February 20, 2017 | Written by: Karen Lewis
Categorized: White Paper
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The IBM Institute for Business Value (IBV) conducted a global survey of over 1,000 executives to understand how blockchain can rethink enterprises, ecosystems and economies.
Blockchains transforming ecosystems
For centuries, global trade has been the single greatest creator of wealth in human history and market friction the greatest obstacle to wealth. Blockchain technology – which creates a permanent and transparent record of transactions – has the potential to obviate intractable frictions across industries.
Supply chains are prime examples of blockchain’s potential for transformation that spans industries. Initial blockchain efforts could have quick impact by transforming even a small portion of the supply chain, such as the information used during importing. If import terminals received data from bills of lading earlier in the process, terminals could plan and execute more efficiently and without privacy concerns. Blockchain technology could make appropriate data visible in near real-time – for example, the departure time and weight of containers – while making inaccessible the information about the owners and value of the cargo. Costly delays and losses due to missing paperwork would be avoided.
Blockchains could also enable a robust and secure exchange for shared logistics, coordinating a vast array of activities from sharing spare space in a warehouse to optimizing truck fleets and shipping containers. Retailers and manufacturers could greatly improve demand forecasting and stock replenishment. Financial institutions, armed with a detailed track record of a supplier’s reliability, could extend much-needed credit to fuel the trading industry. Regulators could trace the origin of goods from raw materials, making it easier to identify counterfeit items, as well as sources of tainted material.
Insights from a global, cross-industry report
The IBM Institute for Business Value (IBV) brought together a core team of blockchain experts and business thinkers to envision the future of distributed ledgers. The IBV, supported by the Economist Intelligence Unit, conducted a global survey of over 1,000 executives in banking, financial markets, healthcare, government, electronics, supply chain and IoT.
The findings from the study are published in a new cross industry report entitled, ‘Fast Forward: Rethinking enterprises, ecosystems and economies with blockchains‘. The report offers CxOs essential insight into how business networks can be transformed through the use of blockchain solutions. Using a framework of frictions, with friction being defined as events which add costs and remain a drag on global business and trade, and which can slow down or stop organizations from moving forward – for example, a lack of information, inaccessible marketplaces, or institutional inertia – the report provides both theoretical and practical guidance for business executives advocating the use of blockchain technology to overcome speed bumps and obstacles.
Propelling business forward with blockchains
Over the years, businesses have overcome multiple sources of friction. Institutions and instruments of trust emerged to reduce risk in business transactions. Technology innovations helped overcome inefficiencies. Still, many business transactions remain inefficient, expensive and vulnerable.
Blockchain technology – which creates a permanent and transparent record of transactions – has the potential to obviate intractable inhibitors across industries. As frictions fall, a new science of organization emerges, and the way we structure industries and enterprises will take novel shape. With transparency the norm, a robust foundation for trust can become the springboard for further ecosystem evolution. Participants and assets once shut out of markets can join in, unleashing an accelerated flow of capital and unprecedented opportunities to create wealth.
In theory, in practice, in action: Putting blockchains to work for you
While blockchains can be extremely powerful in their ability to overcome friction and improve efficiency, trust and value, businesses must carefully evaluate where blockchains can provide the greatest gains. They are not simply a modern database replacement; they bring the most value as a shared system of record. Blockchain-based business networks also require checks and controls across the system at the same speed to achieve the full advantage of instantaneous sharing.
For CxOs who want to extract the greatest value from blockchains, the IBM Institute of Business Value recommends businesses focus on answering three fundamental questions:
1. How fast should I move?
First movers and early adopters can position themselves for quicker returns and sharper competitiveness by leveraging blockchain efficiencies.
2. Can we achieve network-wide accepted standards?
Success in blockchain adoption will depend not on who has the best technology or app, but who can build the strongest network.
3. How can I scale with new revenue models?
Although implementing new technologies may be daunting, understand how they can help your business profit and scale quickly.
Read the complete report here: Fast Forward: Rethinking enterprises, ecosystems and economies with blockchains.
How IBM can help
As one of the world’s leading research organizations and top contributors to open source projects, IBM is committed to fostering the collaborative effort required to transform how people, governments and businesses transact and interact.
IBM provides clients with the consulting and systems integration capabilities to design and rapidly adopt distributed ledgers, digital identity and blockchain solutions. IBM helps clients leverage the global scale, business domain expertise, and deep cloud integration experience required for the application of these technologies. Learn more at ibm.com/blockchain.