Reducing investment risks with cloud-based Blockchain
The number of active Blockchain projects is increasing sharply. Blockchain spending is expected to grow by 88 percent between 2018 and 2019 alone. But what is striking: the vast majority of Blockchain projects have failed. This could be due to companies recognizing the opportunities the technology offers but lacking the know-how needed to implement such projects profitably. The solution could be: Blockchain as a Service.
Blockchain is disruptive
Blockchain seems to have arrived in the marketplace. News about this technology is becoming increasingly commonplace. Dubai, for example, plans to use Blockchain to handle all trade transactions starting in 2020. In India, Mahindra is planning to use Blockchain to optimize delivery processes, while Toyota has similar plans in Japan. The World Economic Forum came to the conclusion that by 2025, 10 percent of the global gross domestic product will be stored using Blockchain technology.
High expectations for TCO
At the same time, however, the World Economic Forum is seeking to dampen expectations from becoming too high. Respondents to the Blockchain study “Building Value with Blockchain Technology: How to Evaluate Blockchain’s Benefits” reported they expected an average return on investment of 24 percent for their early projects, but actually achieved only 10 percent. Of those surveyed who were yet to start a Blockchain project, 59 percent said they did not believe they would see a positive return. And only 38 percent of those implementing the technology developed a business case for doing so before making the investment.
Too little practical experience
The reason for this is has a lot to do with the current lack of expertise in the field. The World Economic Forum states: “Proof-of-concept projects are often led and developed by evangelists working within research and development. This is usually carried out under controlled conditions. The transition to production requires the involvement of stakeholders and can prove a real challenge.” While expectations may have been adjusted somewhat, there is no question that Blockchain could fundamentally change a number of business processes across various industries. Some people also speak of disruption.
Adding transactions and making them visible
When you want to bring a blockchain solution to life you have to solve several problems at the same time and it is usually not in a customers core expertise. Andreas Dittrich shows how T-Systems supports.
Typical characteristics of Blockchain projects
Most Blockchain projects are limited. On average, they last just over a year. And so the question presents itself: does it make sense for companies to invest in their own hardware and software resources for Blockchain projects? Particularly since more than three quarters of CIOs have little interest in Blockchain projects, as the majority are interesting for individual business areas but less so as company-wide solutions. This also means that the respective business areas rarely seek the support of large IT providers, but opt instead for smaller, specialized Blockchain technology providers.
Advantages of Blockchain for Businesses
- Intermediary costs are eliminated
- Connect with anyone, irrespective of size or location
- Transparency over data status and completed actions
- Seamless process documentation
- Manipulability is almost completely eliminated
- Trust between partners is not necessary
- Private Blockchain can be integrated into existing IT infrastructure as a decentralized database
- When multiple companies work together to process transactions using the distributed ledger technology, it cuts costs and saves time, in particular with respect to coordination between the parties.
Why Blockchain as a Service?
- As Blockchain projects currently last only 4-12 weeks on average, it does not make sense to spend a similar amount of time on launching them.
- Shift from CapEx costs to OpEx budgets.
- Those initiating a Blockchain project usually don’t know which tools they will ultimately need later on. These costs are therefore not foreseeable. In the Cloud, users have a whole range of tools at their disposal and pay only for the duration of their use of the tool.
- For a company to be able to set up its own Blockchain environment in the Cloud, special know-how is required. As this knowledge is not scalable, it makes more sense for companies to invest in an as-a-service product than in their own resources.
Blockchain technology can be used in all areas where large-scale and comprehensive exchange of data takes place to maintain data integrity.
German Blockchain Ecosystem
Given the short duration of most Blockchain projects, it is critical that teams spend their time adding value, rather than setting up or taking down Blockchain environments. This is why T-Systems is investing in bringing German Blockchain Ecosystem (Deutsches Blockchain Ökosystem, or DBÖ) to market. DBÖ makes it possible for a Blockchain project to set up a fully functioning Blockchain environment in a matter of minutes, including not only the ledger itself, but the infrastructure, UI, off-chain storage, and a full set of tools for managing through the entire software delivery life cycle. DBÖ will support all of the most widely used DLT protocols, and allow for node creation on Deutsche Telekom’s OTC, other major cloud providers, and even on the project owner’s own infrastructure.
What advantages does T-Systems offer?
- Fast time to market
- Immediate access to a test Blockchain
- Very short lead time for the commissioning of company’s own Blockchains
- Low costs, as only transaction or resource costs are incurred
- Fully implemented dev/test/run toolkit, including DevOps
- No investment in Blockchain-specific systems or network experts needed
- Updates and security patches are monitored and quickly applied
- High level of security and trust
Blockchain at Telekom Innovation Laboratories
Dr. Alexandra Mikityuk talks about which projects T-Labs’ Blockchain team is working on.
What makes Blockchain secure?
Blockchain is fundamentally secure, since it doesn’t require any central entity, such as an intermediary. Every computer in the chain collects the same data. If one user transfers Bitcoins to another user, this is done directly from computer to computer. This is entered anonymously into a table and stored in parallel on all networked computers. So no single computer has any more information than the others. Malicious manipulation at any point along the chain is, therefore, either not critical or not possible. A wrong date alone cannot corrupt the whole system.
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