I Measure ROI for Blockchain Adoption?
Blockchain technology is touted as a way to help reduce costs,
accelerate transactions and build trust between people and parties that
According to a Santander
fintech study, distributed ledger
technology could reduce financial services infrastructure costs between $15
billion and $20 billion annually by 2022, providing the possibility of
decommissioning legacy systems and infrastructure and significantly reducing IT
To break this down
further, Accenture analyzed eight banks and identified
savings of at least $8 billion per year, or approximately 27 percent on a cost
base of $30 billion. Annual cost savings could reach as high as 38 percent — or
around $12 billion.
reports and projects focus on the financial services industry as examples. But
there are other industries that are applicable, including healthcare and
agriculture, as well as cross-industry applications, such as identity
analysts are not all convinced on the merits of blockchain technology, with
some questioning its applicability in the short term outside of a narrow set of
use cases in the financial services industry. For example, Nucleus, a research
firm, analyzed the ROI of blockchain
technology for the
healthcare system and reported that “for the solutions offered, blockchain
[technology] was either not feasible, or was a solution to a problem that
to their other investment decisions, executives need to have a clear
understanding of the use case and think about both the operational savings and
new operational costs. Some of these new costs include increased power and
storage. For example, according to Jason Bloomberg, president of the analyst firm
Intellyx, “storage requirements will always be exploding, due to the fact that
each individual node must maintain an immutable ledger of all transactions back
to the origin of each blockchain.”
How Does Blockchain Technology Fit
into My Existing System?
system architecture has radically changed over the last 10 years. In 2008, 88 percent of enterprise buyers preferred
on-premises solutions, but by 2018, 72 percent were saying they were believers in a
cloud-based infrastructure. Throughout this change, hybrid solutions, such as
virtualization software, have acted as bridging points.
software evolution is the shift to decentralized architectures, of which a
blockchain is one example. Currently, blockchain technology is primarily used
to verify transactions — within digital currencies, though, it is also possible
to digitize, code and insert practically any document onto a blockchain. It is
this concept that provides the opportunity for decentralized enterprise data
architectures, once some of the key challenges around performance, security and
integration are resolved.
when these issues are tackled, blockchain technology will exist alongside
legacy systems and the most likely outcome will be a “hybrid blockchain.” Hybrid
blockchains consist of the public blockchain (which all participants are a part
of) and a private network (also referred to as a “permissioned network”) that
restricts participation to those invited by a centralized body. A private
network generates the record of transactions, which is stored and verified on
the public blockchain.
example, a healthcare provider will want to keep customer profiles on access-restricted,
HIPPA-compliant local environments, while the IoT usage data from medical
equipment in the hospital can be placed in a distributed environment on the
founder Vitalik Buterin, in a TechCrunch
interview, remarked that it will be a couple of
years until transaction volumes allow blockchain technology to compete with
Visa and there might not be a time when decentralized operations are better
than centralized cloud solutions such as AWS for serial computation or personal
data use cases.
What Are the Initial Use Cases That
Should Be Considered?
there has been no single winning use case for enterprise blockchain technology,
but a lot of individual projects that together reflect the evolution we are seeing
toward a new hybrid architecture. Companies are starting off with rapid
experimentation to determine the best applications and ensure their system
environments are production ready.
Loyyal has built out a blockchain and smart contract solution to provide
a decentralized rewards network for consumer travel and employee benefit
rewards. Meanwhile, Chronicled applies
blockchain technology combined with IoT systems to supply chains, such as
pharmaceutical firms, to help improve traceability and accountability.
Outside of these startups, most
companies should consider blockchain technology as part of their journey to
constantly optimizing enterprise technology. Therefore, like the rollout of
other new technologies before blockchains, the best approach is to find an
initial use case, undertake rapid experimentation and then build internal
support to scale.