Bridge to Blockchain: The Enterprise Journey

The Third Generation of Blockchain

Blockchain is developing at a rapid (some would say “alarming”) rate.

New startups are popping up daily, and many have big money backing them.

They are targeting just about every industry you can imagine, including advertising, finance, healthcare, logistics, online storage, and even the new digital business models of AirBnB and Uber. Is your industry in their sights?

By now most forward-looking corporate business leaders, IT leaders and business consulting companies realize that the 3rd generation of blockchain networks fundamentally works and sooner or later is going to impact every market and corporation in one or more important dimensions.

Scaling issues are quickly disappearing and transaction costs on many networks are plummeting.

The time for experiments to validate capability is coming to an end.

More and more companies are making bold statements around their vision for utilizing blockchains, many large iconic cloud companies are in stealth mode buying Blockchain companies and pouring money into their own Blockchain research.

Some are motivated by fear of disruption while others see new business opportunities and a once in a lifetime chance to get an edge on the competition or move into previously impenetrable markets.

Yet others are struggling with the basics of how Blockchain can help their business or just flat out ignoring the technology hoping that it will not impact their business for years to come.

Read: Blockchain Technology and the Real-Time Global Supply Chain

Many organizations are still completely unaware of Blockchain based organizations already targeting their business models directly armed with advanced well-funded Blockchain platforms.

Many decentralized Blockchain based organizations aim to completely disrupt brittle, complex B2B and B2C processes both technical and economic dimensions.

The problem is ERP, Planning, and B2B systems were not designed to operate in the Blockchain based multi-party network world.

One of the core ideas behind the vast majority of Blockchain networks and projects is to bypass the “middleman”, including many “enterprise and cloud services”, combined with enabling parties at any location in a business network to transact directly with each other and simplify business processes.

But the applications that populate today’s corporate IT landscape were designed around servicing one centralized single corporation at a time.

It is no surprise then that the value of moving enterprise applications and single company business processes that involve one party to a Blockchain network is small or negative.

Processes that involve two or more parties with N-way shared objects and applications will benefit from underlying Blockchain technology.

To realize the value and create applications that can function in a multi-party network requires significant investment and innovative thinking.

The Two Worlds of Legacy Systems vs. Blockchain and Multi-Party Networks

Characteristics of Legacy Systems (the typical current IT landscape)

Exponential Explosion of Point to Point EDI Connections
Data Replication = no SVOT drives constant reconciliation and lack of trust
Data Latency = Inconsistent State
Silo MDMs - Master Data Model Mismatches - Drives up Complexity
Explosion of System to System Cross References
Huge learning curve and massive amounts of DApp code
No business multi-party network aware services - legacy apps were designed to be used by one company not N
No standard blockchain across organizations - defeats the purpose of using blockchains
No blockchain proof of service standards
After huge IT investments supply chains and other business networks perform poorly

Characteristics of Multi-Party Blockchain Networks

Significant reduction of EDI - pure blockchain (no legacy systems) = NO EDI
Shared objects, Shared Ledger, Single Version of the Truth
Real-Time - no data latency
Multi-Party & Community Master Data - Reduces errors and synchronizes changes
Reduced # of cross-references for legacy systems
Fast development of network & blockchain applications - DApps
Rich set of business network aware services and multi party applications
Cross blockchain orchestration and chaining - standard open proof of service
Unparalleled business agility, performance, security and reduce time to market for new solutions.

Corporations cannot easily abandon current IT investments and jump into or easily integrate to the blockchain world.

Without some type of well thought out platform approach supporting the two completely different worlds of traditional one company-centric enterprise applications and multi-party network based blockchain applications, companies will struggle to take advantage of Blockchains promise.

There is a way to capitalize on the opportunities that blockchain provides, and transition to a more agile and efficient business, delivering more value at lower cost, while fully leveraging your current technology and investments. I will cover that in a future article, but if you want the full story now, download Bridge to Blockchain: A Platform for Orchestrating Multi-Enterprise Networks.