It’s been a busy few months. Not just the holidays, but a lot of travel to meet Splunk customers and other innovators worldwide. One of the recurring areas of discussion during my travels is the blockchain topic. We’ve all seen headlines that range from “it’s no more than a glorified spreadsheet” to “it will fundamentally change every aspect of the world around us." I’m an experiential and iterative learner, and my recent travels and the conversations that are part of those travels have helped increase my sense of the reality of how enterprises are thinking about and acting on this technology.
For most of the world, the excitement and noise around Bitcoin introduced the underlying technology of blockchain. Last year, blockchain moved from the “peak of inflated expectations” to the “trough of disillusionment” on Gartner’s hype cycle for emerging technologies. That’s generally when breathless expectations fail to deliver and many companies move on to the next shiny object. But the period when the mania subsides is often when serious work gets done.
In Japan, particularly, I heard a lot of interest in—and serious work being done around—blockchain. And that interest is not around the cryptocurrency concept that Bitcoin embodies. The uses of blockchains, or distributed ledger technologies, is much wider. Organizations across all industries are interested in DLT because it can increase efficiencies, improve security, or entirely disrupt business models. Splunk customers in energy, healthcare, telecom and financial services are actively pursuing blockchain projects. In particular, a financial services leader told me that reconciliation with blockchain will reduce error and cost, but the real payoff will be through new points of value creation and services delivered.
Meaningful real-world examples exist already. Walmart is having food suppliers use blockchain technology so that food sources and safety can be quickly determined when, for instance, E. coli affects lettuce suppliers or salmonella erupts in the poultry industry.
When Will Blockchain Really Arrive?
What is different about my travels in 2019 is that some of these enterprises are now preparing to move their first use case of the technology to production. Unlike a lot of transformative digital technologies, blockchain isn’t replacing enterprise infrastructure—it’s adding to it.
Blockchain is not simple, and taking it to production creates a whole new set of complexity and difficulty. Why is it running slow? Is it secure? Why are transactions failing? The answers to these questions are in the data. And it’s not just the ledger itself, but like most solutions, also the infrastructure surrounding it. For example, transactions could be failing due to a network issue. (Don’t worry—we’re solving that!)
As we see blockchain slide into Gartner’s “trough of disillusionment,” it’s important to keep the immediate and longer-term applications in mind. Blockchain is not the answer to every problem, and it’s not going to transform the world overnight, but it has great applications today and down the road.
- In the short term, it will enhance security. It’s already being used to reduce fraud and counterfeiting, and to improve product and system security. (We’re using it ourselves.)
- In the medium term, it delivers efficiency. It can replace existing systems of record to increase efficiency and lower cost (for instance, instead of every vendor/partner in a chain having their own systems of record to reconcile, they can work from the same digital ledger to reduce friction and increase trust and accountability).
- In the long term, blockchain and/or other DLT technologies could continue to close the trust gap, enabling new business models.
Closing the Trust Gap
For me, the long-term potential around trust is one of the most fascinating implications from blockchain. As a species, we get mixed reviews for being able to see the exponential impacts of critical inventions or technologies. For example, as the printing press gained traction, few were able to accurately quantify the impact on our lives as knowledge became easy to share and distribute on a wide-scale basis. Looking back from this side of the electrical grid, it’s obvious the impact this advancement has driven. But in the early 1800s, very few were saying, “We’re really being held back, globally, by a power gap.”
A generation from now, we will likely look back at our connected, empowered, increasingly digital world and say, “It’s amazing how much the trust gap was holding us back.” Blockchain has tremendous potential to close that gap and unleash new potential.
I know executives who think that if they don’t jump on blockchain right now, they risk losing significant competitive advantage. I think we’re still a good ways away from that being true, at least in most industries. But the technology has great potential and is already incrementally closing that trust gap. I’m glad that Splunk is investing in blockchain not only for ourselves, but to help enterprises leverage the technology. It’s a great example of the transformative power of data.