Consultant EY was once known as the accounting firm Ernst & Young. Now it is evolving again and wants to be your blockchain partner.
In one of its first efforts to shift from traditional consulting to blockchain application vendor, EY is working with Microsoft on an easier way to pay royalties to its video game publishers.
The partnership with Microsoft, announced last week, is testing EY’s blockchain application to manage royalties between the software giant and one of its publishers, Ubisoft. The companies said in a joint press release the blockchain tool, which does not have a formal name, will run on Microsoft’s Azure cloud service and will speed the royalty distribution process from 45 days to one. When fully phased in, EY thinks the blockchain network could handle thousands of Microsoft royalty partners and process millions of transactions per day.
More Than an Accounting Firm
EY’s work with Microsoft, however, reflects a deeper investment in blockchain capabilities that could take the London-based firm, still known to many as one of the “Big Four” accounting firms, beyond its role of adviser and professional service provider.
EY wants to provide a value-added service that could build greater trust with clients that are uncertain about their future in blockchain.
In an interview with ThirtyK, EY global blockchain technology operations leader Arwin Holmes says the company now employs more than 100 dedicated blockchain engineers who are writing code, building prototypes for clients and creating tools that can be offered to multiple organizations in specific markets.
“It’s shocking to a lot of the industry that EY, as a firm, could be creating software for a software company” like Microsoft, Holmes says. “But we have experience in working across all sectors and industries, and in terms of blockchain, we have no dependencies to block us from bringing solutions to the table. [Blockchain] touches all our service lines. There’s impact everywhere.”
EY is not alone among major consultancies pursuing blockchain opportunities. PwC is offering a set of assessment services around blockchain, for example, while KPMG has a distributed ledger advisory practice aimed at sectors like financial services.
The ‘Year of Industrialization’
Holmes says EY began developing its blockchain operations team two years ago when it was primarily focused on developing proof-of-concepts of potential blockchain use cases. He called 2018 EY’s “year of industrialization,” where it would be more formally working on pilot projects and bringing tools to market. This includes Insurwave, a blockchain application specifically aimed at marine insurance that was jointly developed with Guardtime to help manage risk for commercial vessels. There’s also EY Ops Chain, a set of applications and services aimed at helping organizations commercialize the use of blockchain technology across the enterprise.
Holmes says EY is not interested in becoming a platform provider on the scale of a Microsoft, Google or Amazon. Instead, he says, the work his team is doing represents a value-added service that could build greater trust with clients that are uncertain about their future in blockchain.
“For some of our clients who are not in the high-tech sector, it takes a more pragmatic approach,” he says. “Our job is to establish what cadence makes sense for their organization.”
EY has been consulting on blockchain with an automotive industry client, for instance, that wants to use the technology in back-office functions but “nothing that’s hitting revenue,” he says. If those initial projects go well, however, Holmes says he expects to see blockchain applied across supply chains and in many other areas.
Blockchain not only offers a way to streamline or bring greater trust involving transactions with established institutions like banks and insurance firms. It can also, in some cases, open the door to remove those institutions as middlemen.
Though he wouldn’t give specifics, Holmes says EY is helping its traditional clientele while also getting more involved in consortiums that may involve entirely new business models and startups.
“It’s not so much a question of if, but when,” he says. “Do you want to wait to be disrupted, or do you want to wait to be the disruptor? This is a journey we advise our clients on.”