Happy New Year from all of us at Skuchain! Here’s the state of blockchain and supply chain as we open 2019
Happy New Year to our Skuchain community! If blockchain hit the peak of its hype cycle in 2017, and serious players feverishly refined their products to meet expectations in 2018, 2019 is the year blockchain becomes reassuringly real. This year, we build on our progress and chase our excitement over core projects while acknowledging some hard industry truths. Here are our five key points as we enter 2019:
1. Be ruthless with yourself about the value proposition. The biggest lesson our customers have taught us, for which we are incredibly grateful, is that a blockchain platform has to be sharp and precise about the value it’s providing. First, solve a core supply chain problem. Only then can we aspire to leverage the full potential of a blockchain network for business transformation.
In many ways, blockchain has been a revolution in search of grassroots support. While the industry has benefited enormously from sweeping statements about its potential to completely change trade, supply chain, financial services, and the like, target customers were wondering–rightly–how that change would be achieved. How does one encourage adoption? Is blockchain really better than a central database? Will the money I make from this actually be worth the cost of the infrastructure and training? The reality is that, just like every other technology, enterprise blockchain has to offer demonstrable value for a business and its ecosystem to move beyond the experimentation phase.
What this means in practical terms is that a vision for supply chain and blockchain can and should continue to be expansive but has to focus on making a true difference in balance sheets and operations. At Skuchain, we are realizing collaborative commerce by securely extending the traditional ERP across a supply chain with our collaborative resource planning, or CRP, platform. We then harness all that information in our EC3 platform of blockchain-based applications for capital opportunities. Reorienting supply chains to be more decentralized, friction-free and liquid is not a small goal, but it is all the more exciting because it tangibly solves the systemic problems that manifest themselves in day-to-day inefficiencies.
2. 2019 is the year of production deployments. According to a 2018 Deloitte study, 41% of surveyed executives planned to undertake proof of concept or pilots within 12 months. A significant crop of go/no-go decisions on whether to proceed with live implementations will happen early this year.
Existing products will either peter out or take off. For Skuchain’s teams, the process of successful implementation requires a great deal of collaboration, vigilance and user education. As a neutral third-party blockchain platform provider, we are in a position to shepherd that implementation across stakeholders, and we never take for granted that our customers and their supply chains have given us enormous trust and responsibility to be their partner for supply chain transformation.
3. Win the war of networks. One consistent concern we hear from customers is the potential for lock-in when there are many existing business networks, and new ones are being announced constantly. They are concerned that their choices today will leave them stranded and unable to participate in the network winners yet to come. All of our manufacturing customers, for example, have Tier 1 suppliers who are almost as big and have already undertaken their own blockchain projects. When it comes time to link these networks, an efficient network architecture needs to be agreed upon that will maintain data privacy and decentralization. Unless good technology choices are made, coordination across supply chain partners will fail, and an ecosystem will never be built.
As the provider of an application platform with built-in blockchain-as-a-service, our primary objective is to facilitate as much cross-chain functionality as possible. A key enabler of this functionality within our offering is a blockchain gateway that allows ecosystem players to communicate across networks via their own peer nodes, thereby maintaining privacy and decentralization.
4. Address the governance problem early. Who will be the admin for a blockchain network? The obvious answer is the originator of that network, but what if that business is in the middle of a supply chain and has to work that much harder to bring their partners on board? We’ve seen a variety of answers to these questions. Oftentimes, the anchor buyer uses its market power to lay ground rules for a network. However, we have also seen trading companies and bank intermediaries deciding on governance. Sometimes, an ecosystem feels it is best to outsource governance to a consortium body to build trust and impartiality.
What we have observed across all of these answers, is that the fastest and most successful deployments are those where the governance issue is surfaced for consensus at an early stage with key supply chain partners. For a networked product across many large enterprises, efficiently building minimum viable consensus is as important as developing a minimum viable product.
For ecosystems as large as an industry or a geopolitical trading community, where multiple blockchain business networks will be the norm, standards-setting for interoperability and best practices is required. Such standards-setting requires the involvement of parties, such as Skuchain, seen as neutral and impartial.
Skuchain has shepherded many governance efforts among its customers’ ecosystems and industries and is also involved in a standards-setting effort in the banking community via leadership of the BAFT Distributed Ledger Payment Commitment (DLPC) workgroup for trade finance. The DLPC standard will start to see formal adoption this year.
5. Track and trace is not enough. This is a conclusion that few would like to admit because it is almost tantamount to saying everything track-and-trace represents, from provenance to prevention of fraud, to ensuring the quality of goods, is not sufficiently important. One hard truth that companies have had to grapple with is that while consumers care about these issues, they oftentimes don’t care enough to pay a premium to solve them. In addition, the benefits of supply chain visibility accrue to downstream supply chain partners. While upstream businesses provide the crucial data, they have little incentive to use this system.
In addition to these two friction points, knowing the origin and status of inventory in the production process is of limited interest in and of itself. Only when paired with other data does this information become useful.
Our two main goals heading into 2019 are to continue to deliver on customer success and pursue innovation in the blockchain space. Blockchain adoption is earned by ensuring our customers find our products valuable, enjoy using them, rely on them and see a direct positive impact in their supply chain organizations. At the same time, innovation is at the core of our DNA. Even as we maintain the reliability of our platform for production deployments, we will continue to develop and incorporate the best technologies for confidentiality, interoperability, and scaling at the same fast pace that we and our customers are accustomed to.
Skuchain is entering a period of significant growth in early 2019. To set us up for the next phase, Rebecca Liao, our current VP of Business Development and Strategy, will be moving into the role of Executive Vice President, where she will continue to lead business and operations. Ranga Krishnan, our VP of Technology, will take on the additional role of Blockchain Fellow and will continue to lead our efforts in blockchain innovation.
2019 promises to be an exciting year, and we’re thrilled to be sharing the growth with all of you. Thank you for your continued support!