Can blockchain help mid-sized businesses?
We’ve all heard the hype about bitcoin and the questions about whether or when the bubble will burst. Many businesses are gearing up for bitcoin currency, but many are waiting on the sidelines.
Something that’s not talked about as much as bitcoin is blockchain, the technology that allows bitcoin to operate. I won’t go into the technology as there are many good explanations, including this infographic.
But I am thinking about how blockchain technology can apply to mid-size businesses. The Research Triangle Chapter of the Association for Corporate Growth (ACG), chaired by Mark Phillips, recently hosted a blockchain expert from IBM. That event got me thinking about business areas ripe for improvement through blockchain. Here are three possible applications:
Taking the friction out of business operations.Think about a time in your business life where there was a seemingly simple task that took way more time and heartburn than it should. It becomes one of those areas that has been a pain point for so long that you forget how much it hurts.
One that came to mind from my background leading media agencies is reconciling media invoices and schedules. It seems straightforward. Media buyers buy an ad schedule and media outlets or networks run the schedule. And yet, schedules rarely run as ordered. Every schedule has to be reconciled afterwards with the order and invoice to ensure the advertiser gets what they paid for. Even with ad buying software, there are discrepancies that have to be resolved. Buyers hate spending time on the administrative drudgery of reconciling schedules. And, it adds work for finance teams.
What if there were one central trusted ledger that automatically reconciled schedule with order and ensured the advertiser only paid for what ran? What if buyers, accounting managers and media sales professionals were freed up to work on higher value initiatives?
In digital media, it’s estimated that as much as half of the cost paid by the advertiser goes to the administrative aspects of getting the ad placed, tracked, reconciled, invoiced and paid for. With blockchain, that could come way down, perhaps to more like 15 percent.
Then, layer on increased confidence from agencies and clients that there’s no fraud in their schedules or invoices. That’d be a blockchain solution many advertisers and agencies would embrace.
Tracking supply chains back to the source or to the end. Many businesses have to be able to track their raw materials or services back to the source, or in some cases, to the end or use. Think about food safety for example. Tracking is one of those things that can be labor-intensive and fraught with errors.
I know a mid-sized business owner in the battery wholesaling and recycling business. The recycling part of the business can be a significant revenue driver, but it’s hard and sometimes dirty work. The company has contracts to pick up dead batteries from other businesses (auto parts stores, auto dealers, golf courses, etc.) and organizations (military, government, institutional). Then they aggregate those batteries for sale to other companies that recycle and manage the waste of the battery components, including the lead.
As you might imagine, there are regulations involved and everyone in this reverse-supply chain wants to ensure regulations are followed and batteries are recycled correctly. Historically, it could be a challenge to make sure everything was handled properly, resulting in risks not only for the company with the contract to pick up batteries, but also for its customers. Even today, tracking requires multiple layers of reporting and verification. That’s a process that could be much simpler if there were one centralized ledger tracking the shipments of batteries from pick-up to recycling.
How much does any business know about the recycling vendors it uses? Imagine a blockchain future where businesses can track their recyclables, by-products and waste to ensure their business as well as every partner is compliant?
Getting on the same page.Sadly, many people in the southeastern US are dealing with insurance claims as a result of Hurricanes Florence and Michael. In many cases, what’s at stake is someone’s most valuable investment, their business or their home.
The way it works now is the insured business or homeowner files a claim. The insurance company sends out an adjuster. Often in times of major storms, those adjusters come in from out-of-state because there are so many claims and it helps to have adjusters who have experience with storm damage. The adjusters check out the property in person. Some, but in my recent experience, not many, are equipped with moisture-reading and digital measurement gadgets. They rely on experience and a national database of repair costs to recommend settlements for damages.
On the other hand, there are the contractors. And, they too come in from all over the country. Some are certified. And those certified contractors do have the latest equipment. They come in with moisture readers and sophisticated templates They also could have actual costs based on real-time materials and market labor costs.
The business or home owner is in the middle. There’s negotiation on the scope of the damages and on the costs of repairs. There’s back-and-forth on what constitutes business interruption even in situations where there’s a state of emergency. There are discussions about depreciation and sometimes delay on full payment until the work is done and the replacement contents actually purchased. There are requirements for certification on certain work standards.
Instead of negotiation, what if there were one central source of truth for actual costs that was updated based on local conditions? One technology-driven source of truth about the extent of damages or the conditions that impact a normal course of business? How much could that save in repair costs? How much time could that take out of the process, getting businesses back online or homeowners in their homes sooner?
These are the types of business problems that blockchain can solve. As a mid-sized business owner, it’s great to be thinking about how it can apply to your business, but you may be wondering, how you can actually implement block chain technology.
As with any technology, there will be different levels and ways of adoption. Some large organizations will build their own solutions using block chain. Some of these organizations may be your customers or your suppliers and if so, you may have to adapt to work with them.
The important thing to realize is that blockchain is just another technology. There will be companies that build solutions on blockchain and as with any technology, business owners will need to stay up-to-date on the solutions that can improve their business and give them a competitive advantage. A great place to start is by staying plugged into business groups like ACG as well as your own industry organizations.