A deep dive into the bridge between enterprises and blockchain

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When we think of the potential of blockchain, it is nothing short of a Midas touch; and yet enterprises are hesitant to wield this huge power. Have they been waiting for a way that lets them dip their toes first? If so, looks like enterprise vendors have started indulging this wish.

Despite a buffet of unprecedented advantages such as immutability, transparency, the sheer computability of trust and wonders of disintermediation, blockchain never really took off in the enterprise pocket. Maybe enterprises needed a special format to pace them well. Maybe Minimum Viable Product (MVP) or Blockchain -as-a-Service (BaaS) is the answer that was awaited so much.

Let’s face it.

The possibilities that blockchain unleashes are both explosive and exponential. It could easily have been the next ‘cloud’, the new ‘Big Data’ moment, or a déjà vu of the ‘Internet’. It could have shaken, stirred and shuffled the industry all over again. Everyone talked about it, but something was not adding up. That ‘something’ tells a lot about the enterprise gaps that blockchain suffers and whether the industry is ready to spackle them yet.

Who balks and why?

If we leaf through the PricewaterhouseCoopers (PwC)’s 2018 Global Blockchain Survey, confidence in the technology, per se, is a huge factor foiling big plans and investments from enterprises. It came up that trust was seen by 45 % of the survey participants as the biggest barrier to adoption. Yes, increased transparency or reduced costs and speed came up as the gains that 84 % of companies (that are, in some capacity, involved in blockchain technology) have noted. But there are 29 % participants who have picked up time delays and scalability as hurdles that persist.

Incidentally, a Juniper Research in 2017 also observed how issues such as interoperability are major worry factors and how the proportion of survey respondents expressing concerns tend to go up progressively as they proceed towards full deployment. The fear of ‘significant’ internal disruption has also come on the front burner in many cases.

This is not hard to believe. Gartner has reckoned in its 2018 Chief Information Officer (CIO) survey that only one % of CIOs are in any kind of blockchain-related projects and there are eight % who are in the stages of short-term planning or experimentation with blockchain. What’s more disturbing to note here is that 13 %  felt blockchain solutions require radical changes to the structure of Information Technology (IT) departments.

Not so long back, a McKinsey report also pinned the problem on the need for a trusted enterprise solution.

If we ask Charlie Dai, Principal Analyst, Forrester about these enterprise-context gaps, he would immediately bring attention to the chasm between the performance of transactions on the blockchain and the requirements of mission-critical applications.

Enterprises need Blockchain THEIR way

Blockchain could be awesome and extraordinary or even seismic when looked at on paper, but pouring this miracle potion in an enterprise glass needs cognizance of many other factors – scale, internal disruption, formidable new infrastructure needs, ability to flex blockchain’s strength to a specific enterprise problem, and deployment ease.

Ashish Sharma, Partner, Deloitte India, digs out a major concern area that could be putting an invisible spanner in the works. “There are two parts of transfers that happen on blockchain. One is based on data and another on value. The data one is witnessing a wait-and-watch mode right now. The value one is still vague when it comes to apt regulatory frameworks and operating standards. It is not clear. Those are real, on-ground challenges.”

It’s not that enterprises do not want to use blockchain, it’s just that they are confused on the ‘how’ and want to try the relationship out in a setting where stakes and scars are not so nightmarish.

That’s a cue. And looks like, finally, enterprise vendors are listening to this need-cum-opportunity for a fresh new market.

Leave the headache to us

If you turn your neck a bit around, you will sniff this pattern. The big cheese of the enterprise industry is ready and eager to serve hesitant customers with offerings that are easy to try, consume, and get rid of if they do not work out. Small, lightweight and modular solutions are making headlines as well as tiny paths for escorting wary enterprises on the road to blockchain.

There is Oracle with its as-as-service variant of blockchain. There is SAP with its Cloud Platform blockchain, greater integration, support for JP Morgan’s Quorum, a Blockchain as a Service (BaaS) offering, a SAP High-Performance Analytic Appliance (HANA) Blockchain service – basically anything that can equip its customers to tailor blockchain for specific business needs but without the hassle of dealing with underlying complexities of multiple blockchain-based systems and networks (or so is what the vendors, at least, claim). SAP says its objective is to make blockchain actionable, affordable,

These are adjectives that other players are also chasing. From Qtum’s offering, to IBM Blockchain Platform and Food Trust Blockchain, to the ready-to-go service from Fujitsu – every major name worth its salt is trying to wrap the blockchain beast into something that is modular, elastic, flexible, cut-to-need, quick, affordable, rapid, jump-started, de-risked and comfortable for enterprises.

Shoe-horning and more

Enterprise vendors leaning in towards open source software bodies like the Linux Foundation’s Hyperledger project, the Enterprise Ethereum Alliance etc.; and those who are experimenting with Minimum Viable Product (MVP) formats or PaaS (Platform-as-a-Service) offerings – these are clear signs that vendors have begun to try the sachet approach instead of bulk boxes when it comes to selling blockchain.

As Dai dissects it – “MVP is a good approach to start small and succeed/fail fast. Leading cloud service providers are adding blockchain services onto their platforms, which helps abstract the complexity and facilitate ecosystem-collaboration.”

From the lens of Shahin Khan, Quantum/Crypto/IoT Analyst, OrionX.net, the trick to get mass adoption is to eliminate complexity and remove the need for deep expertise. “That means software abstraction for at least the main layers: blockchain, consensus, tokens and wallets, and smart contracts.”

Sounds encouraging, but there is many a slip between the cup and the lip. Even if vendors are scrambling to provide the straws in form of as-a-service and MVP formats. Yes. Doubts and challenges persist. But so does hope.

Sharing toothbrush now- What’s next?

Blockchain is not a silver bullet, Dai reminds. “But it has strategic value to build distributed trust and establish digital ecosystem. We should not overestimate the short-term effect; neither should we underestimate its long-term effect.”

As Khan underlines well, “Users will be able to pick where they want to be on that spectrum depending on their specific application.  Not every application needs to be so decentralized or so fast or so trustless.”

Recently, at SAP TechEd in Las Vegas, when the results of a SAP survey came up, it was heartening to see that 99.5 % of respondents are viewing blockchain as an opportunity. If we comb through an International Data Corporation (IDC) study too, the global spending on blockchain solutions is slated to touch $9.7 billion by 2021.

The year 2017 was dubbed as the year of experimentation where both the benefits and challenges of blockchain were seen from the trenches. This year could be about the leap from proof-of-concept projects to full blockchain deployments. It looks good to see that IT services and business services (roughly 75 %) and Blockchain platform software may account for top blockchain spending. But it is also crucial to not take one’s eyes away from the hurdles that will still haunt the industry unless the kinks are ironed out properly.

“A breakthrough like blockchain delivers its real effect only when the industry works as an ecosystem. Currently, when the industry is dealing with privacy, data issues etc. and when we can pick lessons from why private clouds were preferred over public clouds at one point – there is a lot of ecosystem and confidence work that needs to be addressed.” Sharma cautions.

Ifs and Buts

“What problems can blockchain solve in principle? What is the emerging blockchain software stack and what is the maturity of each layer?” Khan swings the spotlight to questions that it can solve rather than the answer it is glorified to be.

Experiments and tiny steps can give one a hang of what’s it is going to be like when one commits for something that is long-term (and possibly life-long too), but a bundle of unseen factors hang in the air even then. Nothing can arm you completely. Unless you know that it is not just about living with a partner, but about adapting to the bigger world of friends and family aspects that will come along.

Can enterprises be brave enough to put information and competitive edge on an umbrella ecosystem? Because the gains outweigh the risks? Can blockchain find inflection elements that helped catapult cloud and Software as a Service (SaaS) from buzzwords to hurricanes to a new industry status-quo? What would be the ‘pay per use’ or ‘economies of scale’ stroke for blockchain, if any?

Looks fuzzy for now. And that explains why enterprises can share the couch but still don’t want to share the remote control.

Khan nails the conundrum best – “Blockchain is like watching an Ingmar Bergman movie: you know it’s important but you don’t get it!”

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