Unpacking the Possibilities Offered by Blockchain
As blockchain becomes increasingly popular, enterprises across industries are wondering whether this technology can benefit them, and how. Brijesh Balakrishnan, Associate Vice President, and Head of Delivery for High Tech Consumer Electronics and Blockchain, Infosys, takes time of his schedule to sit down with Alex, our host for this podcast and explains how blockchain has progressed over the last decade, points out some of the industries that have rapidly adopted this technology and why, and how enterprises need to approach this rapidly evolving technology.
Listen to this podcast to learn how blockchain is likely to develop in the near future and the challenges it could encounter to its widespread applicability. Brijesh also deep dives into the Distributed Ledger Technology (DLT) choices available in the market and makes a guess on who will emerge a winner. He also comments on how Infosys has been engaging with blockchain and investing in it to develop high quality proof of concepts and accelerators for its clients.
Alex: Hello and welcome to a new episode of Infosys Podcast. Today, we have Mr. Brijesh Balakrishnan, Associate Vice President, and Head of Delivery for High Tech Consumer Electronics and Blockchain at Infosys. As the head of the Blockchain practice at Infosys, he will be throwing light on the possibilities and advantages of blockchain technology along with some of the complexities of implementing it to drive business worldwide
To get started Brijesh, could you quickly walk us through the evolutionary stages of blockchain, how it was received initially as a technology, and how Infosys has engaged with it?
Brijesh: Thank you for having me here Alex. So blockchain has been through some key stages in its life over the last decade.
It started with bitcoin in 2009 and till about 2012 it was all about the potential offered as a cryptocurrency. This phase was marked by skepticism from central bankers, while non-believers of traditional centralized banking systems quickly adopted this option.
The period from 2013 until about 2016 saw huge interest and traction around alternatives to bitcoin and its interfaces with the real banking world. The world finally accepted that blockchain was here to stay and fiat currencies would have to make space to coexist. Infosys started to actively observe this space and consider ways to create software offerings in blockchain, particularly for the financial sector.
By 2016, the technology powering cryptos was picked up by virtually every industry with unprecedented zeal. This phase was marked by a huge number of proof of concepts, primarily, to gain early insights into what this technology was capable of. Infosys picked up the pace and executed double-digit PoC’s across almost all major industries. We became a well-recognized and active player in the blockchain space, although we were operating across various pockets within Infosys. By the end of 2017, we had engaged with more than 150 customers, from initial dialogs to executing pilots.
Since 2018, blockchain as a technology has begun maturing, and the advantages of this technology are being widely recognized. Industries are realizing that blockchain need not replace what they already have, but instead capitalize on this technology to derive more value from what they already possess.
Blockchain technology, instead of replacing the core software, augments the core functions and extends the reach of enterprise software to other business stakeholders and partners. This ‘network’ effect powered by blockchain helps in forming collaborative business ecosystems. This line of thought is being acknowledged by nearly all industry verticals.
Infosys has reorganized itself rather well for this phase, by creating a dedicated horizontal practice, as well as developing industry-specific blockchain competencies within each vertical, so that we can jointly identify and service suitable blockchain opportunities by utilizing existing connects of industry-focused verticals.
Alex: We see that some industries have a higher adoption of blockchain, while others do not. Brijesh, which industries have been early adopters of this technology? And how did governments across the globe react to this?
Brijesh: While the initial adoption of blockchain was observed in almost every industry, some have seen greater adoption than other, primarily I think, for the greater benefits it offers some industries compared to others.
Financial services and Insurance industries have seen the maximum number of experimentations on blockchain and most of these have been in crucial areas, such as in payments, multi-party interactions in trade finance, and claims management. This reflects on our market traction over the last two years, wherein upwards of 60% client dialogues are in this space.
The second industry that has seen high adoption is Energy and Utilities. They have leverage blockchain to create synergies between their existing technologies with the expanding alternative energy movement. However, wide-scale deployment is still an issue here primarily due to costly systems acquisition involved in situations that are truly relevant for blockchain, for instance, IoT integration of alternative energy devices with blockchain.
Retail, logistics, and manufacturing industries have majorly focused on optimizing the supply chain, reducing complexity, and introducing transparency for not just enterprises but consumers as well. The challenge here has been to get all parties together amidst complex power equations – the powerful partner will not share their data beyond a point, in order to continue to retain power, while the less powerful partner will trust his systems more than others’ systems – this impacts their speed to capitalize on blockchain networks.
Interestingly, once the controversial crypto usage separated from the huge possibilities that blockchain as a technology had to offer, Governments too started to look at it favorably and there have been several governments that have recognized the value of blockchain and begun exploring options, including those of the US, France, Korea, UAE, India, and others.
Alex: We understand that blockchain has a tremendous potential for the speed with which it allows us to do business, the transparency it introduces into business processes, and the enhanced security it offers – thanks to its immutable records. And more and more industries are beginning to dive in and explore the possible benefits it could offer them. So Brijesh, if an enterprise needed to adopt blockchain, what would be the key questions they should address? And what actions should the CIO/CTO take in order to facilitate the implementation of this technology?
Brijesh: To begin with, enterprises need to understand the risk of disruption and develop a disruption radar. They need to understand the areas where blockchain initiatives are currently most focused and making most rapid progress. For instance, blockchain-powered payment systems (like Ripple) are proving disruptive for central bank controlled payment systems (like ACH, Fedwire).
Enterprises need to improve internal operations, this helps to look forward beyond the current radar and identify the next big thing. For instance, blockchain-powered rethinking of existing business processes typically leads to gradual dropping of certain sequential steps (and/or IT systems), thus improving speed of execution of business processes and simplified IT systems landscape, and generating cost savings. This has been experienced by a prominent department of the Government of India while working with us.
Third is the purpose and suitability. Is the purpose of the business application clearly understood and is blockchain the right technology? For instance, we encourage our clients to spend enough time to identify the right use cases for Blockchain. Using our design thinking led approach, we ensure that they experiment with relevant and pragmatic use cases in their business context, to be able to see real value of blockchain. Our clients have often congratulated us for our transparent approach in this regard.
Co-operation: Now, within an organization blockchain bolsters internal process optimization initiatives, but outside of an organization, blockchain facilitates trust-based networks. Therefore, it is important for external-facing blockchain initiatives to identify relevant external stakeholders early on and gain concurrence on common goals achievable on such networks.
Resilience: How do businesses ensure the technology is resilient, scalable, secure, and recoverable? Blockchain adoption will be best achieved when business and technology/IT teams are aligned. The choice of right Distributed Ledger Technology (DLT) by the IT teams must care for technical parameters stated earlier as well as for its ability to address the business goals.
Categorize adoption complexity: Understand the numbers of parties that need to cooperate and the ability to align their interests. Not every stakeholder in a blockchain-powered network would need the same level of access to data and business functions, so it’s important to have a governance model, especially in private permissioned blockchain networks, to aid smooth functioning.
Alex: That was a detailed answer Brijesh, which brings to mind, how easily applicable is blockchain technology? How can a customer get the best out of it and how do you see blockchain as a technology evolving from where it currently is?
Brijesh: The applicability of blockchain has been ascertained across a variety of industries, domains, and business processes, there is certainly valid interest industry-wise globally. This is reflected in dedicated budgets created by governments such as Australia, UK, Dubai, as well as appearance of formal well-constructed RFP’s as tenders, instead of informal proof-of-concept orders. Clearly, industry is seeing greater potential in this technology and becoming more focused in their approach to determining applicability of blockchain.
There are areas where this technology will continue to evolve in coming times, for instance – Blockchain-as-a-Service, Digital Identity, Interoperability between networks built on different Distributed Ledger Technologies, IoT-powered Blockchain networks.
Alex: In a world where newer technologies replace the older ones every other day, what are the key challenges for the application of blockchain in the near future?
Brijesh: Awareness and understanding – Blockchain must not be construed as a panacea to all current problems in IT or business contexts. It has a specific focus and applicability. Time spent in determining the applicability will create focused pockets of genuine improvement within organizations.
Organization Alignment: As for our clients, they must ensure alignment between their business and technology teams.
Culture: Blockchain represents a shift from traditional ways of doing things, so departmental alignment within organizations plays a key role in adoption.
Cost and efficiency: Speed and effectiveness with which blockchain networks can execute peer-to-peer transactions come at a high aggregate cost. Solutions are evolving fast in order to optimize on such costs – Corda is working on this, so is Quorum, a variant of Ethereum.
Regulation and governance: Bitcoin blockchain bypassed regulation to tackle inefficiencies in conventional intermediated payment networks. And hence it is still not accepted by several governments as a legal currency. However, taking the learnings from Bitcoin’s inception and duly noting relevance of its underlying technology to a wider landscape, there is currently huge effort spent on part of governments and industry to co-develop Blockchain standards. This will also enhance Blockchain adoption in key areas like governance, financial services, utilities, and medical and insurance networks.
Security and privacy: Blockchain security risks do exist, and they must be recognized and mitigated. Private Blockchain in comparison to public blockchain offer a degree of control over both participant behavior and the transaction verification process. In fact, the use of a blockchain-based system is a signal of the transparency and usability, which are bolstered by its inherent security based on hashing and immutability features.
Alex: From what I understand, distributed ledgers use independent nodes to record, share and synchronize transactions. And blockchain itself is classified as a type of distributed ledger. Now that there is much discussion and debate on the Distributed Ledger Technology (DLT) choices we have in the market today, will there be a winner emerging in near future?
Brijesh: Well, there are a number of DLTs that are available. Some are more suited compared to others, for certain industries, but there are no clear winners as yet. For instance, Corda is deemed better for the financial services industry, but it is primarily due to their focus on this industry. There have been successful financial networks on bitcoin as well. Even hyperledger is quite active in this space.
Thus, our approach is to work with all major DLT’s. We are not only enabling our teams across a variety of DLT’s, but we have also established a DLT-agnostic technology layer that helps in building business apps regardless of the underlying DLT platform. This keeps the business interests of the customer intact, even when they consider ‘cutting over’ from X DLT platform to Y DLT platform in future. Further, we are also investing in interoperability of networks powered by different DLTs. For instance, a business node on a blockchain network based on Hyperledger should be able to exchange data with another node on a different blockchain network powered by Corda.
Alex: What are the ways in which Infosys addresses the DLT space and what are the different blockchain offerings available to the client?
Brijesh: Infosys has heavily invested into R&D infrastructure for blockchain and has built about 40+ business accelerators that a customer can deploy in order to minimize the time invested in experimenting with blockchain, and quickly generate maximum insights relevant to their business. These accelerators help them learn from our experiences across a plethora of customers who have been through the journey with us.
Infosys provides blockchain offerings across the spectrum starting with Blockchain research and education to design thinking sessions for use case identification and articulation, POC/pilot development, network creation, management and stakeholder onboarding to production deployment and support services. Infosys uses proprietary tools, frameworks, accelerators, and methodologies, which have been developed and refined by factoring learning from nearly 150 client conversations that we have been involved in over the last couple of years, to strategically advise and execute projects tailored to the clients’ technology maturity.
We have enabled more than 600 of Infoscions on blockchain technology across various DLT’s, and an exciting number of people continue to express keen interest to contribute in this space.
Alex: The world of blockchain technology is highly competitive. What are the future areas of investment to stay ahead of the game?
Brijesh: We will continue to focus on creating and managing business networks. These networks will be developed on multiple open source Blockchain platforms. These networks will be modular in nature and clients/enterprises will be able to onboard themselves through an easy plug and play approach. In order to create and deliver these networks, Infosys will bring together best of breed start-up, alliance, consortium, and enterprise partners. Infosys will also develop and deliver network services around monitoring, analytics, and management of keys, security etc.).
In order to drive blockchain adoption in enterprises, Infosys feels that the biggest impediment will be, onboarding and managing multiple stakeholders onto business networks with specific focus on security, privacy, governance, and regulations. By creating dynamic business networks on platform agnostic frameworks, enterprises will be able to participate in such networks and leverage the stakeholder ecosystem for specific use cases.
Alex: Thank you so much for coming and joining us Brijesh and for engaging us in this incredibly interesting conversation. And thank you, everyone, for listening. You have been listening to Infosys podcasts.