Understanding Blockchain Technology – Is It A Natural Digital Evolution For Professional Services Firms?
Getting paid is a top priority for every organisation. Blockchain not only promises to make this easier by promoting a cashless society and improving customer convenience, it is closely tied to the words integrity and transparency - monitoring every transaction made, with its accuracy assured through the honesty of the entire network. Attributes that make it alluring enough for professional services firms to consider it a potential digital bet.
But in a market saturated by technological innovation it is becoming increasingly difficult to anticipate if investment into blockchain technology will lead to huge opportunities or superfluous costs as a result of hype and speculation. More generally, given today’s uncertain blockchain regulatory conditions, even companies that have the means to invest must also be able to stomach losses should the technology fail to live up to its promising future.
At Deltek we strongly advocate against the adoption of any technology for adoption sake. We advise our clients to rise against the buzz and to remain agile in a commercially viable way, in line with their own business objectives and industry requirements. Because adoption at scale involves a massive shift for existing employees, potentially a search for new talent to support the innovation and a model that can legitimately drive the business.
A growing number of firms are seeing the long-term fundamental importance of blockchain and its ability to innovate the way we exchange value and facilitate trade. In Deltek’s recent report ‘Insight to Action: The future of the professional services industry' 18.6% of respondents said their business would be investing in blockchain over the next 5 years. Others are sceptical of the ‘bubble’ and are deploying a more wait and see attitude.
Professional Services Trends Report 2018
Is This The Most Natural Digital Evolution And If So How Proactive Should We Really Be?
What is blockchain? In its most simplistic form blockchain is a data model better known as digital ledger technology. A decentralised, distributed database that provides a peer to peer network for just about anything. There are many blockchains not just one, depending on what a company requires from a distributed ledger. It can be private like an intranet and public like the internet.
Tweet it: 'Understanding blockchain technology - is it a natural digital evolution for professional services firms?'
How is it used? For a start it’s a tool like any other. Because the technology lends itself to the transfer of money, companies are using it to create a blockchain accounting model, in essence creating a transactional back office. Firms are also using the technology to connect into other various blockchain networks.
Who’s using blockchain? For those new to this space, Bitcoin was the first to use blockchain, and following the early initiatives of leading financial institutions such as IBM, Japanese firm Ripple and NASDAQ, other industries are paying special attention such as those in transport and health.
Blockchain has promise but is it without obstacles? It goes without saying that blockchain has a great deal of promise, but in our opinion, that potential exists only if applied where relevant. As a centralised, shared database it has the potential to eliminate risks and inefficiencies and provide an easier way to move payments, especially with the involvement of multiple geographies. Blockchain is especially applicable for organisations seeking to create networks without traditional intermediaries. For many the value is in the transparency the database provides, to securely record transactions and prove zero manipulation of data. Anyone with access to the blockchain can view the entire chain. Given the versatility of the technology, it could easily be expanded beyond the banking sector into other industries.
However, the adoption of any technology is never seamless and there will always be barriers to adoption and varying levels of acceptance. Blockchain is not intended to be a “cure all” for any organisation and away from the speculative hype must be viewed as one of many tools in your growing digital solution suite. And even then, organisations must remain realistic about the technology's everyday use outside of the surrounding curiosity and fear.
More fundamentally because of the lack of regulation, organisations will have the immediate task of setting their own standards in order to have a voice in the future alignment of trade rules.
Inspired and cautious in equal measure? We often see companies adopting technology for fear of missing out. Whilst we do suggest breaking out of the ‘wait and see’ pattern, we strongly believe organisations should start small. The learning curve is steep so ensuring internal teams are being educated on the technology and whether it can add value, opportunity and robustness to the organisation shouldn’t wait. Starting small also means building up a portfolio of potential blockchain successes, essential when requiring stakeholder acceptance.
Given the amount of investment new innovation is demanding, organisations cannot afford a comparatively meagre return on margin. Since it’s a strategy shift, a conventional approach would be to partner with a technology firm that understands your industry.
Everything should have allocation and meaning within your organisation. Companies with no good reason to use this technology should not be including it into their strategy plans to be part of a trend. Blockchain is still relatively new and comes with its own drawbacks. However if it’s based on an educated decision and clear directive as to what it is optimising then it may be a natural evolution for your company.
2018 Industry Report
Professional Services Trend Report
- Accounting and Finance
- Agency Workflow
- Architecture & Engineering Firms
- Business Intelligence
- Change Management
- Cloud ERP
- Consulting Firms
- Deltek Customers
- Digital Transformation
- Financial Management
- Job Costing
- Legal Sector
- Marketing & PR Agencies
- People and Culture
- Professional Services Automation
- Professional Services Industry
- Project Information Management
- Project Management
- Project Portfolio Management
- Research Firms
- Resource Planning
- Scheduling And Planning
- Talent Management
- Technology Innovation
- Time and Expenses
- Traffic Management
- Transformational Trends