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Sr. Director of Applied Innovation at Microsoft. Bringing paradigm-shifting digital transformation through emerging technologies.
I believe blockchain will have its breakout moment in 2020 as it moves beyond the hype machine to derive real value for mainstream enterprises. In fact, in Deloitte’s 2019 Global Blockchain Survey, 53% of respondents stated that blockchain technology became a critical priority for their organizations in 2019.
With the increased relevance of blockchain in the enterprise, key strategic trends have started to emerge. Here are five of them, along with how they will apply in a business context.
1. 2020 Will Be The Year Of Blockchain Hype Fatigue
Blockchain is perhaps the most hyped technology on the planet, but is it living up to all this hype? According to Gartner, the business value added by blockchain will surge to exceed $3.1 trillion by 2030. What this shows us is that even though blockchain technologies will provide a significant impact across most industries, this value will be realized in a much more gradual way rather than a big splash.
I’ve found that not only is the fatigue growing, but there is also frustration as well. Independent analysis of this confirms that 43% of executives feel that blockchain is overhyped.
There are many reasons for this, but perhaps the main reason is the lack of focus on business outcomes. Many blockchain pilots are focused on proving the legitimacy of a new technology. However, blockchain is a technology that forces a rethink of how data is exchanged across business ecosystems.
To combat this hype, organizations must shift the focus from pilots that prove if the technology is legitimate to developing business case-based MVPs that clearly demonstrate business value. Otherwise, these startups will not get any attention from business decision-makers to maximize blockchain’s potential.
2. A Shift To Practical Blockchain Applications
In many ways, the shift from the ideal to the practical has already begun. In 2020 and beyond, we will see this notion cement itself. Across almost every industry, blockchain is already leveraged in practical use cases, including tracking food, prescription medicine and even airline engine parts. The momentum will continue to expand as executives see how blockchain business scenarios apply to outcomes they wish to achieve.
For the past few years, blockchain was thought of in terms of its usage in the cryptocurrency world — extremely decentralized and permission-less. While that model has its applicability, often that isn’t an attractive use case for enterprises, especially enterprises that are in competitive markets or have regulations to restrict participants.
Leading organizations will come to realize blockchain’s digital capabilities. These digital business-enabling capabilities include self-sovereign data, tamper-resistant data, peer-to-peer data collaboration and distributed data governance.
To embrace this trend, leaders proposing blockchain-enabled solutions must proactively assess where these unique blockchain capabilities can either contribute to their organizations’ strategies or help identify new digital business models.
3. Digital Ecosystems Drive The Enterprise Need For Blockchain
In the wake of mass digitization, blockchain-enabled digital ecosystems will exceed the sum of their connections. Another popular term for these is “blockchain consortiums.” However, that term is fraught with misleading stigmas in the business world.
In general, blockchain-enabled ecosystems have been poorly managed, with a lack of focus, or the criteria for membership has been too narrow. This has led to insular and ineffective outcomes. Even with these challenges, the number of ecosystems is doubling in size year over year. Currently, this is dominated by financial services ecosystems. I believe there will be a shift over the next few years to where more than 80% of blockchain projects will be outside the financial realm.
Building digital ecosystems is hard, and often they do not fundamentally change the business models of participating organizations. Leaders should conduct ideation sessions with two to three companies where an ecosystem is relevant to a multicompany data collaboration and where blockchain capabilities can add the highest value. The outcome of ideation session should be a business and operating model for the ecosystem rather than a POC.
4. Enterprise Blockchain Requires A Deliberate Approach To Business Models
The long-term success and durability of a blockchain-enabled ecosystem requires an end-to-end view of the value stream and future-proofing of the business model.
These business models tend to have varied purposes, legal models and economics. Three common models include:
Founder-led: A single company defines, builds, owns and operates the solution. This is usually picked for either speed-to-market considerations, compliance needs or competitive advantage considerations.
Partnership-driven: An exclusive group of companies that shares decision-making authority as a joint venture. Ecosystems in this model have a mutual financial incentive for success.
Industry-driven: Governed by elected representatives who are designed to be a nonbias ecosystem focused on a specific industry that capitalizes on the capability of many companies.
Leaders should clearly understand their short- and long-term business objectives to ensure they make the right trade-off decisions for each different business model. Many organizations don’t stick with one business model. Often when creating a transformation road map, organizations will choose to start with one model and evolve to another. For example, starting with a founder-led model provides speed and risk aversion while the target may be to be industry-driven.
5. The Convergence Of The Trinity Of Digitization (Blockchain + AI + IoT)
Arguably, blockchain on its own can provide limited value; the real value is in the solution that is created. After all, blockchain is a data technology. Blockchain really shines when enabled by internet-of-things (IoT) connectivity and the intelligence of artificial intelligence (AI), both at the edge and the core.
Interestingly enough, Gartner revealed 75% of organizations that are implementing IoT technologies have already implemented blockchain or will implement by the end of 2020.
When organizations that are either investigating or designing blockchain solutions must look at blockchain as a component of the solution instead of the solution. Likewise, when envisioning at AI and IoT solutions, consider the data-centric capabilities blockchain will provide to enrich these technologies.
To read the original article on Forbes click here