At today’s Hyperledger Global Forum in Basel, the challenge of enterprise blockchain adoption was raised more than once. The hype exceeds the rate at which blockchain projects are going live. However, adoption is likely to be higher than it seems. Plus there’s a steady flow of projects getting to production. And multiple startups that target enterprises have demonstrated adoption strategies that are working.
Brian Behlendorf, Executive Director of Hyperledger, brought up the 1998 IBM survey of the top 100 CIOs. When asked if they were using Linux, only one CIO said yes. But when they surveyed line-level systems administrators, it turned out that 95% of the companies were using the operating system. Because the software was free, the CIOs were unaware as they hadn’t seen any invoices.
Likewise, Behlendorf can see the progress in blockchain today: “at the ground level where the developers are working, where the startups are working, where pieces are being put together, that’s emerging,” said Behlendorf.
Jesse Chenard, the CEO of trade finance startup Monetago echoed the same sentiment in a separate talk. “These are enterprise sales. And a typical life cycle for these things is a couple of years.” Hence he still expects to see another year of pilots and proofs of concept (PoC).
Evolution not revolution
Monetago’s solution reduces trade finance fraud by sharing illegible invoice data between financiers to ensure a seller doesn’t try to raise finance multiple times with the same invoice. One of his fellow panelists spoke about public blockchains with disruptive business models and bemoaned that Monetago just addresses a small part of a bigger process.
Chenard gave a robust response: “You have to start somewhere. It’s great to have a utopian vision, and the end state should be what you’re focusing on, but how do you get people to the table today? How do you get them to agree that they will put one part of their business process on the blockchain? It’s incremental, it’s not revolutionary. That’s the way we’re going to see this deployed, at least at the enterprise level.”
And Chenard has backed up the talk with action. In India, there are a handful of trade finance networks that focus on microbusinesses. That’s where Monetago saw the first production adoption of its Hyperledger Fabric platform three months ago. Now it’s integrated with SWIFT in India making it available to all Indian banks. Plus Monetago is finalizing paperwork in another country where it will cover 80% of trade finance transactions. Whereas the Indian banks are mainly local, the new banks are international.
The Monetago CEO also has strong opinions about how you approach the sale. It’s not about the technology. It’s about solving business problems. “When we first started talking to banks and said we were a blockchain company, they said ‘oh great go talk to our IT department,'” Chenard explained. “And now when I go in and say ‘hey who runs your trade finance products, would you like to reduce fraud in receivables?’. They’re like ‘great’, and they don’t care if it’s a blockchain.”
Another startup with a Hyperledger Fabric blockchain in production is Circulor which created a traceability platform for the tantalum mineral that’s widely used in consumer electronics. It’s classed as a conflict mineral similar to “blood diamonds”. To get the project going, it needed to persuade several participants. Those included the Rwandan government, mining company PRG Resources which supplies Apple, and a refiner.
Douglas Johnson-Poensgen, Circulor’s CEO, was clear about the adoption strategy. “It’s a mindset shift. The idea that a corporate entity is the master of its own destiny and imposes requirements on its supply chain, for example, is the most prevailing business doctrine, in my case, of how supply chains work. The idea that they might collaborate to collectively join the dots for traceability is new.”
While persuading the first group of participants was a challenge, it gets easier. “Once you’ve started, other people look at it and go ‘that’s really interesting'”, observed Johnson-Poensgen. After announcing the Rwandan project in October, the CEO says he now has a bigger sales pipeline than he knows what to do with and has just signed another MOU.
Anyone who’s ever tried to sell a technology solution will know that demos are critical. A description doesn’t work. Only when someone tries to use a solution will they see both the benefits and the pitfalls.
Ales Zivkovic is CTO at Soramitsu Labs, which is one of the drivers behind Hyperledger Iroha and has numerous Japanese partners including Hitachi, Honda, NTT Data and Panasonic. Zivkovic gave the example of a government which got suppliers to deploy various solutions in a sandbox. That enabled potential customers to use the blockchains and even identify problems. At least then the issues could be addressed. And it helps enormously with education.
Technology challenges like scalability have been addressed and are continuing to improve. Change Healthcare gave a talk at the conference and spoke about their health claims blockchain that can process 550 transactions per second.
There’s now a much broader range of cloud providers supporting blockchain hosting which means in many cases administrators can use their preferred cloud. Network administration is a current skills challenge which Hyperledger is addressing with a certification program. The Hyperledger Sawtooth program has launched with Hyperledger Fabric to follow soon.
This doesn’t mean that every hurdle is addressed. There’s still plenty to worry about from governance to the legal aspects of smart contracts.
“If you are looking for a problem you will always find one,” commented Zivkovic. “So I think with blockchain you can always find a problem and use this as an excuse to your management board to say ‘it’s too early’ or ‘it’s not for us’ or whatever you want to say. But you might be missing a huge opportunity.”