sb-nz logo
Story image

What to tell the board about the blockchain – Gartner

23 May 2017

Article by Gartner contributor Kasey Panetta.

It’s entirely possible that, in the next few weeks or months, your CEO will pull you into a meeting and ask “What do we tell the board about blockchain?”

News of the next 'game-changing' technology has made its way from casual hallway conversations all the way to the board room.

The Gartner 2016 Board of Directors survey revealed that 91% of board directors have at least heard of blockchain or distributed ledger technology.

However, more detailed understanding of the implications is limited, and respondents are confused, with 36% of them viewing it as an opportunity and 21% as a threat.

It will be up to the CIO to communicate to the CEO or to the board directly what blockchain is and how it could affect the organisation and the industry the firm operates within, said Gartner vice president David Furlonger.

“They will want a high-level explanation about potential issues, risks and implications, including market potential and suggested actions,” he says.

Improve understanding of blockchain and its potential

Blockchain can enable people to create, transfer and store value directly without a traditional central authority.

It creates a global, peer-to-peer, self-regulating, secure, and reliable economic and transaction infrastructure.

It also creates an opportunity for enterprises to exchange value — whether monetary or otherwise — directly with each other.

This means that old business models and intermediation by large organisations would disappear and create an opportunity for 'instant' business models created to exploit temporary opportunities with new companies. 

The pervasiveness of technology in society is underpinning a revolution in how goods and services are priced, valued and exchanged.

CIOs should establish a framework highlighting for the board the concepts, risks, and opportunities of a new economic model that blockchain technologies will enable.

Ensure the board recognises the multiple phases of blockchain development.

Identify where investments in blockchain R&D can have the most impact, based on current technology maturity, the evolution of commercial ecosystems and society’s proclivity to embrace a programmable economy.  

Explain the potential frictionless markets

Set the business scene for blockchain evolution, with an explanation of the potential for a frictionless, decentralised and programmable society.

Explain what would happen to the business if people, businesses and smart things could communicate directly between themselves without the requirement for a third party to establish trust and arrange for the creation and exchange of value.

For example, companies could use cryptographic tokens as payment instead of a government-backed currency to purchase materials.

Digital identities could become portable and documents and processes verified via immutability in the blockchain, rather than by an institutional arbiter.

Highlight these possibilities and show the impact on the current operating and business models as multisided platform businesses are built.

Clarify the risks of underestimating blockchain

Companies that do nothing about blockchain run the risk of being left behind, but there are also risks to undertaking a blockchain project.

Focus on three areas related to risk: The specifics of the business context (such as customer adoption paradigms), risk management (for example, information management), and legal issues (e.g., smart contracts).

Industry boundaries will become more fluid as business ecosystems develop and artificial intelligence increasingly influences decision making.

As the programmable economy takes shape, it’s difficult to see what business enterprises will look like in five years, as blockchain business models disrupt even today’s more advanced platform businesses such as Uber.  

For risk management, governance, auditability, control of the networks and blockchain components supporting them are challenging.

Assuming that permissioned operating models will solve a lot of the risk is not necessarily a given due to centralisation and reliance on single supplier stacks.

Legally, blockchain enables jurisdictions to be crossed and intermingled, complicating operating frameworks and enforcement.

Much of the legal basis for identity, trust, smart contracts and other components are undefined in a blockchain context.

Established laws still need to be revised and amended to accommodate blockchain use cases, and financial reporting is still unclear.

Many challenges come along with blockchain, but the board must look ahead to how the technology could affect the enterprise.

CIOs can start small, by developing proofs of concept and engaging with the various consortia.

The board should also conduct scenario-planning exercises to assess the evolution of blockchain business and the impact on their market and enterprise.

Article by Gartner contributor Kasey Panetta.

Story image
Video: 10 Minute IT Jams - SonicWall VP on the cybersecurity lessons learned from the last 12 months
This is our seventh IT Jam with SonicWall, the cybersecurity company specialising in firewall, network security, cloud security and more.More
Story image
2020 sees a global shift in financial malware threats
The financial threat landscape experienced a game-changing pandemic year, according to a new report from Kaspersky.More
Link image
Virtual demo: Diagnose network cabling problems with the LinkIQ Cable+Network Tester
If you’re finding it difficult to install access points and cabling, or if you can’t pinpoint an issue with a video camera or end user, the LinkIQ Cable+Network Tester could be exactly what you need. Try a free, fully interactive demo now.More
Story image
Attivo Networks expands Active Directory suite for greater protection
"We see Active Directory exploitation used in the majority of ransomware, insider and advanced attacks. We are pleased to now offer our customers early and efficient solutions for preventing the misuse of Active Directory.”More
Story image
IT leaders prioritising automation, Zero Trust and API-based security investments
"The study shows that a cocktail of multiplying threats, the proliferation of hybrid and cloud architectures, blended with a pandemic-fuelled explosion in distributed and remote work has created a perfect storm for network security teams."More
Story image
Mobile devices biggest enterprise security threat - report
Businesses have left themselves vulnerable and open to cyber criminals in the rush to ensure their workforce could operate remotely during the Covid-19 pandemic.More