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Close Encounters of the Blockchain Kind: How You’re Likely to Encounter Your First Blockchain in the Enterprise

If you believe the hype, blockchain – a software-powered, decentralized ledger that is append-only and immutable – is going to take over the world in the next few years.

In descending order of likelihood (and effort), this is how you’re probably going to encounter your first blockchain:

  • Software-as-a-Service with blockchain on the back end
  • Vendor partnership
  • Custom development on top of an open source protocol
  • Developing your own blockchain protocol

What Makes Sense for You?

If you’re not in financial services, logistics, or particular types of manufacturing (like pharmaceuticals), you’re probably going to end up buying a SaaS with a blockchain on the back end. This could be your ERP, CRM, HRIS, or some other service like that.

William Mougayar, author and blockchain commentator phrases it this way: “Unless you’re a software developer, blockchains are not a product that you just turn on, and use. Blockchains will enable other products that you will use, while you may not know there is a blockchain behind them, just as you do not know the complexities behind what you are currently accessing on the web.”

For those non-developers among us, Salesforce is looking to unveil a blockchain solution this fall. SAP is in the process of developing blockchain solutions tied to their Leonardo digital innovation system. For the vast majority of their customers, this will be among their first interactions with a blockchain in the digital flesh.

The next most likely course of action is probably a bespoke blockchain solution built in partnership with vendor. Those vendors can be dedicated blockchain companies, or they can be legacy vendors with expertise, like IBM, who develop on top of open source protocols.

If you’re in one of the industries I just mentioned, where blockchain has some immediate potential, it’s worth contacting vendors and inquiring about the nature of the services they offer. Different vendors have expertise in different protocols, and it’s a good idea to make sure that your needs align with the vendor you eventually pick.

This is the path large companies like Walmart and Maersk have taken (to varying degrees).

Alternatively, you could look into custom development on top of a blockchain protocol, cutting out the necessity of a vendor to do that development for you. That would involve hiring blockchain developers and doing the majority of the heavy lifting yourself.

Custom development is a challenging proposition. Blockchain developers are rare, though their number is growing. If you want to hire a freelancer, it could cost you upwards of $250 per hour, and, if you want to take them on full time, their median salary is $140,000 compared to about $105,000 for traditional developers.

This is a good idea if you’re looking to build a blockchain business, or have the resources to operate at scale. I predict this option will apply to only a select few people in a specific subset of industries plagued with trust problems, international money transfer, and long supply chains.

There’s also the option to start completely from scratch. This aligns most closely with what companies like MasterCard have done. The considerable expense and expertise required to make this work are generally prohibitive, though in some cases it makes sense. MasterCard has made a big play here, recently announcing that it is hiring several hundred new people, including blockchain developers, and filing its own blockchain-related patents. They see their future as involving a proprietary blockchain, but theirs is a special case: again, it’s unlikely to apply to most situations.

Developing your own technology can be a great way to differentiate your organization from the competition, though most companies will have to buy most of their technology. The space for differentiation comes in leveraging blockchain solutions in optimal ways, and choosing the right partners for more serious custom implementations.

Recommendations

  1. Get in touch with your vendors if you’re interested in blockchain technology. Odds are, unless their product is bird-head-sized holes in sand, your software vendor has explored blockchain and begun to work towards a wide release.
  2. Don’t worry if you’re not going custom. Blockchain technology could become foundational in the next few years, but there are plenty of foundational technologies that competitors don’t differentiate on. Non-software companies don’t develop their own email systems because email isn’t their product, and because other companies have that covered. If your vendor is able to provide you with a blockchain solution that meets your needs, there’s no need to worry about being left behind.
  3. Breathe easy. If blockchain generally rolls out in software updates, there will be relatively few technical hurdles. You probably won’t have to take any substantial steps to prepare, which can keep things easy.

Bottom Line

Blockchain is new and exciting, but it’s probably going to come to you with feature update – nothing fancier than that. If you’re well-positioned to take advantage of blockchain technology – and willing to invest the money – you could explore working with a vendor to prepare a custom blockchain solution, or even hiring blockchain developers and going at it yourself. The way things are looking now, however, this seems unlikely.


Want to Know More?

How Will Blockchain Impact IT? Part One: Decentralized Storage

How Will Blockchain Impact IT? Part Two: Identity Management

The Back End of Blockchain