Why IBM and the Maersk Group venture was doomed to fail. Our takeaways and the state of B2B blockchain adoption.
A few days ago, Coindesk posted an article titled ‘IBM and Maersk Struggle to Sign Partners to Shipping Blockchain’. It’s important not to make any wrong assumptions here. For example, one shouldn’t think that the blockchain is not needed, or that its adoption is impossible. Quite the opposite, in fact, as there is a huge market; one only needs to take a look at the McKinsey report to realize the obvious opportunities that this technology represents.
B2B is in need of a way to collaborate while at the same time having conflicting economic and political interests at stake. The blockchain is the obvious solution here, but the implementation of IBM was doomed to fail — which is the key takeaway here for the entire B2B blockchain industry.
The goal was to create a level playing field for competitors to interact with one another, without the need to trust a third party. The need for a trustless setup comes from the fact that all parties — shippers, manufacturers, suppliers — have different economic and political interests at stake. Therefore, utilizing blockchain technology makes perfect sense. However, the execution by IBM and the Maersk Group is not something that can be categorized as trustless or equal.
‘It’s hard enough to get enterprises that compete with each other to work together as a team, but it’s especially tricky when one of those rivals owns the team’. — Ian Allison, the author of the aforementioned article.
IBM and the Maersk Group are essentially in control of the platform. There is nothing trustless with this setup. Instead of creating an equal level playing field, the two giants made a platform and then expected competitors to join it. Smaller companies, who would want to dive in and get a piece of the market, would have to use the solution owned and controlled by their largest competitor. Needless to say, this makes no sense for the smaller company. Next to that, since this is a consortium chain where you need an authority to approve new consortium members, the processes become cumbersome and inflexible. There is no way to create ad-hoc processes and quickly change a shipper or a supplier.
Together, these shortcomings only increase the administrative burden that blockchain technology should help eliminate. This does not sound so different from a normal software solution, but in this case, it is even controlled by your biggest competitors. Adding to that the obligated product push by IBM, the entire picture looks quite bad indeed. Instead of allowing parties to use their existing systems, IBM obliges its clients to use the software and the tools developed by IBM, thereby increasing the costs of adoption and making the entry barrier even higher. In the end, one would spend more on the implementation of the platform than one would save by adopting blockchain technology.
Overall, the solution was doomed to fail due to the technical and logistical shortcomings of this cooperation. To be extra dramatic, it can hardly even be called a blockchain solution. This begs the question: is B2B blockchain adoption doomed to fail in general? Will the pilots be running forever, wasting millions of dollars, and that’s it?
LTO Network: changing the landscape or making the same mistakes all over again?
We came from the traditional sector, servicing big clients like the Dutch Government, Deloitte, DEKRA, and others since 2014. Our business was focused on workflow automation, so the problems of a typical supply chain solution and GDPR were exactly what led us to the blockchain. The shortcomings of a trusted setup — the likes of which IBM and Maersk Group essentially created — as well as a lack of security, were the key issues which pushed us to where LTO Network is today.
LTO Network developed a blockchain platform for process automation which takes a hybrid approach towards the blockchain. Every organization may create ad-hoc automated processes and invite any party they want to these processes, making the solution more flexible than a consortium chain. Every different automated process rests upon its own miniature permissionless private chain, where each event is timestamped and hashed on the permissionless public chain for security.
This approach ensures that all the parties operate on a level playing field, and makes it possible for them to connect using their existing systems instead of completely renewing their software suite. The system is also GDPR and data privacy compliant, which has been a hot topic since last May after new regulations came into force.
The beauty of the blockchain is its censorship-resistance and trustless execution, which are only possible due to decentralization of validators. The hybrid approach basically takes the best out of the two worlds.
Famous blockchain professor, Emin Gun Sirer, shares a similar opinion.
We have a custodian supply chain for the Dutch, Belgium and German governments who are already finishing running the pilot — as part of the EU tender we won in early 2018. We have also just rolled out the first implementation of the real estate portal with Deloitte, CMS, Merin, MSeven, and OSRE, which you can already try out.
More is in the making!