2020 Challenges And Blockchain Transformation For Business Leaders

by Claudia Jeffrey MS

Since 1960, the global economy is in the continuous process of digitalization. Previously, digital technologies were used to improve business processes by delivering conventional outcomes but in a more safer and faster manner.

However, as an exchange of value, blockchain represents something different from previously presented technologies. The innovation has become a priority from market leader across the globe in every industry, including manufacturing, banking and energy.

According to a report published by International Data Corporation (IDC), blockchain exchange is expected to reach up to a $12 billion mark by 2022. Smart industry leaders have already recognized the aggressive potential of technology and realizing its worth as a game-changer in value exchange use cases.

Hence, what are the challenges and transformation needs still there across verticals? Let's find out!

Challenges

Although blockchain technologies have the potential to improve security and operating models for enterprises, many stakeholders are still challenged to utilize it successfully to get distributed ledger technology.

In a report named; Building Value with Blockchain Technology: How to Evaluate Blockchain's Benefits, published by The World Economic Forum and Accenture. They conducted a survey of 550 leaders across 13 industries, interviewed their CEOs and got analysis of 79 projects running on blockchain technology, identified the top five challenges market leaders face to adopt blockchain technologies below:

1. Uncertainty

Since blockchain is relatively a new technology, more than 50% of the participants agree that they have no confidence before starting the project t regarding generating a positive ROI. Furthermore, most of them still lack the surety of the technology being production-ready because of its stability issues and limitations.

The report stated that: "Though many technologists and service providers classify the technology as v1.0 and ready for production, scepticism remains, it is important to keep in mind that blockchain is in its early stages and there are limitations as a result. Challenges exist in fully addressing security, speed and efficiency, given the nascence of the technology."

2. Technical debt

More than 80% of the participants said that blockchain is far way more challenging when it comes to implementing the solution as an integral part of your an existing transformation project for digitalization. Particularly, when a considerable amount of money has been already spent on a technology legacy.

The report stated: "Alternative digital solutions may offer faster returns and be more strategic in the short term, but organizations should evaluate whether blockchain provides additional benefits in the longer term."

3. Ecosystem value

Assuring the evidences of standards, concepts and solutions that are adopted at large industrial scales, companies have to work in collaboration to make an ecosystem favorable for everyone with shared values and respectful partnerships to overcome obstacles and solve arising challenges. As per the report's contributions, working with others is a key to implement blockchain technology successfully.

The report said. "The whole point of doing blockchain is it's a team sport, if you're trying to do it on your own, maybe that's OK from a proof-of-concept standpoint, but if you ever want to get real production value, you have to join with others. Otherwise, there's no point."

4. Stakeholder buy-in

Another evidence of blockchain project concepts is led typically by some of its biggest supporters developed in research and development pool. They always operate in controlled environments. Therefore, shifting to production needs to be understanding of the stakeholder's buy-in limitations. Hence it can be challenging to transform a business model altogether. So, leveraging stakeholders to understand the blockchain technology and its proven benefits needs to be an ongoing process.

The report said: "Helping stakeholders to understand the technology and its benefits is an ongoing process, and it's proven to be hugely valuable. It's enabled us to understand the needs of our customers better and ensure we develop functionality that will make their lives easier."

5. The hype cycle

Regardless of blockchain being an exceptional, transformative technology for industries, many of the stakeholders still unrealistic expectations of what is possible and what is still impossible to get done with it. Survey respondents were expecting a 24% ROI with their pioneering projects for blockchain while they get only a 10% ROI on average initially.

The report stated: "It is important for organizations to carefully consider whether there are other technologies or approaches to digitization that may deliver on their objectives more effectively or efficiently."

Transformation needs

1. Management and Operations

“The most promising transformation use of blockchain is that it supports streamline processes of businesses to reduce friction among parties involve for a valuable exchange of data.” Says; Oprah Sheller, Financial Analyst, Australian Master. Organizations can use blockchain that is validated, private, secure and shared ledger to ensure the quality of goods, data and services with their source origins along with efficient contracts to execute business agreements automatically.

Also, the blockchain elevates the confidence and trust among dealing parties of even different business networks which allow them to work together as a team without any additive guarantees. Entities working within the same industry are likely to trust each other more because they are aligned with a mutual goal of supporting the business industry to grow and succeed.

Hence, when companies working together, representing two different sectors; trust is rarely present, makes collaboration difficult. Blockchain helps to build trust and can bring ultimate benefits across multiple industries.

2. Accounting

Accounting is just like an example of providing a personal statement service for a finance student that is capable of getting profitable revenues from blockchain technology. Just like a personal statement note, is full of complicate findings from over-complex tax codes to paramount needs of precision and accuracy. Blockchain is there to address all of the complicated issues.

Blockchain provides transparency which can ultimately decrease the time taken by auditors to audit, sample and validate transactions. Hence, with ease, auditors can focus more and spend time on controls and other vital tasks.

3. Human Resources

Blockchain could be used relatively to upgrade hiring processes by enabling HR professionals to verify their credentials quickly provided by the applying candidate and if needed, even for their existing employees. Furthermore, the Society for Human Resource Management predicts that a blockchain technology induction can prevent third party agencies by providing fake or inaccurate data regarding candidates and manufacturing.

Systems based on blockchain can be utilized to manage payrolls, especially in businesses which are multinational or working across countries worldwide. Blockchain technology can standardize and simplify payments in multiple currencies by changing the way a company compensate employees. Also, it can modify how workers are willing to save for their retirements which lead companies to take more care of their employees.

4. Marketing

Researches have proven that advertisers are estimated to lose around $44 billion by 2022 because of frauds in marketing. By incorporating blockchain technology, click frauds can be reduced significantly, which will ultimately lead marketing executives to achieve their targets. The system can be utilized to manage spending budgets, preventing scams, removing intermediaries and most importantly, the risk of underperformance and overcharging can be reduced.

5. Legal

With the digitalization of judiciary, the law is not just about logical arguments and legitimate communication. Technological literacy is rapidly becoming the key to stay competitive in the market. Blockchain technology can serve as a gateway to a massive amount of data that may help to enhance the ability of law firms to get hard evidence or even the contradictions in a case.

Moreover, it could enable automatic transfer of assets one a decided condition is met. It will resolve disputes efficiently without involving lawyers, judges and police and saves the client a lot of valuable time. This will bring an end of escrow accounts where money can behold by legal firms and only released to a party when previously specified conditions are met in a dispute.

Impact on traditional markets

Startups still face the challenges of being accessible to a capital. Funding an idea and developing it into a business can be hardened while lending options are not viable. Since cryptocurrencies are decentralized and associated fees are kept minimal, fortunately; blockchain can serve as an ultimate capital providing tool.

Thanks to the ease of usage, venturing capital firms and accepting funds from investors can be done within minutes. The easier, accessible and quicker it becomes to secure capital, the soon we can expect to see new projects coming up and modifying the way of business processes.

The potential of blockchain in 2020

Since the bubble of cryptocurrency has busted, blockchain hype has become higher than ever before around with several giant players looking forward to devising blockchain technology as the next big thing.

Most of the stakeholders consider blockchain technology as the next big dot-com that is expected to bring a new era of digitalization. Investors are expected to follow the same pattern of the 1990s when the dot-com businesses were just kicking started; we can witness more companies trying to leverage the blockchain technology for the future.

Undoubtedly, there is an industry-wide excitement regarding blockchain businesses, making an active market and leveraging the growth of the economy to serve blockchain companies.

Final Verdict

Lastly, the world economy is changing its way outs. Only those businesses that will go with the flow of innovation and transformation will be able to survive, build a reputation and get a profitable ROI in the new world of digitalization.

Altogether, digital agencies and smart contracts can make the trade processes faster, safer, scalable and efficient. Hence, the economy will continue to grow towards decentralization as more players will support blockchain to join the market with full strength to rock.

Author bio

Claudia Jeffrey is a qualified financial analyst and an expert academic writer. With a vast experience in cryptocurrency management; currently, she is working as Junior Finance Advisor at Crowd Writer, exclusive academic writing services provider in the UK.