Tag Archives: blockchain

Blockchain: Are You Bothered?

There are so many misconceptions around blockchain and its potential impact. Will the fundamental concept of blockchain really have a significant impact on procurement, finance and supply chain?

Last month’s Procurious London Roundtable was sponsored by Basware

Blockchain is the coolest technology of the moment and the hype surrounding it only appears to be growing year upon year. Whilst the concept was first used for Bitcoin, the digital currency, its potential is far wider, and many industries are actively investigating the possibilities of using blockchain-based solutions.

But despite organisations around the world jumping on the Blockchain bandwagon and advocating for its enormous potential, do the majority of professionals understand precisely what it is, what it can do and the extent to which it will impact our businesses?

At last month’s Procurious roundtable, Paul Clayton, Head of New Service Development, Basware put us through our paces with an overview of blockchain technology and his insights as to why procurement pros need to be cautious not to overestimate it’s bearing on the function.

What is blockchain?

A blockchain is simply a digitised, decentralised and cryptographically secured ledger of transactions.

“The biggest misconception” Paul begins, “is that there is only one blockchain. There are actually many blockchains in use today throughout many different industries.”

“Blockchain is actually only a concept, whose origins go back to academic work in the early 90s, rather than a thing. The concept was first publicly used to allow the crypto-currency Bitcoin to be traded virtually, anonymously, and without the need for a centralised bank.”

“Blockchain technology says where something has been transferred to and retains a trace of the transfer. Conceptually a blockchain acts like is a single ledger, a source of the truth if you like. In reality, it is physically distributed where there are actually multiple ledgers, known as nodes, that all work together to come to consensus on where something has been transferred to, which is then shared between them.”

An obvious advantage of this technology, is that it’s very difficult for you to break the integrity of the ledger. “There are multiple copies of the same ledger and so if someone hacks one it becomes immediately obvious that it is different.”

The flaws at the heart of blockchains

Whilst a blockchain itself is safe, an application using it remains hackable – Security researchers and hackers have proved it’s possible to hack someone’s Bitcoin wallet and empty it of crypto-cash. Mt. Gox infamously lost 7 per cent of all Bitcoins in circulation in 2014, which were worth, at the time, approximately $473 million. It also appears to be an uphill battle trying to prosecute someone for taking a Bitcoin

It’s can be too transparent – With public blockchains, once a transaction and its associated data have been placed onto a blockchain, anyone and everyone who has access to it can view everything, whether you like it or not

It’s not the most elegant solution – The very nature of the deliberately distributed ledger with multiple copies (nodes), means that you have multiple nodes undertaking exactly the same piece of work ie working out where something has been transferred to. From a pure computing power point of view, for certain applications, this is a highly inefficient way of doing things.

The blockchain for Bitcoin for example, has already had to be re-designed to increase its scalability as the number of Bitcoins in circulation and the growth in the associated transactions meant that the ledger became too unwieldy and it was taking too long for it to update.

You can still lose things!

Even if you know where something went, you can still then lose it. Who could forget the unfortunate James Howells, who mistakenly threw out a hard drive containing 7,500 Bitcoins, now estimated to be worth $7.5 million

 

Blockchain for business

There are some who would argue that these problems have been addressed and eliminated for blockchain for business. Paul is not one of them!

“The distributed nature of ledgers means blockchain is good at maintaining the integrity of who owns something but what it cannot do is determine whether the person who put something into a system owned it in the first place.”

This means, when making a transaction via a blockchain, the recipient needs to be able to trust the supposed owner of the thing that is being exchanged. “You are, essentially, reliant on the veracity of the source of what goes in to the blockchain.”

For example:

Does the “owner” actually own the rights to the house they are trying to sell you?

If you’re exchanging metals, does the “owner” have documents to prove they have the rights to the gold?

It might be good at preventing a fraudulent transfer of an asset but blockchain is “next to useless at establishing if a person owned something in the first place”

“As a ledger system it is extremely inefficient, almost clumsy in the way it works. In certain circumstances, where there are a high volume of transactions it uses so much computing power it’s almost not worth it.”

“And it’s for these reasons that, whilst it will have applications in many areas from supply chain through to electronic voting, blockchain won’t change the world!”

Where is the value for procurement?

“Is there value in blockchain tech? Yes. Does the value match the hype right now? Not even close!”

“From a procurement point of view the biggest area of impact right now is most likely to be in supply chain applications. There are obvious applications for the transfer of title and bill of lading. Of particular interest in this space right now are supply chains that can be subject to fraud such as pharmaceuticals and food

Going beyond that the application of so called “smart contracts” to a blockchain can help automate certain business processes. Smart contracts, are pieces of computer code attached to a blockchain that automatically execute an action once a set of agreed criteria have been met. For, example, a smart contract could be used to automatically pay a supplier once the buyer has received their goods without the need for invoice processing and payment.

” In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet its just an interesting concept with some obvious benefits and flaws.”

Last month’s Procurious London Roundtable was sponsored by Basware

8 Reasons You Won’t Want To Miss Basware Connect

Basware Connect is just around the corner, and is shaping up to be one of the highlights of the 2017 procurement event calendar. Procurious has the inside word from our knowledge partner Basware on the top eight things to watch out for on Wednesday 18th October.

  1. The very latest on Industry 4.0

Whether you’re from the procurement or finance function, it’s almost certain your role is already being impacted by the many facets of the 4th industrial revolution. From ‘business as usual’ technologies such as PDF e-invoicing to large-scale futuristic disruptors including blockchain, robotics, machine learning and predictive analytics, it’s up to you to keep up with the latest news on how the revolution is progressing and Basware Connect will help you to do just that!

  1. Engage with a blockchain guru

Blockchain has well and truly arrived, and organisations are scrambling to understand how they can incorporate this technology to reap the security benefits, keep ahead of the competition and avoid getting left behind. It’s a hot topic: Procurious’ own articles on Blockchain have attracted a lot of attention, demonstrating that procurement professionals are increasingly eager to get to grips with what this technology can actually deliver. Simon Taylor, one of the most recognised thought leaders on Blockchain and DLT, previously established Barclays bank as one of the leaders in blockchain thought and action. He is set to deliver one of the most anticipated sessions at the conference.

  1. Learn how to fail forward

We’ve come a long way from the days when failure was seen as career damaging and shameful. Today, businesses are embracing failure as an exciting, enlightening step towards success. Black Box Thinking author and Times Columnist Matthew Syed will demonstrate how to redefine failure in your organisation, taking attendees through his thought-provoking approach to high performance in the context of ever-increasing complexity and rate of change.

  1. Get to grip with megatrends

Don’t miss out on seeing Eric Wilson, Basware’s VP Purchase to Pay, speak about megatrends. We’re biased when it comes to Eric because he’s already proven himself to be a thought-leader in his profession via his excellent contributions to the Procurious Blog. Check them out:

  1. Will my job be lost to automation?

Automation has been impacting human roles for at least two centuries. In the US, over 50 per cent of the population was employed in agriculture in 1900, down to around 2 per cent today. Chair, Non-Executive Director and Business Advisor Natalie Ceeney will examine the coming impacts of AI and machine learning. Natalie has operated at Board level for fifteen years, holding three significant CEO roles. She is currently Chair of Innovate Finance, the members’ body for FinTech, and a non-executive Director on the Board of Countrywide PLC. She’ll be providing attendees with some examples of why some of the biggest brands have failed to stay ahead while others succeed.

  1. Get your questions ready for Basware’s executive team

Eric Wilson isn’t the only senior exec that Basware is putting on the stage. A line-up of Basware’s thought-leaders and top consultants will be presenting, and (importantly) will be available to answer your questions about the platform itself. Highlights include Ilari Nurmi, Basware’s SVP Purchase to Pay, who’ll be talking about “what’s hot right now” in the company’s solution roadmap, Andrew Dos Santos, Principal Business Consultant will be on hand to offer advice and Senior Product Manager Theresa Lacey will be demonstrating new functionalities and future plans.

  1. Immersive workshops

Nobody wants to sit back and listen for an entire day, which is why Basware has included some immersive workshops for audience members to roll up their sleeves and participate in. A highlight is the “demo area”, where attendees can see demos from across Basware’s product portfolio and speak to their experts. You can get hands-on with Marketplace, and even go as far as ordering a pair of wireless headphones to take home with you! Now that’s a valuable takeaway to bring back to the office.

  1. Network, network, network

Sessions aside, this event is an important opportunity to grow your professional network. Take along plenty of business cards, seize every opportunity to meet new people, and follow up by connecting with them on Procurious. To get the most out of the day, be sure to introduce yourself to the speakers post-event. Basware will provide the free beer, wine and pizza, you take the opportunity to network, network, network!

Basware Connect will take place on 18th October 2017 at CodeNode, 10 South Pl, London. Learn more about Basware Connect and register for free today.

“I Just Don’t See How Blockchain Can Apply To My Business”

Blockchain naysayers are echoing the words of short-sighted CEOs in the early 1990s who refused to recognise the disruptive potential of the Internet. American Blockchain Council Executive Director Jack Shaw demonstrates why businesses need Blockchain as a cornerstone of their digital transformation strategies.

Business Technology Futurist Jack Shaw is a keynote speaker at Procurious’ upcoming Big Ideas Summit in Chicago. Register now as a digital delegate.

Very few procurement functions are not currently going through some sort of digital transformation. Typically, the transformation includes building digital tools to enhance customer engagement, robotic process automation for rules-based activities, the use of big data and analytics to bolster decision-making, IoT integration, moving your business to the cloud, and – for some – bringing cognitive computing on board.

What’s missing from this daunting to-do list? The integration of Blockchain technology.

Jack Shaw explains why Blockchain needs to be a fundamental part of every business’ digital strategy: “Blockchain is unique among emerging technologies. Other technologies, such as IoT, can be extremely powerful as a ‘point solution’. This means they apply at a particular point in the business process, or even at a particular geographical location in the supply chain, to increase accuracy and speed.

“Blockchain, however, provides the infrastructural glue that ties these disparate technologies together into a single, coherent business ecosystem. You can have thousands of participants accessing timely, shared data, which allows you to step back and think about how the whole system can work more effectively.”

Two exciting benefits Blockchain technology will bring to the supply chain

Speed: Shaw talks about the incredible increase in speed of international trade transactions that Blockchain can deliver. “When I spoke at a global big data conference in China recently, a delivery of cotton from Houston U.S.A. had arrived at the local Chinese port three days earlier. With an international shipment like that, the paperwork involved normally takes around 10 days to settle. However, this particular shipment had been arranged with Blockchain and scanning technology, and it took a mere 10 minutes in total.”

Validation of providence: Supply chain professionals know the importance of transparency when it comes to sourcing products. Even if your first, second or third-tier suppliers seem legit, there’s also the risk that something illegal exists further down your supply chain, such as conflict minerals or modern slavery. With Blockchain, every step of the products’ lifecycle can be tracked and validated, all the way back to the extractive industries. As Shaw says, “Lack of visibility will no longer be an excuse.”

Cybersecurity and Blockchain technology

While it isn’t a magic bullet for cybersecurity challenges, Blockchain creates a level of trust that’s well beyond anything that has existed previously. Transactions are readily accessible (and transparent) for those who are authorised to see it, and un-hackable by those who aren’t. Not only are financial transactions more secure through Blockchain technology; it’s also very powerful for protecting data.

Shaw cautions that hackers could still find their way in by feeding incorrect data through in-house systems. “In a way, Blockchain will step up the requirement for improved data integrity. Technology such as cognitive computing only works if the data is valid.”

The Internet of Things (IoT) is another frontline for cybersecurity. “How do you know that the data you rely on to make decisions is actually from a particular device, and that it hasn’t been hacked or spoofed? Blockchain can provide an immutable record that uniquely identifies a data-providing ‘thing’ to ensure that you know your information is coming from that source.”

Shaw gives the example of odometers, where unethical car dealers can hire digital hackers to alter the mileage. Bosch has recently integrated Blockchain technology with odometers which upload digital readings hourly. “You can extend this concept across big data, analytics and cognitive”, says Shaw. “It only works if the data is valid, and Blockchain is one way to ensure that.”

Blockchain technology will be one of the many disruptive forces discussed on 28th September at the Big Ideas Summit in Chicago. Register now (it’s FREE!) as a digital delegate to access all the news and content from the event.

Blockchain Is Real. It’s Here Now And It’s Coming To Transform the World

Why are organisations so keen to bury their heads in the sand and pretend blockchain isn’t happening – it all starts with a severe case of NIH syndrome…

There are certain market analysts who would have you believe that the benefits of Blockchain technology are “Hype” and the real benefits are still 10-20 years away. There are several reasons for this:

Ignorance

Although many believe such firms to be thorough and knowledgeable about every leading edge technology, they are not. This is evident in a lack of participation in key consortiums and conferences and a lack of good research leading them to a parochial view of Blockchain’s Global impact which they put in print.

NIHS (Not Invented Here Syndrome)

“Coin the Term and Own the Market” has always been the mantra of some these firms.  “If we don’t say it is so – then it ain’t so.” There has been at least one attempt to rename the Blockchain market “Metacoin”- “Meta” meaning “about or referring to itself.” This shows a clear misunderstanding of the market.

It’s not “about the Coin”…

…whether Bitcoin, Ether, Zcash, or any others. Again, this is a very narrow view of what Blockchain is all about. What are most important are the underlying capabilities of Blockchain technology that enable those cryptocurrencies, but also enable many other unrelated and far reaching benefits.

Blockchain is not synonymous with Fintech or Bitcoin

Currently, Financial institutions arguably stand to gain the most by adopting Blockchain technology and stand to lose the most if they don’t. The major global financial institutions, especially those in the U.S. also face the biggest challenges in getting their objectives achieved.

Blockchain technology can resolve many inefficiencies inherent in the trade settlement process that cost them and customers time and estimated $20 billion per year. There are three major prohibitive factors in achieving this:

1.   Existing Technology infrastructure

Understandably financial institutions don’t want to start over redesigning their systems from the ground up so they are trying to select bits and pieces of Blockchain and integrate it with existing technology. History has shown this approach has never worked very well and could take years to accomplish if they are ever successful. This is one area where market or analyst skepticism is derived from. On this they are correct.

2.   Current Legislation

Mandating human intervention and oversight in settlement processes that Blockchain can negate the need for has hamstrung efforts even more than the technology issues.

3.   Ownership & Control of the processes and technology

Financial institutions want to own and control these processes via “private Blockchains” so they can make the rules and control the economy. “Public Blockchains” are like the Internet and are not controlled by anyone. We know how well “private internets” worked – remember “intranets”?

Ironically the public gave that “trusted intermediary” role to financial institutions years ago and they have abused it time after time. It was the Global Financial Crisis of 2007-2008 which motivated Satoshi Nakamoto to invent Blockchain to enable technology to do what we could not blindly trust banks to do for us. In spite of Dodd-Frank oversight legislation, the recent Wells Fargo debacle has shown that not much has changed.

With all of these challenges for Financial Institutions to adopt Blockchain technology, one might say, “Ok, now I understand why Blockchain is more hype than reality – lots of discussions, lots of promise, and a handful of promising but limited test-scenarios. Lots of investment, but not much to show.” Yes. One could clearly have that view if :

1.   You didn’t look beyond the Financial Industry,

2.   You thought Blockchain was the same as Bitcoin,

3.   You didn’t look beyond the borders of the United States, and

4.   If you ignored or were unaware of the implications of Blockchain security, record immutability, Smart Contracts, micro-units, micro-payments, and digital identification already implemented and working in many other countries in hundreds of applications across every industry sector.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

The Impact Of Blockchain On Procurement

Blockchain won’t wait for you to be ready for it, which means it’s time to brush up on your knowledge and understanding right here, right now! 

Blockchain technology will not only impact procurement and procurement professionals but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement and procurement professionals in perspective picture yourself twenty years ago trying to explain how the Internet is going to change things. Where would you even begin?

Like the Internet the Blockchain is a network. In the case of Blockchain comprised of decentralized “ ledgers”, many are referring to it as Internet 2 or more commonly the Internet of Value or Internet of Trust.

The benefits

The most important thing to understand is that Blockchain addresses many of the most critical problems we’ve encountered doing business on the internet.

1)  Security: Practically speaking the Blockchain is unhackable.

2)  Transactions are verified by network participants (consensus), eliminating the need for third-party intermediaries’ (banks) costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains banks alone have estimated these processes are costing them more than $20 billion annually.

3)  Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards could significantly add to their bottom line.

4)  Once transactions are verified they are secure and immutable. (unchangeable)

5)  The immutability of the Blockchain means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where provable chain of custody is critical.

6)  Payments can be made directly from buying entity to selling entity “ledgers” by-passing intermediaries (banks, brokerage, clearing houses, title companies, etc.)

7)  Payments can be automatically triggered based on the codified terms of “ Smart Contracts” stored in transaction blocks.

8)  Blockchain capabilities will change, if not eliminate the role of accounts payable and accounts receivable departments.

9)  Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity exists for products and services such as energy or digital rights where backend settlement costs currently constrain those markets.

10) It is also estimated that 25 per cent of the global population does not participate in the global economy because they have no bank accounts and/or credit cards. Without these tools they cannot participate in the Internet economy. The primary reason they do not have these economic tools is because they cannot prove their identities. Immutability of the Blockchain can enable these people.

What do I need to understand?

The capabilities I’ve outlined just scratch the surface on how Blockchain impact all of us. Aside from the aforementioned, as a procurement professional are several important things to understand.

1)  Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact these technologies will become infinitely more practical and secure because of Blockchain.

2)  Do not think of Blockchain and BitCoin, FinTech or Crypto Currencies as synonymous. They are not.

3)  Do not think that it will take 20 years to mature and be mainstream. The estimate is 5-7 years for full maturity.

4)  Do not assess progress by the US/Euro FinTech Community. While they were the first to recognise Blockchain’s inherent value and arguably have the most to gain by adopting it, they also have the biggest hurdles to overcome and could very well be last to cross the finish line.

5)  Don’t make the mistake of waiting to become knowledgeable about Blockchain; it is the most highly disruptive technology we’ve seen since the Internet and it won’t wait until you are ready for it.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

How 9 Technologies Will Drive Global Supply Chain Disruption

Cloud corporations, supertrends, and potentially procurement without lawyers and auditors. Are you keeping up with technologies driving global disruption?

technological-disruption

Last week, Procurious attended the ProcureCon Europe conference in Berlin. You can read about our experiences, keynote highlights, and more on our Blog.

One keynote caught our attention enough that we felt it needed delved into in more detail. Professor Leslie Wilcocks, Professor of Technology Work and Globalisation at LSE, spoke about how procurement needed to prepare itself for digital disruption.

If you are a regular reader of the Procurious Blog, then you will be aware that we have a keen interest in future technologies. From drones and last mile logistics, to blockchain, we’re aiming to keep up to date with the impact on global supply chains.

So with this in mind, we revisit what was a fascinating keynote.

Prepare for Disruption!

Professor Wilcocks kicked off with the following statement: “Technology will disrupt pretty much everything between now and 2025.” This isn’t just the world of business, though that will see a massive change. But it’s also everything we do, see, touch, and encounter in our daily lives.

According to the GEP Procurement Outlook 2016, there are 5 so-called “supertrends” we need to be on the look out for. These are:

  1. Heightened impact of geo-politics
  2. Shift of economic power to the USA and emerging economies
  3. Continued decline in global commodity prices
  4. Increased impact of climate change
  5. Push to Digital

It’s safe to say that all five have been highly visible during this year. We’ll be keeping an eye out for 2017’s “supertrends” with great interest!

However, it’s the fifth trend that Professor Wilcocks focused most on. He believes that much of the interconnectedness and innovation being seen in procurement comes from the application of technology.

As we have frequently stated, procurement cannot afford to ignore technology. If it does, it cannot deliver true value to organisations, and faces redundancy, or obsolescence, in a fast-changing world.

Rise of “The Cloud Corporation”

Happily, the assembled procurement professionals were given a list of technologies to watch over the next 4-5 years. These fell into an easy to remember acronym, SMAC/BRAID.

  • Social Media
  • Mobile Technology
  • Analytics (Big Data)
  • Cloud Service
  • Blockchain
  • Robotics
  • Automation
  • Internet of Things
  • Digitisation or Digital Fabrication

These technologies all link together to help the emergence of digital businesses. Or as Professor Wilcocks put it, “The Cloud Corporation.” They also provide a number of opportunities and challenges for businesses. They need to be more agile, and manage on a ‘micromultinational‘ level, but it also opens up the potential for major process innovation.

However, Wilcocks did give one caveat on technology and innovation. No-one knows how to fully maximise the potential of technology. The only way to do this is by learning by making mistakes, something less agile organisations have proven themselves to be less good at in the past.

Transforming the Supply Chain

So how does all this fit together with disruption to the global supply chain? For the most part, the disruption has already started, and, as a result, organisations are playing catch up. However there are some tactics that can be used.

  • Organisational – realigning organisations strategy for supply chains on a functional, geographical or regional level.
  • Technological – ensuring supply chains are integrated to work best through better connectivity.
  • People – traditional pyramid structures aren’t optimised for the digital era. Human talent in the digital supply chain should be organised as a diamond, providing a more streamlined hierarchy, and better training opportunities at the lowest levels.

Switching the focus to the benefits of automation showed how the technologies could impact productivity. Traditionally, organisations have used five methods to transform their supply chains:

  1. Centralise
  2. Standardise
  3. Optimise
  4. Relocate to Low Cost Region
  5. Technology Enablement

However, there is a sixth that can, and is already, increasing productivity in supply chains – automation. It’s estimated that by automating, an extra 3-4 per cent can be added, on top of the efficiencies found in the other measures, by automating processes.

Final Word on Blockchain

There was one final word on blockchain before the end of the keynote. The disruption being caused by blockchain is, in itself, a protector for organisations from being disrupted. And organisations can leverage the technology to aid transparency, governance, and authentication.

Blockchain can also help with the evolution of “smart contracts”. These contracts can have rules set for automatically storing data, and executing commands.

Could it help to disrupt the disruptors? Probably, yes. Operating the technology at its most effective level could remove the need for banks, lawyers, credit cards, and even auditors, in the procurement process.

Whatever the challenges that exist, surely that’s something to aim for. Isn’t it?