In July, 2019, the World Economic Forum and Accenture released Building Value with Blockchain Technology, a white paper aimed at helping organizations evaluate blockchain’s benefits and build an effective business case. The white paper is based on a global survey of 550 individuals across 13 industries, including automotive, banking, and retail; interviews with CEOs and public sector leaders; and a detailed analysis of 79 blockchain projects.
Survey participants were asked for the top reasons that led their organizations to invest in blockchain solutions. Across all industries, the top three priorities were “full traceability of information on the blockchain”; “ability to ensure data has not been tampered with”; and “increased security”. “New business 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. Worldwide spending on blockchains solutions is expected to reach almost $3 billion in 2019 and close to $12.5 billion in 2022. 51% of survey 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.”
Based on its analysis of almost 80 blockchain projects and its dozens of interviews with private and public sector leaders, the study developed the “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. Each dimension includes a distinct set of blockchain-enabling capabilities that provide a solution to a concrete pain point or present an area of opportunity. “Consider this as the validation that blockchain is the correct technology to solve the current-state priority and a first step for future development to focus on.” In addition, the framework will help identify where the real value will be created. “Each driver touches on important components of the business that are driven by technology – and when the time comes, these value drivers become the basis for any business case.”
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 fully traceable shared ledger of transactions to all parties;
- 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 leading edge 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; and
- standards – organizations working together in a blockchain ecosystem must agree on a common set of protocols and rules by which they will work together, which will result in improved time to market and productivity
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, which facilitates the timely resolution of disputes among partners;
- resilience – blockchain’s distributed ledger mitigates the risk of data loss or corruption due to natural or man-made disasters, hacking attacks, malicious or incompetent employees, or other such events; and
- trust – blockchain significantly 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, company or government,” 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; and
- identity management – blockchain technologies significantly improve 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, its potential business opportunities as well as competitive threats, and the overall impact on a given industry. “Each organization should have a senior leader responsible for understanding and tracking what is happening with the technology and within industries.”
Set realistic expectations. “Like any major business or organizational transformation, success is dependent upon more than simply plugging in the technology or spinning up a blockchain node… 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.”
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. “Different strategies are correct for different organizations – for some, not investing immediately is the correct response.”
Evaluate blockchain’s value relative to other technologies. “For many use-cases, other technologies will be lower cost, lower risk, and implemented more quickly.” That’s why it’s important that organizations carefully consider whether there are better-suited solutions for their use case before committing to blockchain.
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 individual 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. In fact, a lack of collaboration can undermine – or even block – such transformation. In assessing value, it is important to consider network and scaling effects, particularly as enabled by collaboration.”