Do Organizations Need Blockchain?
Written by Nick Roquefort-Villeneuve, Head of Marketing – Ondiflo
Let’s start with the truth: Blockchain is not for everybody. After all, “truth is like the sun. You can shut it out for a time, but it ain’t goin’ away.” So why not speaking it from the very get-go? And since I’m at it, I must confess that I wouldn’t have just quoted Elvis (not Costello, the other), had Spotify not suggested that I listen to Elvis Presley’s 1973 Aloha from Hawaii Via Satellite concert while writing this piece. It’s all about feeling inspired in the moment.
As you know, there’s been so much hype around Blockchain. Many professionals have been behaving the same way around this technology as my puppy around food. That’s from a place called FOMO, or the fear of missing out. As a result, so many Blockchain projects have been started here and there, without much initial considerations, before being sacrificed on the altar of excessive expenditures among other “unforeseen” variables shortly after.
So, would Blockchain truly work for your organization?
Decentralization, At All Costs?
If your existing centralized system works and consequently contributes to increasing your organization’s revenue every year while minimizing expenses, why change anything? To regularly upgrade existing systems in order to stay up to date technologically certainly makes much more sense than breaking everything to incorporate Blockchain. It’s a bit like the new Executive hire who utterly needs to impose his or her mark immediately and does so by undoing every single bit of work his or her predecessor undertook. That never works too well…
If a key-factor behind the growth of your business lies in its user interface (UI) and user experience design (UX), and all processes that pertain to your interactions with your clients, including shopping, exchange of documents and/or payments, are efficient and in line with your financial goals, then why would you want to disrupt such a performing service or platform by embracing a new technology, with which you’re likely not to have much experience? Thus, instead of jumping on the potentially precarious bandwagon the unknown represents, the key might rather be to refine, upgrade or simply replace specific solutions.
Finally, the adoption of Blockchain signifies new IT expenditures, which represent investments whose ROI’s are always highly scrutinized. To engage expenses related to Blockchain projects can become entrapping for CFOs and CTOs, if those projects do not reach production and then do not deliver as expected or sold on paper. The hiring of software developers, who master the proper coding skills to build and maintain a Blockchain-based application and/or a Blockchain network is naturally essential. The problem is that there’s currently a shortage of skills in this area, hence an inflation in their compensations. Then, you have to add the costs inherent to (rapidly growing) storage, among other expenditures.
Should You Adopt Blockchain?
A major benefit of Blockchain technology is efficiency. Do your operations lack productiveness? If the answer is yes, then it might be a good idea to investigate what Blockchain can bring to the table. For example, there are countless B2B processes that are extremely straightforward in their conception, yet archaically managed. The fact that 50 percent of companies in the United States wait between 10 and 25 days for invoice approval, because of dysfunctions that pertain to the manual handling of tasks, clearly illustrates the lack of automation between stakeholders’ systems. Moreover, thanks to the execution of smart contracts, those processes that used to necessitate the intervention of intermediaries can now be automated in the Blockchain to allow suppliers and customers to transact directly, in a peer-to-peer fashion. Therefore, the exchanges of documents become quicker and simpler, since they don’t have to go through a third party.
Is data security a key-issue? Blockchain networks are virtually impossible to compromise. First, data stored in the network is immutable, which means that no one can tamper with it. No one has indeed the authority to delete, create or update a data. It is the same treatment for smart contracts. Their code cannot be altered. Furthermore, the Blockchain audits itself every 10-15 minutes. It means that if a node were to be compromised, the other nodes would pick on the abnormality and correct the incriminated data. The fact that the Blockchain is a network of inter-connected nodes makes it hard for hackers to compromise. A hacker would have to not only compromise one node but the rest of the network, which is impossible today.
Finally, is there a trust issue between you and your customers or suppliers? There are indeed industries where opacity does exist. And it is mostly because of an absence of automation and therefore reconciliation, which leaves room for misinterpretations, disputes and sometimes fraud. Blockchain brings transparency to all operations, by allowing all parties involved access to the same information. Each participant (a customer or a supplier) is responsible for his own node, and each node in the network stores the exact same data.
Blockchain Or Not Blockchain?
May I invite you to search “blockchain use cases” online (or a variation of that)? You’ll be able to read about projects that are currently being developed, and one may actually pertain to your industry. If you’re interested in knowing how Blockchain technology can streamline operations in the Oil and Gas industry, feel free to contact me. With Ondiflo, we’re in that business.