Enterprise Software and ERP to Blockchain

The Enterprise Journey to Blockchain (Part 1)

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This is Part 1 of Geoff Annesley’s Enterprise Journey to Blockchain series. Read Part 2 here.

Blockchain is developing at a rapid (some would say “alarming”) rate. New startups are popping up daily, and many have big money backing them. They are targeting just about every industry you can imagine, including: advertising, finance, healthcare, logistics, online storage, and even the new digital business models of AirBnB and Uber. Is your industry in their sights?

By now most forward looking corporate business leaders, IT leaders and business consulting companies realize that the 3rd generation of blockchain networks fundamentally works and sooner or later is going to impact every market and corporation in one or more important dimensions. Scaling issues are quickly disappearing and transaction costs on many networks are plummeting.

The third generation of Blockchain is upon us, and it is going to impact every market and corporation in one or more important dimensions... are you ready? - Geoff Annesley @onenetwork Click To Tweet

The time for experiments to validate capability is coming to an end. More and more companies are making bold statements around their vision for utilizing blockchains, many large iconic cloud companies are in stealth mode buying Blockchain companies and pouring money into their own Blockchain research. Some are motivated by fear of disruption while others see new business opportunities and a once in a lifetime chance to get an edge on the competition or move into previously impenetrable markets. Yet others are struggling with the basics of how Blockchain can help their business or just flat out ignoring the technology hoping that it will not impact their business for years to come.

Many organizations are still completely unaware of Blockchain based organizations already targeting their business models directly armed with advanced well funded Blockchain platforms. Many decentralized Blockchain based organizations aim to completely disrupt brittle, complex B2B and B2C processes both technical and economic dimensions.

The problem is ERP, Planning, and B2B systems were not designed to operate in the Blockchain based multi party network world.

One of the core ideas behind the vast majority of Blockchain networks and projects is to bypass the “middleman”, including many “enterprise and cloud services”, combined with enabling parties at any location in a business network to transact directly with each other and simplify business processes. But the applications that populate today’s corporate IT landscape were designed around servicing one centralized single corporation at a time.

It is no surprise then that the value of moving enterprise applications and single company business processes that involve one party to a Blockchain network is small or negative. Processes that involve two or more parties with N-way shared objects and applications will benefit from underlying Blockchain technology. To realize value and create applications that can function in a multi party network requires significant investment and innovative thinking.

The Two Worlds of Legacy Systems vs. Blockchain and Multi-Party Networks

Traditional Enterprise IT Landscape Blockchain and Multi-Party Networks
Exponential Explosion of Point to Point EDI Connections Significant reduction of EDI – pure blockchain (no legacy systems) = NO EDI
Data Replication = no SVOT drives constant reconciliation and lack of trust Shared objects, Shared Ledger, Single Version of the Truth
Data Latency and Inconsistent State Real Time – no data latency
Silo MDMs – Master Data Model Mismatches – drives up complexity Multi Party & Community Master Data – Reduces errors and synchronizes changes
Explosion of System to System Cross References Reduced # of cross references for legacy systems
Huge learning curve and massive amounts of DApp code Fast development of network and blockchain applications – DApps
No business multi party network-aware services – legacy apps were designed to be used by one company not N Rich set of business network-aware services and multi party applications
No standard blockchain across organizations – defeats the purpose of using blockchains Cross-blockchain orchestration and chaining
No blockchain proof of service standards Standard open proof of service
High IT investment, low performance across supply chain and business networks Low investment, high performance with unparalleled business agility, security and reduced time to market for new solutions

Corporations cannot easily abandon current IT investments and jump into or easily integrate to the blockchain world. Without some type of well thought out platform approach supporting the two completely different worlds of traditional one company centric enterprise applications and multi party network based blockchain applications companies will struggle to take advantage of Blockchains promise.

There is a way to capitalize on the opportunities that blockchain provides, and transition to a more agile and efficient business, delivering more value at lower cost, while fully leveraging your current technology and investments. I will cover that in a future article, but if you want the full story now, read Bridge to Blockchain.

You can also read the second article in the series: Enterprise Journey to Blockchain Part 2.

Geoff Annesley