7 ways to promote blockchain in the enterprise

As the technological foundation of cryptocurrency, blockchain has taken center stage during the volatile ups and downs of the digital currency age. Yet blockchain has yet to play a prominent role in most businesses, with only a few established pilot applications and tepid enthusiasm from the business community.

Blockchain adoption depends on finding the right use cases, creating a strategy and focus, and encouraging people, Northeastern University professor Ravi Sarathy said during a recent MIT Sloan Management Review webinar on the business case for blockchain.

With the right tactics, businesses can overcome the organizational, financial and interoperability challenges of incorporating blockchain into their operations, said Sarathy, the author of a new book on blockchain and business. Companies need to make a serious effort to advance the technology, he said, although building an effective cost-benefit case for blockchain requires consideration beyond the usual return on investment.

There are still only a handful of enterprise blockchain initiatives, and Sarathy pointed to a few that he believes are harbingers of things to come. One is IBM and container company Maersk’s TradeLens partnership, a well-established blockchain-based supply chain monitoring application used to track shipments and help global trading partners share information and collaborate securely.

Other notable use cases that illustrate the power of blockchain at scale include NBA Top Shot, which allows fans to buy, sell and collect NBA non-fungible tokens (NFT) minted on the Flow blockchain platform; Filecoin, a blockchain-based decentralized digital storage and data retrieval marketplace; and Axie Infinity, an NFT-based online video game.

“While blockchain has not yet been adopted by enterprises at scale, there is significant promise and it is only a matter of time,” Sarathy said. Based on current market activity and taking into account existing challenges, Sarathy said he expects large-scale enterprise blockchain applications to become commonplace by 2030. “Progress is making it more and more possible for enterprises to start piloting and developing internal applications,” he said.

Barriers to Blockchain Adoption

Despite its benefits, such as greater trust and traceability, enterprise blockchain deployments have lagged due to several technological, financial and organizational obstacles.

• On the technology front, challenges include interoperability; the need to manage trade-offs between scalability, security and degree of decentralization; and difficulties in symbolizing real assets, Sarathy said.

• Financial concerns mostly surrounds how to quantify revenues, benefits and risks, as well as the need to coexist with legacy systems, which can quickly increase the cost of blockchain deployment.

• From one organizational point of view, blockchain is new and constantly evolving, which underscores the need to change corporate culture while dealing with the eternal resistance to change. “When you move to a blockchain, you’re really moving to decentralized nodes,” Sarathy said. “Very often you’re going to be decentralized within the organization, but also decentralized in terms of nodes that connect to people outside of your organization. It’s an uncomfortable approach to doing business.”

How to promote blockchain in the company

While there is no simple recipe for success, Sarathy highlighted some steps that can help blockchain make an impact in the enterprise. Among them:

Find the right use case. There are clear areas where blockchain can deliver based on its unique capabilities. These include security and verified identities, decentralization, an immutable audit trail, and the ability to execute smart contracts. Blockchain is a natural fit with data-intensive applications that need a high level of resilience and cyber protection, as well as for use cases that want to prevent double spending or eliminate a middleman.

“Make a checklist of all the features of that use case and see if it matches the kind of features blockchain offers,” Sarathy said. “It would be a way to think about which use cases should be pushed to the top.”

Create a strategy for legacy systems. If legacy systems work well, a decision must be made as to whether that system should be replaced, or alternatively how the two will complement each other or at least work in parallel. This is a critical but sometimes overlooked component of developing an implementation strategy.

Determine whether the focus is internal or external. Blockchain can be used to track parts being worked on within a company – for example proving that certain processes or safety steps have been followed during the manufacturing process. Alternatively, the blockchain could be aimed at information sharing across external parties – for example, electronic health records across an ecosystem of multiple providers, insurers, payers or specialists. The scope and directional focus of the blockchain is critical to the adoption and implementation strategy. “When you start thinking about cross-organizational applications, you need collaboration,” Sarathy said. “In an internal application, there is more opportunity to use hierarchy and gently, if not forcefully, persuade users of that company to join the blockchain.”

Do a benefit-cost analysis. An analysis can assess total cost of ownership, avoided costs or ROI if there are revenues generated by blockchain initiatives. Regardless of the approach, a formal analysis must be conducted to secure budgets and gain executive and corporate support for the project.

Galvanize the right people. Organizations need to prepare for blockchain by bringing in the necessary talent, from programmers to blockchain specialists in legal and project management issues. It is also important to cultivate the support of senior management who fully understand what it takes to move a blockchain pilot to a fully functioning application at scale. “You have to be able to freely develop the prototype, run the pilots and develop the results without feeling pressure because there is a certain window of time to show results,” Sarathy said.

Learn from pilots. This is a critical step for iterative improvement while reaching commercial scale for a blockchain-enabled application. Consider the role of data and analytics. Given that blockchain is likely to generate significant data, there is ample opportunity to add analytics, artificial intelligence and even Internet of Things capabilities to the mix to deliver significant business value.

Don’t start with information technology. Like any complex technology initiative, IT cannot be the driver. Blockchain applications must be rooted in business needs and calibrated to address key pain points. It is important to engage industries to identify problem areas and possible opportunities where blockchain can make a difference. It is equally important to enlist organizational champions, including top executives who are willing to take the risk and the green light. “You need a strategic perspective,” says Sarathy. “You need management involvement before it makes sense to continue.”

Watch the webinar

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