The Enterprise CIO and the Blockchain Opportunity

From data overload and tight budgets to clunky legacy technologies and anxiety over IT security, CIOs have a lot on their plate. What can solve the many challenges they face on a daily basis?

Enter blockchain technology — the solution that could impact the core IT fabric at a fundamental level, optimizing key KPIs, including organizational agility, innovation, efficiency, and governance. Let’s dig deeper into why a blockchain-powered solution help CIOs transform their companies and move towards a sustainable future.

How blockchain technology benefits enterprise CIOs

Consider what the blockchain is. In the words of Don Tapscott, a blockchain thought leader, a blockchain-powered platform can be the “immutable, unhackable distributed database of digital assets” that CIOs desperately need.

When transactions in a network form a tamper-resistant, decentralized, and public information trail, the potential for fraud, theft, negligence, miscommunication, and even substandard work becomes much, much more unlikely. Therefore, enterprise CIOs across a range of industries should be researching and testing what blockchain solutions can do for them.

From finance and insurance to tourism and retail, blockchain solutions hold the power to revolutionize core IT functions. Though the technology is still young, it’s clear it’s the answer to improving efficiency, transparency, security, and governance across enterprise networks.

Use cases of the blockchain for enterprise CIOs

Blockchain technology’s transformative potential extends much further than finance. The current amount of research and development being conducted by enterprises is amazing.

Outlier Ventures, a UK-based venture firm, tracks such activity. Companies ranging from Airbnb to Nokia to Walmart are actively examining how blockchain solutions can help them. Some highlights from Outlier Ventures’ tracker include:

  • Nearly 300 companies involved in blockchain research
  • Over 160 companies conducting proof of concepts (PoCs), such as MasterCard, Emirates Airlines, and UBS
  • 16 companies that have applied for blockchain patents, including Accenture, Amazon, and Western Union

To better see precisely how the blockchain can benefit CIOs and make the IT function built for the future, let’s take a look at how some different companies are specifically researching, testing, and using solutions.

Improving the execution and settlement of transactions in Financial Services

Stocks and bonds trading could use a boost when it comes to the speed of swapping payments. Goldman Sachs, one of the largest banks in the world, has recognized that and filed a patent for its own virtual currency, which will be used to expedite the transfer of actual money.

Speaking of their solution, Goldman says, the blockchain ledger will allow them to “instantly settle securities, based on cryptographic currency technology, without the risks associated with traditional settlement technologies.”

CIOs in the financial sector have long worried about security. A heist back from 2014 to early 2015 yielded hackers a total of $900 million from 100 banks. The hackers used phishing campaigns to gain access to administrator’s computers, which they then infected with malware to track keystrokes and snap screenshots.

A blockchain solution like Goldman Sachs is developing can remove the potential for sensitive information of traders to be seen, as such data is encrypted on a decentralized blockchain. Through a consensus-driven algorithm, any fraudulent activity can be detected and rejected.

Furthermore, middlemen like clearinghouses and exchanges slow down transactions and make them more costly, something financial IT teams have long worked on addressing. Goldman’s blockchain solution creates a peer-to-peer internal private network that gives traders direct access to stocks and bonds with the click of a button.

Eliminating counterfeits and fakes with a blockchain-powered supply chain

Alibaba has a dominating place in the e-commerce world. However, the sale of counterfeiting and fake goods has long negatively impacted the companies reputation.

It’s not just Alibaba’s problem, either. Globally, $1.7 trillion in fake and counterfeit products are sold annually.

Considering Alibaba and its platforms, like TMall and TaoBao, consist mostly of third-party merchants and individual buyers and sellers, ensuring the integrity of goods is quite difficult for the IT team. The blockchain solution they’re testing may just be the solution to one of their main business concerns.

In April 2018, Alibaba rolled out a blockchain pilot program to fight food products, which is a common worry among Chinese consumers (fake food scandals make headlines regularly). What the blockchain database allows buyers to do is see if a food is genuine through the scanning of QR code. When customers scan the QR code, they can see the origin of the food and what’s in the package, as that information is stored on the blockchain and is immutable.

When it comes to meats, such as steaks from Australia, there are even plans to include the cow’s DNA on the blockchain. This way, even burgers can be verified and guaranteed authentic.

By moving the supply chain to a blockchain-powered platform, the Alibaba IT team increases overall traceability and transparency. This allows them to enhance efficiency in their operations, improve governance, and gain greater trust from consumers.

Going forward with the blockchain

IT and the enterprise go hand and hand. The CIO’s job is to optimize the way the tech that drives the business operates. This can be done through the blockchain.

For companies like UPS and Airbus to successfully use a blockchain solution, CIOs and other leaders must start experimenting — now. And they must move quickly.

CIOs must create what Don Tapscott calls a “blockchain services supermarket,” one where they anticipate business needs and procure the appropriate applications, technologies, and talent to solve the issue at hand.

So, how should CIOs go about choosing a blockchain solution?

First, consider scale. Enterprise blockchain solutions with high scalability, such as the Loyakk Vega Platform, which is designed for decentralized business networks, can allow for safe and efficient interaction with external organizations and partners. Such a solution eliminates bottlenecks that currently exist in disjointed business networks, while keeping sensitive data and trade information secure.

Second, consider usage. Gartner strategists recommend CIOs test blockchain products in pilots to see how they can benefit the company.

For instance, for CIOs in the insurance industry, testing a product like Chainsure, a solution jointly envisioned and developed by Loyakk and Mphasis, is a great idea. Running a pilot program could show you how Chainsure can improve client onboarding, claims processing, regulatory auditing, and more.

Furthermore, CIOs should ask themselves a few things before shopping for blockchain solutions, such as:

1. Is the protocol open sourced? You want a solution built on a protocol that’s openly governed and committed to innovations for the enterprise that use it.

2. Who will participate in the network? Consider the scalability of the solution, especially if partners, suppliers, regulators, and others will be participating.

3. What will be the use cases? If you need to exchange data across a network of consumers, partners, manufacturers, logistics firms, and others, then you want a scalable enterprise solution like the Loyakk Vega Platform, which guarantees permissioning, standardization and propagation of data, value and rules across the business network via the Loyakk Token.

4. Is the technology user-friendly? As IBM advises, “key features such as consensus, permissions, and database should be modular to the needs of a specific use case.” If they aren’t, making necessary changes to configure the solution for enterprise-wide use may require complex development processes.

Finally, CIOs must remember that blockchain technology remains nascent in maturity. Don’t expect a revolution overnight.

But that shouldn’t make CIOs hesitant. The time to explore blockchain solutions for your enterprise is now. Because those that employ the blockchain sooner rather than later will win the day.