Democratizing Services Through Blockchain
Enterprise adoption has been relatively tentative, but blockchain technology has great business potential.
In the fast-moving world of tech, innovations can arrive, pivot and become ubiquitous in mere months. So, it’s surprising that, even though blockchain offers many benefits to businesses across sectors, enterprise adoption of this particular innovation has not been as anticipated. The possible reasons for this range from technical challenges to conservative business practices to basic misconceptions.
The most common misconception is that blockchain is exclusively used by Bitcoin. This is understandable as blockchain has its roots in cryptocurrencies and adoption of the technology has been strongly concentrated in the financial services sector, which is an enthusiastic adopter of digital innovations. Notably, blockchain use in financial services has mostly been limited to smaller businesses, even though the technology has broad applicability.
Blockchain in Context
To understand why blockchain has not been adopted by larger enterprises as quickly as other new paradigms―mobile, for instance―we must step back and take a broad, historical view of how enterprises leverage IT. Traditionally, enterprise IT focused on operational efficiency. Only recently, with the application economy’s arrival, has IT come to be seen as a business driver and revenue source.
Mobile is clearly a major enabler and driver of the app economy. Blockchain, on the other hand, seems to belong to the previous age of IT. By applying a peer-to-peer approach to networking, blockchain makes it possible to remove intermediaries from any kind of transaction and distribute computing resources across heterogeneous nodes―improving efficiency while tightening security and lowering costs.
Before the application economy, adoption of new tech was relatively slow. In the age of mobile apps, new paradigms are adopted with much greater enthusiasm. Blockchain is perceived as a rather arcane process that benefits the technical backend rather than enabling software-focused business models. This helps to explain why enterprises have approached it tentatively, if at all.
“Enterprises should focus on blockchain’s ability to decentralize and democratize the ways online services are created, secured, packaged, brought to market, managed and finally consumed.”
― Nivedita Aggarwal, Director of Information Services, CA Technologies
Blockchain in the App Economy
This perception is understandable but has to be cleared up because what blockchain does on the backend makes it an ideal enabler of the app economy―just as much as mobile, cloud or microservices. Enterprises should focus on blockchain’s ability to decentralize and democratize the ways online services are created, secured, packaged, brought to market, managed and finally consumed.
From this angle, blockchain is certainly another technology that can help enterprises be quick to market with powerful software products and to maximize the value of IT assets by making them available for third parties. And in fact, blockchain’s decentralizing impact on IT operations specifically empowers enterprises to invest less in resource management and focus more on business development.
Blockchain in Perspective
A better understanding of this new technology’s democratizing nature will be crucial to more widespread adoption. But perception is not the only barrier to blockchain. Enterprises have invested billions in complex IT systems, so implementing a new paradigm is a great deal of work. With so few blockchain experts out there, getting the human resources to do that work is a major challenge.
Blockchain also comes with inherent business and technical challenges. It can be difficult to ensure that the business meets its SLAs when services are so dependent on distributed third parties. Likewise, from a technical perspective, managing such widely-distributed systems can be a real headache when any change or upgrade can create significant complications in transaction management.
Some enterprises will be better placed than others to address the challenges. These will be organizations that have committed to the digital transformation necessary for app economy success. In effect, this means having an IT infrastructure based on components that make it possible to manage, integrate and secure heterogeneous services. With the right attitude and infrastructure, the business potential for leveraging blockchain technology is enormous.