An increasing number of large businesses are developing or looking to purchase blockchain technology.
According to a Deloitte survey previewed Tuesday during this week’s Consensus 2018 conference in New York, 39 percent of the more than 1,000 global companies surveyed are planning on investing $5 million or more on blockchain technologies in the next year, and 43 percent consider blockchain a “critical” top-five strategic priority. Deloitte will be releasing the study officially next month.
These results represent “a good signal and sign that investment is going to blockchain and people are finding meaningful use cases,” according to Linda Pawczuk, a Deloitte principal.
Not Your Father’s Microsoft
In many cases, enterprise companies are reaching out for solutions. Microsoft has been a presence at Consensus for the last three years, but its cloud-based foray into blockchain came at the behest of its enterprise customers, Product Manager JT Rose said.
“This is not your father’s Microsoft,” he said. “We’ve had hundreds of customers coming to us and asking for help building with blockchain.”
Rose said blockchain applications generally have a core use case: an asset moving across corporate and trust barriers. If companies don’t have these requirements, they “will save a lot of time” by eschewing blockchain solutions, he added.
Speakers working with large industries agreed. Accenture Managing Director Sarah Banks calls blockchain an “outside-in” technology for large industries working with external partners, not a replacement for enterprise resource planning software. “You have to find the right use case,” she said.
“Blockchain is a clearly evolving area, and we intend to embrace it and maintain our leadership position,” says FedEx CEO Smith.
When evaluating use cases, “focus first on the business value and look to find the right technology to make this happen,” saidd Torsten Zube, head of blockchain for SAP, which is working to solve industrywide challenges ranging from the drug supply chain and food provenance to pallet management.
Absolutely, Positively Logistics
Logistics have been an early starting point for blockchain in the enterprise, and FedEx founder and CEO Frederick W. Smith knows something about logistics. As a startup, FedEx built the first chain-of-custody system in the early 1970s, he pointed out. As logistics have become increasingly global, blockchain “has the potential to completely revolutionize trade across borders,” Smith said. “Blockchain is a clearly evolving area, and we intend to embrace it and maintain our leadership position.”
By making information available to customers and other carriers, blockchain could give FedEx the ability to collaborate in new ways, added Chief Information Officer Robert Carter. “Our brand is about trust, and to extend that trust beyond the things we do for customers … is fascinating to us.”
Other enterprise providers offered a wide range of solutions to complex challenges. Deloitte focused on its work with partners developing a blockchain-powered intellectual property management system. IBM’s Consensus presentations focused on solutions addressing what Senior Vice President Bridget van Kralingen called “the social good,” including work with microfinance, carbon offsets and charitable donations.
“When we use the potential blockchain has, we can solve some really big problems, but we can also solve small problems at scale that can be transformative,” said Simon Moss, managing director and co–founder of Global Citizen, which with IBM issued a developer’s challenge to build a system to speed and verify charitable contributions. “The unlocking effect that will have on trust will be profound,” he added.
Skepticism and Scale
There are some skeptics, however.
During a different part of the conference Blockchain Capital’s Jimmy Song criticized, to much applause, much of the applications space, calling it “buzzword bingo.”
“Blockchain isn’t very useful for most of these businesses,” he said. “The obsession with decentralizing things that have no function in a larger centralized system makes no sense. You can’t sprinkle magic blockchain dust and make your problems go away.”
Joseph Lubin, a co-founder of Ethereum and founder of ConsenSys, responded that interoperability is key for the enterprise. “Many centralized entities compete and collaborate with each other,” he said. “They can develop shared collaborative architecture [to address shared challenges] on the blockchain.”
“Any network is only as strong as its weakest link,” Song replied.
Scale also remains an issue for enterprise customers. “Some of these supply chains have millions of participants,” said Amber Baldet, JPMorgan Chase’s former head of blockchain, who unveiled the startup Clovyr during the Consensus conference. Clovyr will help consumers, developers and businesses explore blockchain-based, decentralized technologies, she said.
“At what point does a private chain develop the same challenges as a public chain?” she asked, suggesting that private blockchains could wind up with the same scale issues as public ones if they get really big.
A Slow Blocktrain Ride
FedEx, however, is committed to blockchain and is looking at its freight business — which has lower volumes but higher values than its core operations — as a place to start. “While we absolutely believe the technology will scale, right now it makes sense for us to start with freight,” said Carter, the CIO.
FedEx’s CEO Smith agrees and is looking farther down the road. “When you stop innovating and stop embracing change, you’re stopping the pace of modernization at best, and probably facing extinction,” he said.