence summary that best describes the journey of enterprise adoption of blockchain tech and where this is all headed in 2018:
Put another way, enterprise clients have become more educated about blockchain.
In my practice at Accenture, this evolution is clear from the increasingly more sophisticated questions they ask us — a telling marker of the progress made and an indicator of what we can expect to see in 2018.
Beyond the technical specifications of what blockchain technology can do and how certain configurations are more advantageous, some of the most interesting questions that arise are not actually technology driven.
Rather, they mostly relate to the strategic shifts needed and corresponding change management.
Yet, our forward-thinking clients are wrestling with key questions based on how they, and their ecosystems, could transform business processes using blockchain technology.
- If this is not just a technology, but rather a paradigm shift, what will our business look like in 10 years?
- Given that this is a network technology, how do we find and participate in the relevant consortiums?
- On a use case specific basis, how do we identify and align interests with other stakeholders?
- Will these new blockchain-powered networks be run as a separate business venture of sorts?
- How do we find and develop talent in a decentralized world? (We’re seeing investments made in academic partnerships, research initiatives, and training)
Why reinvent the wheel?
Arguably, in addition to everything listed above, one of the most powerful questions I encourage our enterprise clients to ask is, "What are we NOT thinking about?"
My response to the question above is simple; look at the new frontier of blockchain startups and initiatives that are related to your industry, but that are being incubated, tested and deployed outside of the enterprise community. These are oftentimes the open source, public blockchain projects that are re-imagining the way the world operates.
As a technology agnostic partner to our clients – we see the startups pitching their products to clients, or to us as potential systems integration partners.
In my view, as a result of our involvement across the blockchain spectrum, it’s becoming harder to ignore the parallels between the products being built by generation 2.0 blockchain companies and the systems we have in place today. Many blockchain startups initially started to compete with incumbents, only to realize that partnerships are the way to go to rapidly implement the solutions they offer. Others never set out to compete, and rather design new-world products targeting a different demographic of users.
The most obvious examples relate to the new crop of wealth management firms and products specifically designed for crypto assets, carrying out many of the functions of what existing financial institutions provide for traditional assets. Other examples include the ConsenSys hub-and-spoke method and their roster of decentralized projects.
Many blockchain ventures are, in fact, attempting to tackle the very problems our clients are trying to address.
BAT seeks to modernize the publisher-advertiser-consumer relationship through the use of tokens between advertisers, publishers and users. Another example is DataWallet, the Draper-backed consumer-to-business data exchange that connects consumers directly with businesses.
When companies like these are mentioned in the boardroom, I am often met with blank stares. The blank stares are completely understandable. Established business with established business processes operate in a separate and distinct world from many of the new blockchain technology startups. In their defense, many blockchain startups are doomed to failure.
Anecdotally, they are often run by entrepreneurs with big ideas who lack the industry knowledge to understand the dynamics of the markets they are disrupting, the network effects or the regulatory complexity that takes a seemingly simple process and buries it in compliance. And that’s fine, 99% of startups fail – that shouldn’t be different in cryptocurrency world.
However, these initiatives could be wildly successful in 2018 because they are starting from scratch, funded through the increased gains of the crypto market or ICO funding – rather than by VCs or enterprise partnerships. Indeed, some of these business models are intentionally (or accidentally) defying the odds of what we would predict to be successful.
At a minimum, enterprises have an opportunity to learn from the unorthodox new ventures emerging in the blockchain world – either via a post-mortem review of the successes or missteps of a blockchain startup, or (preferably) by observing what’s going on during the life cycle of the startup.
And we’re certainly seeing this starting to play out – the Spotify acquisition of Mediachain in the spring of 2017 made headlines, and is likely to be a harbinger of what’s to come.
In Spotify’s case, we had the already established disruptor to the incumbents that saw the gap and possible challenge to its own business model (and hence opportunity) from further afield, and made a strategic bet to embrace the power of blockchain technology – sooner, rather than being surprised and caught off guard later.
What now? The 2018 agenda
In all, the progress being made on the enterprise front is tremendous.
We’re seeing fewer and fewer "blockchain for the sake of blockchain" undertakings and more impactful projects completed, such as Accenture’s recent work with the Monetary Authority of Singapore (MAS) on Project Ubin.
The work on Project Ubin illustrates how blockchain technology could significantly improve the kinds of payment systems that currently enable banks around the world to transfer trillions of dollars per day to each other and help them manage their financial liquidity. Recent announcements from the Australian Securities Exchange (ASX) about its forthcoming use of blockchain and the continuation of Project Jasper in Canada are other concrete examples that blockchain technology is being treated as a serious contender in the "most impactful tech" category.
For many enterprises, the journey starts with blockchain education and strategic thinking, and will certainly also result in new business models and collaborations. When it comes to blockchain, we will not know with certainty how the future state of the technology will look.
The best recommendation is to keep moving, learning, and testing out business models. In the midst of this technology paradigm shift, it’s ok to think really big – in fact, it's imperative.
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