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LES VISZLAI
Advisory Strategist

Most people trust government agencies, banking institutions, and even major brands but there are places in the world where trust in local agencies, organizations, corporations and by default, the digital information created in those systems is lacking. Information held on a blockchain exists as a shared and continually reconciled database. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker, organization or corporation to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

By allowing digital information to be distributed but not copied, blockchain technology has created the backbone of a new type of robust internet that solves the problem of malicious manipulation. Basically, by storing blocks of information that are identical across its network, the blockchain cannot be controlled by any single entity and It does not have a single point of failure. The bottom line for retailers is that blockchain is not going anywhere and can bring clear value to both the Retailer and the Consumer. There have been enough developments across both consumer and business applications, that it is time to pay attention to the technology, and where it’s headed next.

Until this point blockchain has been known for its use in tracking transactions and ownership of crypto-currencies like Bitcoin and its success in creating a secure and trusted system. As a result, a blockchain can record any sort of relevant data produced by a Retail system that spans from global sources.

From the Consumer standpoint:
Product Traceability and the Proof of Origination

A blockchain solution can renew/enhance buyers trust by allowing customers to scan a code permanently etched into the product and access the entire history of the product, including the chain of ownership. This leads on to proof of traceability. An obvious benefit is a reduction in counterfeiting and Retailers will be able to show the proof of origination. The ability to undoubtedly prove who made, owned and/or had contact with certain goods will increase their value and ensure that the buyer knows exactly what they are buying. Customers will spend more freely and with greater confidence because Retailers can prove that these Eggs are “Certified Humane,” “Animal Welfare Approved,” and “Organic”. In addition, we can show that this Coffee came from a Fair-Trade producer, or that this Rolex watch is genuine and not a counterfeit copy.

From the Producer standpoint: Supply Chain

With the chronological product story that blockchain provides, Producers (and potential customers) are able to see data and information from every point within the supply chain. For example, if there is a product recall, the blockchain data would not only tell exactly where and when the product was made and by who, but the data from the individual components would also be tracked. Producers benefit from the accuracy, speed and reduced costs with the correct products and/or components being identified in the Recall. Producers and their supply chain partners could deploy a blockchain solution to raise accuracy and confidence by ensuring that journey of a product from the Producer to the Customer can be tracked.

Digital Advertising

In digital advertising, a lack of transparency is hurting the industry. The use of bots, which look and act like humans can generate ad payments without any actual human having seen the ad. In addition, currently, it is very difficult to prevent ads being placed on sites where the association with the site’s content is actually damaging to the advertisers’ brand. However, the problem in the adtech space is speed. Blockchain, as it exists, is very secure but can be slow. As a result, “solutions” in this space is currently very limited. However, the value that this transparency can bring to adtech is compelling enough to have a big potential impact on the Retail advertising industry.

Warranties

Warranties are often problematic for consumers. Blockchain could move product warranties from paper onto the cloud via blockchain, keeping them up-to-date and easily transferable. Consumers would maintain a virtual warranty wallet, saving consumers, retailers, and manufacturers administrative work. Consumers would no longer need to manually fill out the registration card on new purchases. This could now be done automatically at the time of purchase.

IoT (Internet of Things)

Security is paramount in addressing a system view of IoT (connected things, gateways, network services, and cloud services) or a business view (platform, connectivity, business model, and applications). Blockchain as a public, decentralized, and autonomous technology can serve as a foundational element supporting IoT solutions. The secure nature of blockchain can build trust between parties and devices and reduce the risk of collusion and tampering. One of the challenges to consider in the adoption of blockchain in the management of IoT devices is the processing power and time required to perform encryption algorithms for all the objects involved in blockchain. Blockchain-based IoT ecosystems can be very diverse by nature and comprised of devices that have very different computing capabilities. As a result, different devices may not run the same encryption algorithms at the desired speed.

How to develop an effective Blockchain strategy

Retailers should develop a cohesive blockchain strategy rather than taking on projects in a piecemeal fashion. Many reasons to move forward are strategic in nature and cannot be quantified at the outset.

Here are some quick considerations:

  1. Set clear goals. Assess whether blockchain technology is well suited to the target business issue and clearly specify which objectives will be achieved.
  2. Learning will be iterative, and costs and benefits may only become defined more clearly as the project progresses.
  3. Blockchain projects should be driven by business sponsored cross-functional teams with identified specific business problems or opportunities.
  4. Stay flexible. Recognize that blockchain is still in the early stages of development. Innovation will continue, and the core infrastructure will evolve.
  5. Explore a variety of platforms: Make sure the platform possesses features that meet the needs of the business use case? Ask if this new platform will create unacceptable levels of business risk? Does the technology meet the business requirements for privacy, security, scalability and speed?
  6. Don’t underestimate the importance and challenge of managing people and partners to create an effective culture of collaboration.

What are some of the Internal Obstacles to blockchain Adoption

  1. Be aware of the difficulty in evaluating, understanding and communicating the value of blockchain and its use cases to key stakeholders.
  2. Understand the legal and compliance issues. (What’s new/What’s needed)
  3. Ensure data security (what data is now unintentionally available to who)
  4. Gain buy-in from organizational leaders and internal divisions such as compliance, IT, legal etc.
  5. It may be difficult to procure talent and expertise
    1. Technical
    2. Cybersecurity
    3. Business strategy (ability to identify use cases)
    4. Compliance/Risk management
    5. Legal
  6. Understand the “culture” and “change management” impact and effort.

In Summary, blockchain is not going anywhere. The developments in both consumer and business applications in different industries should prompt Retail to pay attention to the technology, how it can be applied and where it’s headed to next. Retail organizations will need to develop or acquire additional skills and expertise to succeed with blockchain. IT will need additional blockchain skills in areas such as Public Key Infrastructure (PKI), or cryptography, information architecture, software engineering, network infrastructure and integration, and user interface/user experience.

 

VMware’s Blockchain Plans in 2018
https://research.vmware.com/updates/vmware-plans-to-pilot-blockchain-technology-in-2018

Introducing VMware Pulse IoT Center
https://blogs.vmware.com/pulseiot/2017/05/09/introducing-vmware-pulse-iot-center


Les Viszlai is a Principal Strategist with VMware Advisory and Transformation Services based in Atlanta. Les, by leveraging his previous CIO experience, helps senior IT and Business leadership address big, complex industry issues in order to deliver outcomes that grow, optimize and protect their businesses. Les works with customers to turn “Thinking about it” into “Execution” in order to accelerate profitable innovation and digital ecosystems, deliver breakthrough innovative IT strategies, optimize IT organizations’ capabilities, and help drive growth while managing risk.