Digital Transformation Must Be Focused on Entire Industries, Not Individual Firms

Digital Transformation Must Be Focused on Entire Industries, Not Individual Firms

Richard Gendal Brown

CTO at R3

Views 494

Digital Transformation Must Be Focused on Entire Industries, Not Individual Firms

04.08.2020 05:15 pm

The current crisis has forced businesses and entire industries to rely on digital technology more than ever before. Aside from the fact colleagues and customers have only been able to connect via phone and video conferencing for months, inefficient information exchanges reportedly cost a typical 10,000-employee business $26.5 million annually.[1]The costs are less dramatic but no less significant for smaller companies – and whatever the size of the company, this kind of unnecessary expenditure is simply not acceptable in the ‘new normal.’

Forentire industries to bounce back from the economic impact of the current pandemic, businesses will need to pool resources and find a way to accelerate digital transformation at the industry level – not just the individual level – even if they are fierce competitors. Against this backdrop, what role can emerging technologies play in giving whole industries the tools they need to collaborate at scale?

Whether in healthcare, finance, supply chain, logistics orany other industry, companies are typically wary of collaboration with their peers. As well firms’ concerns over losing their intellectual property, anti-cartel regulations or giving away trade secrets, free markets are built around the culture of competition.

This is why, despite the opportunity to deploy digital applications that simplify key aspects of a market being so huge, it has never truly happened. Over the course of its history, the IT industry has pursued a relentless march to optimise the affairs of individual firms, often creating massive inefficiencies and standing in the way of progress for industries as a whole.

But in their defense, software vendors have only responded to how firms within markets operate, providing solutions that fit their customers’ fear of sharing valuable data. There is an unspoken invisible line at the boundary of the firm and the market in which it operates that, until now, enterprise software has rarely been able to cross. Gaining market-level optimisation has been unthinkable without also ceding unpalatable levels of control and power to a vendor.

So, even when an opportunity to pursue amazing new efficiencies through pooling the operations of an entire market into a centralised shared service arises, it’s extremely hard to justify taking the plunge. But what if there was a way to achieve the benefits of standardising and optimising an entire industry without giving up that power over the vendors who run the infrastructure and applications for you?

And as a software firm, imagine you could write and deploy applications that operated at the level of an entire industry — and hence enabled you to capture those savings and opportunities, and to serve your customers better — but where each participant in the resulting network retained control over their data, their business processes and decisions over where their business logic actually ran — on-premises or in the cloud.

This would mean an application could be written once for an entire industry — think of the simplification and reduction in errors and cost — just like the old days of centralised market utilities or monopoly service providers. But without the outsized control and power that comes from being that centralised operator.

There are already a number of high-quality enterprise blockchain projects out there that achieve this balance. What characterises them is that they bring together groups of firms – often competitors – to improve how their market operates, for the benefit of all – themselves and their customers. 

Enterprise blockchain’s seemingly simple but transformational innovation of “What You See Is What I See” is crucial here. WYSIWIS allows a firm to know for sure that their business application, that they trust and control, is in sync with another firm’s business application, that they trust and control.

The same standardised application can be used industry-wide, but each firm is in control of their own copy and hence in control of their own destiny. Each firm retains the power to decide where their data lives and who controls it.

So, industries are finally able to gain the benefits of a single big computer for all firms, including competitors. And this is the key to supercharging the benefits of public cloud whilst retaining control where it should be: at the individual firm level.

Our ability to rebuild our broken economies in the coming months and years will be reliant on whole industries’ ability and willingness to carry forward the spirit of collaboration into everyday business practices. And enterprise blockchain technology can play a central role in delivering on the need for optimisation at the market level, setting the stage for positive digital change post-crisis.

 

[1]Inefficient information exchanges cost a 10,000-employee business $26.5 million annually (The Panopto Workplace Productivity Study)

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