It’s been almost a decade since blockchain technology made its debut. Since then, blockchain has evolved more quickly than anyone could have anticipated. It was designed to be a decentralized tool with potentially dozens of applications. Blockchain startups have attracted billions in venture capital and everyone—from banks to supply chains—is exploring blockchain-based projects.
For many, though, a key challenge remains: quantifying success. How can an organization tell when it’s making gains with the technology and justify moving projects forward to the next level? With many companies thinly spreading their resources between different emerging technologies, a mature approach to evaluating your blockchain implementation is crucial.
Getting on the Bandwagon
For many companies, blockchain is a bandwagon technology. It’s new, it’s exciting, and it lends superficial credibility to projects. They adopt blockchain technology for the wrong reasons and inevitably see their projects fail. The more failures the industry sees, the more disillusioned people become.
It’s the same with many technologies, which is why Gartner developed the Hype Cylce for Emerging Technologies, which charts a young technology’s journey from research lab to commercial adoption and beyond. Somewhere along their journey lies the trough of disillusionment, when early adopters find the technology lagging behind expectations. According to Gartner, blockchain technology entered that phase this summer.
Setting Yourself Up for Success
To make your blockchain implementation truly transformative, projects should begin with the business objectives and apply blockchain technology when they can capitalize on its key characteristics. A decentralized, immutable trust model keeps all players honest. For example, for financial settlements or supply-chain management, blockchain can be a powerful tool.
Alignment between technology outcomes and business goals is a key factor in blockchain project success. Start with business objectives, which should be specific, measurable, agreed-upon, realistic, and time-based (SMART). Because SMART business goals have measurable objectives, executives can use them to create key performance indicators (KPIs). They can then use these to measure the performance of the blockchain-based business system. For example, a business goal might involve cutting costs and time by limiting an intermediate third party and dealing directly with customers. That could be a candidate for a blockchain implementation because there is clear mapping between blockchain qualities and the business goal. It’s the right tool for the job.
Measuring Your Progress
The metrics used will depend on the business vertical and the specific use case. They will also depend on the business stakeholders. For example, finance executives may have different agendas from managers in other lines of business. Aligning these multiple objectives is a key part of the planning phase.
There are few, if any, frameworks for measuring blockchain success in this way. Consider creating a quadrant for each business goal, with X and Y axes representing two related metrics that you can use to plot performance relevant to that goal. Cost per transaction and time per transaction are two examples that might fit a particular business objective. Set dates to evaluate the performance of a blockchain implementation with a clear indication of where you’d like each data point to be. By measuring these indicators, companies can see how well their blockchain-based systems are performing against expectations. If a company measures a legacy system that the blockchain is replacing against the same metrics, it can be a useful tool in quantifying blockchain technology’s benefits compared to previous solutions.
Unlocking the Value of Corporate Data
Beyond the immediate value to a particular business application, consider the potential value of the blockchain as a means of capitalizing on your other business resource: data. Companies will generate increasing amounts of data in the next few years, not only from existing business systems, but also from new initiatives such as connected IoT sensors. This data has an immense amount of value for third parties, but it must be sold via secure marketplaces that protect sensitive information and only allow the appropriate data to be transacted.
Blockchain technology will be a useful tool in the development of these marketplaces. It could generate significant new revenue streams for companies as they unlock the unrealized value in everything from connected fleet vehicle tracking systems through to usage data in consumer devices.
Companies must manage this process sensitively and with a deep understanding of data privacy and information flows. Partnering with the right big data analytics company provides a powerful enablement layer for ingesting, processing, and analyzing data.
The important thing here is for companies to see blockchain as a means to an end, rather than as the end in itself. The truly successful blockchain will be invisible, serving merely as efficient infrastructure to power decentralized applications that deliver benefits to all participants.
If you want to know whether your blockchain project has succeeded, don’t look at the blockchain—look at the business benefits it brings.
To learn more about blockchain, and its impact on data marketplaces, read this article.