In this interview with Chief Technology Officer, IBM Blockchain Services for Middle East & Africa, Anthony Butler, I speak to the IBM Distinguished Engineer who highlights how distributed ledger technology is transforming multiple industries.
IBM has been working on blockchain technology for many years and has been developing blockchain-based global trade solutions for industrial supply chains. Is there any particular reason your company chose to explore such a complex vertical?
We have explored and implemented blockchain in many contexts and domains where there are inefficiencies, waste, impeded customer experience or other challenges that the technology can address. Blockchain is a technology suited for network problems and these tend to be, by definition, complex as they involve multiple entities, such as different parts of a supply chain. We see global trade, as do our customers and partners, as being an area where there is tremendous room for improvement and the nature of the domain is such that it involves multiple parties who don’t trust each other necessarily and therefore lends itself well to the application of blockchain technology. We worked with early adopters like Maersk, Walmart, and others to quickly understand the efficiencies that could be gained in their respective industries, have implemented different networks, and now scaling to address inefficiencies across a variety of verticals and industries.
What other use cases will IBM Blockchain be applied to e.g. travel and transportation?
We have use cases across most industries, particularly those where there are challenges or complexities around different value chains.
For example, in travel and transportation, we are working on logistics and how blockchain can be used to improve visibility into the movement of different forms of cargo as well as digitise the documentation associated with that movement of cargo. In government, we are helping governments across the region and world reimagine the business of government through the use of blockchain technology. In the banking industry, we are working with a number of Central Banks to implement Central Bank Digital Currencies and we are working with Commercial Banks to implement different supply chain finance solutions, such as We.Trade in Europe and others. We are working on how we can improve the sharing of KYC information between different entities. We are working in the oil and gas industry to address inefficiencies related to tracking of hydrocarbons. We are working in the media industry to address various kinds of fraud. We are now at the point where we have multiple use cases in pretty much all industries. These are just examples and not exhaustive.
What do you think businesses across Africa need to understand when it comes to blockchain adoption?
For businesses in all emerging markets, it’s important to realise that these emerging technologies, like blockchain, are very much within their grasp for two reasons. Firstly, cloud has democratised access to such technologies that means it doesn’t matter where someone sits geographically they can get access to the latest technology at less marginal cost than if they had to deploy locally; and, secondly, many emerging market countries are unencumbered by the kind of legacy technology and infrastructure that makes adoption of a fundamentally transformational technology like blockchain a challenge. I would therefore encourage all businesses in Africa to look at how they can make these technologies the foundation of their transformation and roadmaps for the future.
Where do you see blockchain technology making the biggest impact in the lives of people in developing countries?
I think there are quite a few areas where blockchain can have a significant impact. One of the challenges that many emerging markets face is in how to support the growth of the SME sector which will enable large numbers of people to improve their living conditions. Blockchain-based trade finance and supply chain solutions can not only remove a lot of the friction and complexity but also enable more innovative ways to provide supply chain finance to help these businesses grow.
What are some of the challenges you’ve faced from a business and technical perspective trying to develop some of your blockchain solutions?
Blockchain is a team sport and the biggest challenge is usually when you need to pull together the business network and if members in that network are competitors or not used to sharing then innovation can be stifled or stagnate. This is a fundamental change in the way in which most businesses think about how they interact with their ecosystems. For this reason, we see governance as one of the most significant business challenges. If you have, for example, all the banks in a market in a network, who is then responsible for deciding who joins and who leaves, who decides what changes get made, who owns the data, etc. so there are a long list of considerations that need to be taken. On the technical side, I think the biggest challenge is that this is a new technology.
What do you look for in terms of skills or qualities for your blockchain teams?
It requires different types of skills to execute a blockchain project. We need consultants who can think about network problems and help clients translate these into blockchain-based solutions. We need architects who, whilst they should have deep knowledge of different blockchain protocols, should understand the 80% of work in any blockchain project which is traditional application development work, such as designing integration layers, microservices, etc. Then we need developers who can work with the different protocols, and write the smart contracts and integrate these with the rest of the solution. As blockchain is obviously a new technology, it’s unreasonable to expect people with 10+ years of experience in the field but rather we look for people with strong general application development experience and, most importantly, an understanding of distributed systems design and implementation, cryptography, and understand the data structures and algorithms that underpin the blockchains.
Are there areas of IBM’s business already benefiting from blockchain-based technologies?
We were very early adopters of blockchain. We have used it now to solve issues with the management of our supplier ecosystem and, most recently, we announced we are working to use the technology to improve the way in which we onboard and manage the suppliers we work with (known as the Trust Your Supplier). There are other examples but IBM is a firm believer that we should “eat our own cooking” and we are ourselves a great proof point for the technology as a very complex, global organisation with hundreds of thousands of employees.
How do you align your blockchain projects to fit the overall business strategy of your organisation?
We are led by the market and we will build whatever capabilities we need in order to address market demand. We see a lot of companies now wanting to implement blockchain networks at scale so helping them with this, as well as the associated business challenges, is a core part of our strategy. We are seeing customers who look to us as the general contractor for convening blockchain networks across different countries, industries, and technologies. We are also seeing increasing opportunities to create even more value by applying AI and IOT to blockchain networks so this is also an area of focus for us. For example, integrating sensors with a blockchain network to gather real time and immutable data on the temperature and conditions under which a product has been transported through a cold chain; or using AI to make predictions based on the data that is sourced via the blockchain network. There are many emerging cases now and our research organisation, for example, is focused on what comes next: looking, for example, at the implication of quantum or how technology such as crypto-anchors can be used to further strengthen supply chains with blockchain.
How do you predict the blockchain space will be different in two years, and how do you see IBM shaping that change?
We recognised the value of blockchain very early. Initially, it was a research project that we incubated before handing over the code to the Linux Foundation to form the basis of what became known as Hyperledger Fabric. We continue to be involved as part of that open source community in a number of Hyperledger projects so we are supporting the evolution of the technology at a protocol level. We are also continuing to focus our Research division on what is coming next with respect to blockchain so this naturally means research into things like quantum, application of AI to blockchain data, security, and crypto-anchors (which allows us to physically link products or objects to the blockchain).
We continue to work with innovative clients to really push their industries forward. The work we did with Maersk that evolved into Tradelens is a great example of the work we are doing with Golden State Foods in the United States to improve cold chains and ultimately the freshness of foods delivered to restaurants. The work we are doing with Central Banks is reimagining money and how it will exist in the future. So we are really co-creating the future of blockchain with clients.
In terms of two years, I expect that there will be much more networks in production and at scale; and there will be a focus on “networks of networks” where we will be connecting different networks together to create more value. For example, there may be a network for bond issuance running on a protocol such as R3 Corda and users will buy and sell these bonds whilst making payment using a payment network based on Hyperledger Fabric. This asset exchange will happen atomically and will be across industries, countries, and use cases.
This interview includes excerpts from a feature originally published in CIO Online.
