The challenges facing enterprise adoption of blockchain and why middleware is the solution

The challenges facing enterprise adoption of blockchain and why middleware is the solution

Juan Miguel Pérez

CEO and Co-Founder at Finboot

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The challenges facing enterprise adoption of blockchain and why middleware is the solution

16.09.2019 10:00 am

In the 20th century, we saw how automated machines transformed supply chains in the manufacturing and industrial sectors, with the key objectives of increasing productivity and streamlining logistics. Today, we are seeing a new wave of transformation with the emergence of cutting-edge technologies that have the power to further revolutionise supply chain efficiency.

It is a well-established fact that industry is the backbone of the European economy. It accounts for 80% of exports and private innovations in the region, and provides high-skilled jobs for citizens1. In light of this new wave of transformation, innovation and competitiveness are at the heart of the European Commission’s agenda, as evidenced in the Commission’s Horizon Europe2 proposal - the ambitious €100 billion innovation programme that will succeed Horizon 2020. The main objectives are to encourage competitiveness and productivity, but also support and enable collaboration in a globalised economy. The industrial community is gradually advancing towards wider adoption of emerging innovations in information and communications technology (ICT). Cutting edge technologies, such as Cloud computing, the Internet of Things (IoT), Artificial Intelligence (AI) and blockchain, appropriately address these objectives.

This powerful combination of technologies faces several challenges. This blog focuses on one of those challenges in particular: the urgent need to create middleware that will enable the use of blockchain in enterprise environments and are designed to fully interact with other technologies, such as IoT devices and AI algorithms, in a secure and transparent capacity. In this context, a middleware is a platform or system that acts as a bridge between the blockchain networks and frameworks and the enterprise software applications that can make use of the technology.

The need for these systems becomes evident when we consider results of market studies such as the 2019 MHI Annual Industry Report, “Elevating Supply Chain Digital Consciousness”3. Despite the well documented and well-known advantages of blockchain, only 10% of the 1,000 respondents say they are using blockchain technology today. Yet 62% of them expect to do so over the next five years. This number clearly demonstrates the enormous potential of the technology to revolutionise the supply chains of the future. We believe these industry executives are waiting for key enabling middleware to take their next step in digitisation, since middleware solutions are more cost-efficient and simplify technology adoption.

Additionally, Deloitte’s global blockchain survey4 shows that 68% of more than 1000 C-level respondents are investing over US$ 1m in 2019 in the development and implementation of their blockchain strategies. All this hype around enterprise blockchain is partly driven by the future market potential, which certainly justifies significant investment and involvement today. In “Forecast: Blockchain business value, worldwide, 2017-2030”5, Gartner estimates the business value created by blockchain products and services will reach US$ 176b by 2025 and US$ 3t by 2030.

This forecasted business value can only be achieved if we facilitate the smooth, accelerated and cost-efficient adoption of blockchain technology in enterprise operations. Therefore, the middleware in question needs to address the four biggest challenges facing enterprise adoption today.

(i) Enterprise security: structuring these products into enterprise approved identity and access management systems; by this we mean the set of policies and technologies that ensure users have the correct permissions to the digital resources they use. Identity management is a key concern of most CIOs today, not only to assure compliance to regulations but also to guarantee secured and efficient authentication mechanisms in all digital operations, which are increasingly entangled with their day to day activities.

(ii) Providing true ecosystems of trust: digitisation is key to optimising cross-organisational operations. For instance, minimising human error by implementing more automated operations using software applications. However, the trusted digital environments in which the applications run is as important as the application itself.

(iii) Integration and interoperability: in the cases of both legacy systems and emerging technologies, industrial companies have suffered the consequences of adopting impractical solutions to solve short-term problems that are not equipped to adapt to future threats.

(iv) Business applications and return on investment: blockchain is without a doubt a complex technology and comes with associated implementation costs. High onboarding costs are increasingly becoming a barrier to enterprise adoption. Therefore, lowering those high entry barriers by maximising business returns will drive market growth.

Technology agnostic and scalable middleware, such as Finboot’s powerful proprietary platform MARCO, is key to simplifying blockchain and other distributed ledger technologies for enterprise adoption. It can overcome the entry barriers by delivering fully working business solutions in the form of enterprise software applications powered by a combination of core services and additional plug-ins that together create an enterprise approved, interoperable, trusted ecosystem. The middleware should be configurable for multiple business cases, as this allows for rapid experimentation in a production ready environment, so that businesses can maximise their return on investment.

Over the past couple of years, the implementation of enterprise blockchain applications has certainly proved a challenge to many, and we have seen this in the number of proof of concepts that have yet to materialise into products. However, the introduction of middleware into the picture has caused an inflection point, as executives are won over by the lower implementation costs, greater flexibility and customisability to different business cases. We are now witnessing an increasing number of successful blockchain implementations within manufacturing and industrial supply chains, proving that we are in the presence of a new wave of transformation, comparable to that of the 20th century.

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