Invited by Aerce (Spanish Association of Purchasing Managers) at the end of march, on the occasion of the Buyer's Day in Barcelona, I had the pleasure to make a presentation about Blockchain and its application in procurement.
I am grateful to have been able to share my experience and exchange testimonies and opinions on this topic with the companies present there. We all read about Blockchain, we watch videos, we participate to keynotes, and these multiple introductions give rise, at one moment or another, to a sensation of vertigo.
Sensation that, in fact, I had.
"It seems very interesting, I'm starting to understand, but that means an important transformation of the processes", "who knows how to develop such projects?", "How to convince my partners?", "How can I explain this to my colleagues or my managers? "
In addition, it is easily understood that Blockchain requires involving an entire ecosystem of actors: suppliers, subcontractors, certification bodies, etc. For this reason, it differs a lot from other technological changes that do not need to involve such a complete ecosystem. As a matter of fact, Blockchain does not make much sense for internal projects in your own company, since it is assumed that trust, the key added value that it offers, already stands.
And here is another factor of paralysis at the time of acting.
Likewise, the growth and after the brutal drop of the famous cryptocurrencies has blurred the landscape. It has left many disconcerted, and even, some fear regarding Blockchain. The root of this feeling is the lack of clarity about the different levels of application of Blockchain and, in particular, the confusion between public and private Blockchains. Added to this is the doubt about the need to use or even create one of these famous cryptocurrencies to implement a Blockchain.
Do those sensations sound familiar ? Did you have these questions and doubts?
Good news: you are not the only one.
Second good news: you can overcome and go forward despite the uncertainty, despite the unknown.
So, how to start effectively?
The essential idea is to go step by step, with concrete cases, of your own environment, to be able to evaluate this technology and its suitability with your processes.
Therefore, beginning with the identification of use cases is a first stage of great importance. Under the form of "brainstorm", it allows to determine processes where numerous transactions are at stake and that are carried out between actors that do not trust each other. This is a good step to start involving people from your teams and start learning about what Blockchain really is. This stage concludes with an analysis of the use cases, confronting them with certain questions such as: "can the assets of these use cases be digitized?", "Do the rules of the identified processes change often : yes or no? "," Do you need a high storage capacity? ".
The answers to these questions will result in the choice of the use case that best corresponds to what Blockchain can solve.
During this stage, a very interesting learning curve for all participants will begin. Believe me, I've experienced it.
In a second stage, the use case will be materialzed in the form of a Proof Of Concept (POC). It is a "light" stage both technically and financially. Consequently, the level of risk is low.
You can achieve the realization of a POC with the support of developers who already have skills in areas of cryptography, code, blockchain editing tools.
A POC allows defining, for example:
· What the actors of the planned blockchain will be,
· What transactions will be recorded,
· What assets will be digitized,
· What actions will be executed thanks to Smart contracts.
In the POC, fictitious transactions can be developed, which do not involve the real actors, but simulate them. Thanks to them we will obtain a very good visualization of the changes in the status of the digital asset for the chosen process: ownership changes, change of value, change of place, purchase and sale in a market place, etc.
These two stages allow us to learn a lot about Blockchain, where it is best applied, which conditions are the most important and, in addition, prepare us to move (or not) to the next steps: pilot and implementation.
Thanks to the knowledge acquired, it will be possible to consider / decide on the way forward, valuing the different options such as: continue developing a solution of its own, evolve towards solutions "off the shelf", or promote a solution with the other main players in the sector as a consortium, among others.
Without having done these first two stages I consider very anticipated and / or risky to choose, for example, an “off-the shelf” solution, or a technical platform versus another one, or a specific protocol for validating transactions, etc.
First of all, because we are probably not "armed" enough to make a sound choice. But also because this technology, which sometimes compares to the Internet in the years 98/2000, is growing and changing very fast. Therefore, many things will surely change between the start of a project and the moment of its implementation (the available platforms, the methods of validating transactions, the speed of the infrastructures ...). It is better to leave the doors open for the choice of solutions when we are really clear about : what our needs are, whether those needs can be met thanks to Blockchain and that we get support from all stakeholders.
In terms of lead time, I recently read an article highlighting that, to make sense, a POC had to be done in a strict and short time: the article even figured an eight weeks period of time. This reflection seems interesting to me. Although maybe the figure of eight weeks is not exact : why not three two more weeks or a week less ?
However, the interesting thing about this point of view is to set a clear and reasonable deadline, to move from the definition of the use case to the POC. And this term should neither be undefined nor very long. Since we are in a fictitious environment and simple transactions are modelized, a POC should not involve too many complex problems.
In fact, surely between 2 and 4 months, depending on the complexity, would be good bases. If a POC needs too much time, there is something that does not work. In other words: the motivation of the team is failing, the technology is not adapted, or the objectives are poorly stated.
Thanks to the process described, one strengthens his convictions and has in his hand something very concrete to show to managers, decision makers, potential partners, in front of the possible doubts and sensations of which we speak. The POC will really be the ideal tool, beyond any powerpoint presentation, to convince the necessary stakeholders that Blockchain is the right strategy in a specific use case.
Want to test ? Want to learn more about Blockchain ?
Take contact with us : https://www.achazconsulting.com/blockchain-workshop