Blockchain in Canadian public sector: the foundations

Sharing value across the collaboration of organizations is critical

Co-authored with Ken Saloranta, Chief Technology Officer, Public Sector, IBM Services. This material is our own and don’t necessarily represent IBM’s positions, strategies or opinions.

Blockchain has significant potential to enhance public sector programs and the quality of services to citizens. Understanding how value chains are created and maintained in blockchain solutions is critical. In this post, we explore the basics of blockchain architecture and interoperability as groundwork. We intend to explore incentives, governance, case studies, selection criteria for blockchain solutions and why governmental program designers are well-positioned to be blockchain business architects.

IBM’s Institute for Business Value recently published their report on world wide governmental organizations’ expectations and use of blockchain.

Trailblazers are focusing on blockchains to help reduce time, cost and risk in four areas: regulatory compliance, contract management, identity management and citizen services. Additionally, they expect blockchains will enable new business models, particularly in contract management, financial transaction management and identity management.

Blockchain is technically robust, made up of well-understood and mature components assembled in a novel way. It can be thought of as a series of spreadsheets, each pointing to the previous spreadsheet then hashed and encrypted. The hashing algorithms, the public-private key encryption algorithms and the data management are long-standing, well-understood and standard. Deployment of a single blockchain instance for a single organization isn’t the compelling model.

Generic model of a private, permissioned blockchain

The value of a public sector Blockchain solution is where there already exists a strong, collaborative, multi-party business value chain.

What does that statement mean? Strength comes from the agreements and contracts that are already in place. Collaboration across multiple parties comes from having integrated processes and inter-dependencies across businesses. And the business value comes from each business contributing to the overall value through the activities they perform, and from which they derive benefit, typically in the form of profit. We can rewrite that value statement as:

The value of a public sector Blockchain solution is in having a pre-existing agreement based, contractual or regulatory environment that is integrated and inter-dependent where business transactions occur across active, participating businesses, each of whom derive benefit from their participation.

In the public sector, in addition to the participating enterprises, there would also be a regulator and an auditor organization. The value they provide to the value chain is in the oversight they provide on behalf of citizens. As examples, consider a provenance record for diamonds or other high value asset that may be under regulatory control, or the registration of corporations across multiple jurisdictions. The importance of the business value chain is key to understanding the value of Blockchain solutions.

Where blockchain differs from previous enterprise interoperability approaches is that the blockchain is maintained in whole or in part on the systems of all of the collaborators as an immutable record of the evolution of the data. It’s a shared database which all participants can read, leverage for their internal business processes and potentially update depending on the business need.

In subsequent discussions we will explore topics including assessing the value chain and establishing incentives for participants, alignment with governmental program design, a decision tree for blockchain solutions for government and case studies from Canada.

Ken Saloranta, Chief Technology Officer, Public Sector, IBM Services

I’m passionate about learning my client’s businesses in depth, gaining insight into the challenges that face them on a daily basis, and applying solutions and technology to overcome those challenges. I provide technical guidance and oversight to the IBM Public Sector consulting practice in Canada serving government and healthcare organizations.

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Michael Barnard, Executive Consultant — Cloud, Blockchain and Health, IBM Services

Focused on helping clients with their strategies related to Cloud transformation and on blockchain solutions in the Health and Public Sector. He has over 20 years of delivery, innovation, transformation and consulting experience, covering a wide span of business and technical domains. Specialties: Healthcare, grid transformation, blockchain, Cloud portfolio transformation strategy, complex program startup.

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Michael Barnard

Michael Barnard

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Advisor Agora & ELECTRON. Founder distnc & TFIE. Publish on low-carbon transformation and related politics.