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Blockchain is the latest, greatest hype to hit the IT industry. The concept might be tough to explain, but that hasn’t stopped the technology marketing machine going into overdrive, with assorted experts suggesting blockchain will have a huge impact on business operations and information security techniques.
At its simplest level, blockchain is the technology that underpins the digital currency bitcoin. It is a digital ledger that can be programmed to record financial transactions and data from various sources and objects. The ledger is produced through mass collaboration and represents a single version of the truth.
Gartner suggests the ability to store multiple transactions in one centralised ledger will transform business, and blockchain’s potential is helping to generate huge market interest. The technology is near the peak of Gartner’s Hype Cycle for Emerging Technologies, despite the analyst suggesting it is still five to 10 years from mainstream adoption.
So what do CIOs think about blockchain, how are they analysing the technology and how will it affect their organisations going forward? Computer Weekly spoke to six CIOs, who gave their opinion on how to approach blockchain and its potential impact on their businesses, both now and in the longer term.
Create a single view
Capital One CIO Rob Harding said he had undertaken a fair amount of personal research into the impact of blockchain. He said departments of his bank around the world were also analysing the potential role of the technology. “I think blockchain is very interesting,” he said.
“I think it will have a big impact in certain parts of the banking industry. But I also think it’s one of those things that is currently at the peak of its hype cycle. Blockchain needs to be deflated a bit and come down to a level where people can take sensible action. You probably need a few more partnerships to help get the technology really up and running in a successful way.”
Blockchain is often used to create a shared resource layer across multiple parties. While the potential for external organisations to share and check information represents one potential use case for blockchain, Harding said he wondered whether businesses could benefit greatly from the application of the technology within the enterprise, rather than across firewalls.
“Like many other organisations, we have a range of disparate systems – some are well integrated, others are not,” he said. “When you are trying to create a single customer view, it can be easy in some areas and hard in others. I am intrigued about how executives can use blockchain within an organisation.
“I wonder if it is possible to create a system where all your systems both contribute to and access a single ledger. If blockchain was used in this way, it could help to solve a lot of the problems that CIOs find when they try to create a single view of the customer.”
Learn from early adopters
Mark Ridley, group technology officer at venture builder Blenheim Chalcot Accelerate, is already convinced about blockchain’s potential power. “I think blockchain will be an absolutely momentous technology and I think it will create fundamental change in the way business operates,” he said.
“Look at the banking industry. It is traditionally conservative, but it is incredibly interested in blockchain. I think interest in the finance community provides a really strong indicator of the importance of the technology.”
Ridley pointed to the first cross-border transaction between banks using multiple blockchain applications, which took place last October. He conceded that the adoption of the technology would not necessarily be rapid, but said the opportunities were boundless.
“There are obviously still a lot of concerns about the technology and about how it is going to continue to grow into the future,” said Ridley. “Technology experts and industry leaders must address some of these structural issues as developments in blockchain move forward.
“But as an open ledger of transactions, I think it could be used incredibly well across entire businesses. It could be a very powerful way to help transfer digital information from one place to another – and it could become the master record of data that sits across an organisation.”
Camden Council interim CIO Omid Shiraji said bitcoin and blockchain presented potentially exciting opportunities for CIOs looking to reform public services. He pointed to the introduction of HullCoin, the local digital currency launched by Hull City Council. Shiraji said Camden was exploring how to make the most of developments related to blockchain.
“Some applications relating to identity, property and transactions can be linked to our drive to push as much as data as possible into the public domain,” he said. “But we want to do that with services, too. The real reform can come from citizens and local businesses helping each other, and local authorities acting as a trusted broker.”
Read more about blockchain
- UAE bank becomes the latest to test out the potential of blockchain technology for improving financial services processes.
- A global banking consortium, including Barclays, Royal Bank of Scotland and HSBC in the UK, has completed cloud-based tests of five different blockchain technologies.
- At 2016’s Sibos event, one word more than any other reverberated throughout Singapore’s Marina Bay conference centre: blockchain.
So what will those brokered implementations look like? For now, Shiraji is unsure. “We don’t have the answer, but that’s OK – I’m comfortable with that,” he said. “The opportunity is around finding real-life applications for the technology. And it’s not necessarily my role to do that – I want the wider ecosystem to help us find solutions.”
Shiraji and his colleagues are setting up a competition to see how blockchain technology could be used to bring about change in the public sector. The aim is to help solve real-life community problems, possibly using local technical expertise in Camden.
“We are talking now and it will hopefully happen soon,” said Shiraji, referring to the competition. “An area like blockchain is a great example of where it can be difficult to establish a clear business case. But there are two reasons for us getting involved now – we have the data and basic infrastructure in place, and we have social problems that need tackling.”
How does blockchain fit?
Matt Peers, CIO at legal firm Linklaters, recognises that blockchain – and the potential creation of smart contracts – could have significant ramifications in the legal sector. Such smart contracts would link into various ledgers and provide awareness around which parties had signed up to what kinds of deal, he said. But it was important to put such significance in context, he added.
“It will be an important technology and will undoubtedly be used,” he said. “But the introduction of blockchain could take a while, especially given that legal firms are often not the fastest to sign up to new technology.”
Peers pointed to the slow adoption of technology in related areas. He said Linklaters was using technology from electronic signature specialist DocuSign to help ensure the secure use of documents. The tool has helped to boost employee productivity, but take-up of the technology has been slower than Peers had anticipated.
It is a theme he expects to see repeated in other areas of advanced technology. “Blockchain might create significant change, but the adoption won’t be rapid,” he said. “It’s not really on our five-year horizon right now – in fact, it’s probably beyond the strategic timeframe at the moment.”
Understand its relevance
Chris White, CIO at Clyde & Co, is another legal CIO who is investigating the potential role of blockchain. His firm ran a session about the technology at its recent partner conference. The partners at the meeting analysed the technology from a legal perspective to consider its impact on the firm’s clients.
White said the general feeling across the firm was that blockchain would eventually have a significant influence. “It is something we are keeping a watching brief on, but the level of that effect is hard to predict,” he said. Much of the complexity related to the level of confusion about the technology in the IT marketplace, he said.
“The experts have many different definitions of blockchain, just like they do of big data and cloud,” said White. “An idea enters the mainstream and then, over a period of time, people get a better understanding about what blockchain is and its potential relevance to their organisations.”
The key for CIOs is to find ways to stay on top of emerging trends, including blockchain, said White. “We have pockets of people across the business who do the research, keep an eye on what’s happening in the market and share their knowledge,” he added.
Suppliers can help
Neil Moore, head of ICT at Hampshire Fire and Rescue Service, said he had also started to investigate blockchain. Like many of his fellow IT leaders, Moore is unsure about the technical implications and is looking for key technology suppliers to take a lead in developments.
“At some level, blockchain seems a lot like infrastructure – and that’s something our suppliers will deal with,” he said. “As we’re not developing the applications and security services ourselves, it isn’t necessarily an area where we have to build internal expertise.”
But Moore also recognises that blockchain could have a significant impact on the way organisations secure their applications and services. “It’s already in use in some services,” he said. “Unbeknown to us, it could already be used as a mechanism behind secure transactions.”
At a more general level, Moore said the introduction of advanced technologies such as blockchain was part of a continuing shift in the management of IT security in the modern business. “There seems to be a change in approach, from defending a firewall around the edge of the organisation to protecting the security of the actual data,” he said.
“In the old way of operating, someone who gained entry through the firewall could rampage through the datacentre. Now access is just a starting point – each element of data is protected.”