Blockchain Adoption- The case for Business Process Reengineering
Need to consider BPR before taking a blockchain journey
The Disruptive power of Blockchain
Blockchain technology has already gained widespread traction. The way blockchain has emerged from digital currencies and has established itself as enabler of trust for critical social and business applications like identities, contracts, legal documentation, energy trading, banking clearly shows that it is no fad. It is here to stay.
Blockchain is not about small incremental changes in business processes. It is disruptive. The businesses, stretched by the new idea of dramatic improvements in critical contemporary measures of performance, have failed to be dissuaded by the challenges of disruption.
We’re in the year of blockchain.
There is buzz around the potential impact of the blockchain technology.
On one hand is the fact that technology in itself renders limited value unless it can enable new efficiencies in business processes. On other hand is the basic question of how can they best employ blockchain ledgers and associated benefits. It is therefore no surprise that, in real world, nothing at scale has happened yet when comes to blockchain. Bernd Leukert, Member of the Executive Board at SAP, Products & Innovation mentioned in an interview “It remains to be seen if solutions based on this technology will truly act as business disruptors and how well blockchain will integrate into existing systems and processes,”.
The challenges are immense. But these need not be a deterrent to organizations who are all excited with the potential benefits. Brilliant ideas and business cases are emerging. The have Ecosystem of distributed ledger technologies has begun to develop with both startups and established OEMs are offering solutions to governments and business.
Business Process Reengineering for Blockchain
Block chain is a disruptive. But it is disruptions, that present us with amazing opportunities to create and deliver compelling services to customers using the power of innovation.
Disruptions may sound challenging to implement, but the very basic rules of process reengineering hold good. Block chain is no exception to the rule. BPR not just enable rethinking, reinventing and a radical redesign of the business process but will also create the necessary justification, calibration and recalibration of use cases from the lenses of cost, feasibility and viability.
1. Blockchain Task Group
Set the things in motion. Start by forming a core team “Blockchain Task Group” to investigate the potential of Blockchain for your organization. This team can should at minimum includes business groups, security experts and SMEs. Gradually expand your team to include enterprise architects, ICT professionals, Data Analyst, system experts as needed.
Team Charter: Prospect, business case, standardize, security, governance, and execution plan.
2. Prospect- Time to solve the Use case puzzle
There are tens of ways to solve one problem and to optimize the processes. Is blockchain the answer?
Design thinking and Block chain Discovery Workshop are definitely the most suitable for the purpose of defining that most viable and feasible use cases that can stay relevant to regulations and standards while promising agility. Think disruption. Define ambitious objectives. Get rid of the expensive and inefficient business processes and even abandon all the obsolete rules and procedures that have been used up to that time that do not add value and creating new (including unimagined) ones. It is time to shorten cycle times through the introduction of simpler and more streamlined operations. Motivations could range from industry and technology directions as well as internal use cases
Use case should be not only quite compelling, it must also garner that much needed attention from the business groups. Use the usual route of POC to showcase the promise and prove the point.
Define the Limitations – Important, because blockchain technologies may not make sense for you.
3. Adoption Plan – Business Case and the Change Management Puzzle
Simple it may sound, but block chain means quite a challenge in terms of change management.
POC proves the technical viability. But that’s not enough. All use cases must be tested on basic parameters of commercial viability, motivation and adoption risks.
- In real terms “blockchain is a way of introducing trust into an untrusted environment and for exchanging value over a distributed network without an intermediary “. It leads to adopting a parallel new way of managing identities, security, transactions and entire networks.
- Blockchain establishes transparency and this might create initial resistance among the value chain partners. It is also important to establish motivation and incentive that will enable on boarding of all partners in the value chain.
- Blockchain technology means heavy usage of IT and networking power. Costs can be demotivating.
- Risk- It is important to Ways to minimizing risks associated with change
4. Implementation Plan – IT takes over
A convincing business case and budget in hand, time for IT to add value
- Define Performance- Creating a new list of critical contemporary measures of performance – is it fit for purpose with respect to transparency, speed, reliability and cost of operations
- Solution Architecture – an architecture that lets applications work with the blockchain seamlessly and accelerators that allow integrating blockchain technology within the enterprise software (including one for the IoT-enabled scenarios that blockchain may entail) to put that use case into action is another step. Accelerators, provided by enterprise application providers, abstract the complexities of blockchain application while exposing the newly found functionalities to legacy applications
- Standards- Blockchain technology is quite unprecedented. There are multiple fragmented blockchains, each with their proprietary, somewhat non-interoperable standards and protocols. While Bitcoin has the benefit of being the most secure public blockchain, Ethereum is making waves as the most extensible. Namecoin is better choice for distributed DNS, Sneryo is trying to create a world computer, Synereo’s 2.0 tech stack to incorporates all faculties needed to support decentralized computation without central servers. Railroads weren’t standardized for decades and blockchains too will take their time to standardize. But IT must define a starting point.
5. Risks- The Governance and Ownership Puzzle
The final step of defining governance to ensure that teams can focus on value-added work.
Distributed immutable ledgers provide multi-organizational databases with a nearly perfect audit trail, owned by no one and everyone in the chain. But just like everything else in business, these new ways of doing business too will come with their own set of risks. It is not just important to define those risks and their implications but also important to establish governance framework in terms of ownership, liability and responsibilities of the various partners in the value chain.
Establish the responsibilities of all members including the authority to write ledger and process to follow if something goes wrong. Explore regulatory framework for risk mitigation.
Blockchain is the technology of the future. It is an inevitable journey. With some caution and right approach, CXO can mitigate the risks. Blockchain technology offers immense transformation potential. Enterprise solution providers like SAP, are the best partners to enable the adoption of this technology – providing the right strategic and technical support for your blockchain voyage.
Bharti is Director, Digital Transformation and CXO advisory at SAP.
She provides the thought Leadership for the strategic client initiatives in disruptive technologies of analytics, blockchain and IOT including. She has been leading several large and complex IT consulting, process re-engineering, system integration, and business transformation programs across marquee clients globally.