The dawn of the distributed ledger technology opens up an entirely new quadrant of possibilities. To fully exploit its potential, a firm should not simply clone its current business processes onto blockchain. It would only replicate existing inefficiencies. Instead, an SME should consider the actual business purpose and intent of its processes to take this opportunity to streamline and restructure them by asking how they can be reimagined by leveraging blockchain technology. Rethinking of business processes should be conducted in tandem with an assessment of the changes required in technology systems to take the best advantage of blockchain solutions.
The potential of blockchain to bring about substantial economic transformation is the mirror image of the way the Internet revolutionized commerce, media and advertising in the previous decade. SMEs should effectively channel its technical human capital surplus to position itself as one of the pioneers during this upcoming wave of innovation.
The Hindu
To know about the value that blockchain can create for your business, click here.
It is clear that the academic hypotheses of five years will steadily become a reality for an SME. Momentum is shifting from a focus on learning and exploring the potential of the technology to identifying and building practical business applications, where blockchain can play a key role.
The Blockchain Spotlight on SME
SMEs are the backbone of any major economy, an integral part of GDP growth and other national metrics. Blockchain will provide an SME the ability to access new alternative financing options. The technology promises to dramatically streamline operations and reduce costs while opening up new revenue opportunities and markets. It can help bring products and transactional services to market quickly and inexpensively, and offload the traditionally high costs of security, know your customer (KYC) protocols, data storage, and other overheads. It not only reduces cost but also allows businesses of all sizes to compete with each other in a healthy manner which leads to
Suggested: Key Concepts of Blockchain
One of the attractive features that blockchain offers SME – Smart Contracts.
Smart contracts will define the terms and penalties around an agreement in the same way that traditional contracts do. Also, they will automatically execute and enforce those pre-agreed terms and conditions. Essentially, smart contracts will help people to sell property and shares, exchange cash, or indeed anything of value can be sold in a transparent manner. This will not only avoid conflicts but also remove the service of the middlemen.
The global estimates through crowdfunding will reach $93 billion by 2025.
World Bank Report
Blockchain’s enabled crowdfunding has changed the way SMEs gather investments, accounting for over 34.4 billion dollars in 2015, according to Mossolutions 2015 crowdfunding report. Crowdfunding provides an excellent way for creative projects to find cash. Many small or obscure projects which lay outside the scope of traditional investments are at ease after the inception of crowdfunding. Blockchain-based crowdfunding seems to be a game changer because it decentralizes the fund gathering model. The token represents a share in the project and just like a normal share in the stock market they have the potential to go up in value. These investments are referred to as
Blockchain is an emerging technology that can improve banking, supply-chain and other transaction networks, giving new opportunities for innovation and growth of an SME while reducing cost and risks incurred.
Suggested: Introduction to Graphene – Consensus and Testnet Setup
How an SME can Deploy Blockchain Technology
The easiest way to understand traction and value is to find out if the SMEs are putting money where their mouth is. Predictably, the financial sector drives blockchain spending, with 2018 spending making 46.7% of the total. It is lead by a banking industry accounting for around $260m of the total spendings. The second largest spender is distribution and services (nearly $120m in 2018), with retail and professional services as their largest contributor. Thirdly, manufacturing and resources sector ($112m) are driven by discrete and process manufacturing. Another report by IDC predicts the highest growth will come from telecommunications (79.1% CAGR), professional services (77.2% CAGR) and healthcare (76.7% CAGR).
Small-scale business lending blockchains graph in different SMEs
(Source: IDC Worldwide Semiannual Blockchain Spending Guide, 2018H1 )
The four major impact points derived from the data above can be narrowed down to four major SME segments, namely- supply chain, financial services, health care and real estate where blockchain has a major impact.
Supply Chain
Blockchain technology is producing extraordinary results in the supply chain, transportation, and logistics. For instance, Maersk’s use of blockchain is demonstrating that the administrative costs of shipping flowers from East Africa to the Netherlands can be drastically reduced.
In international trade, blockchain is making it possible to process paperwork, transfer ownership, and pay sellers in a minute. Diamonds are monitored from South African mines to retail store shelves in order to eliminate the scourge of blood diamonds. Wine is traced from the Napa Valley to China. Walmart is using blockchain to track shipments of seafood and pork from China to its retail store shelves down to the second. Health care providers are verifying that pharmaceuticals are kept at the proper temperatures throughout the shipping process. All this and even more will be possible through the power of blockchain.
In the coming five-to-ten years, global supply chains will bind parts, products, information, services, materials, funds that flow between organizations without any irrelevant human intervention. This will happen according to the goals and objectives which are established and agreed by the stakeholders, which are documented within smart contracts. Blockchain stores these smart contracts permanently and immutably. They will not be only blockchain-based records created with a word processor. In fact, they will be dynamic computer programs that will enforce their own provisions.
Blockchain technology could add value to the supply chain industry by:
- Reducing or eliminating fraud and errors
- Improving inventory management
- Minimizing courier costs
- Reducing delays from paperwork
- Identifying issues faster
- Increasing consumer and partner trust
Suggested: An Affair of Two Chains: Blockchain Meets Supply Chain Finance
Financial Services
The opportunities that blockchain will provide to an SME cannot be ignored. Blockchain will significantly reduce the processing fee as there’s no waiting around for third-party entities to provide relevant information. From streamlining contracts to trade financing and supply chain, or to getting access to alternative financing, blockchain will allow an SME to compete in ways never seen before.
As per Gartner’s Survey:
Significant transformation in the industry is expected over the next five to ten years. Size, scope, and focus will change as customers get more used to micro-transactions available via use of blockchain technology and the use of artificial intelligence to make decisions that potentially circumvent the traditional banking industry altogether.
Blockchain will lead to a win-win situation for banks and small-scale businesses. It will provide the following:
- Transparency: Blockchain made it possible to improve transactions, in terms of transparency, through virtual currencies
- Immutability and the elimination of intermediaries are some of the most cherished attributes of the blockchain
- Faster processing, easier settlements
- Secure transactions, cost-effectiveness, reduction of frauds
Using blockchain we can create a faster, transparent and efficient path to make SMEs grow in the coming future. Blockchain will make all the back-office functions easier. It is already being used in a number of big financial institutions like Barclays, Citi Bank, UBS etc.
Real Estate
The real estate industry is undergoing a global transformation that is being fueled by advances and technology and access to real-time data. The one underlying technology that is expected to have the biggest impact on the real estate is blockchain. Blockchain-based smart contracts can play a big role in this industry. Blockchain technology can potentially transform core CRE operations such as property transactions like purchase, sale, financing, leasing, and management transactions.
A blockchain transaction cannot be copied and is a parallel which can thus be drawn to the real estate sector. Blockchain-based Smart Contracts will enhance speed of transactions while cutting out the middleman. While still in its early lifecycle phase, blockchain technology is already starting to transform the real-estate industry worldwide.
Six uses of blockchain can improve the leasing, purchase and sale process:
- Firstly, Property search process becomes easy
- Secondly, blockchain could expedite pre-lease due diligence.
- Ease of leasing and cash flow management.
- Enable more efficient processing of financing and payments.
- A transparent and relatively cheaper way of property management.
- Enable smarter decision-making.
Healthcare
Blockchain technology has the perspective of transforming healthcare by placing the patient at the center of the healthcare ecosystem and increasing security, interoperability, and privacy of healthcare data. In other words, This technology could provide a new model for health information exchanges (HIE) by making electronic medical records more efficient, secure and disintermediated. While it is not an elixir, this new, rapidly evolving field provides fertile ground for experimentation, proof-of-concept testing, and invention.
According to a study from IBM, 60% of surveyed health care executives had solid plans to implement a commercial Bl Blockchain solution this year, while 56% expected to implement it by 2020.
Another survey by Hyperledger shows that 42.9% of healthcare organizations think that the interoperability of electronic health records will become faster with blockchain implementation, with 28.6% of respondents ready to use this technology in care settings today.
Blockchain’s use in Healthcare sector
Healthcare sector is a very sensitive industry where blockchain will be a big step in maintaining the records of patients. So, keeping a record of the disease and diagnosis. Thus maintaining an electronic health record which can be readily accessible and shared easily. A doctor will be able to monitor a patient’s health through a transparent and decentralized system.
Blockchain could bring the most value in the following areas:
- Prevention of malpractice
- Data integrity/ Drug Supply chain integrity
- Economical model
- Interoperability
- Data Security
Big companies in the healthcare sector implementing blockchain as of today: Nebula genomics, Iryo, Doc.AI, etc.
Suggested:
Conclusion
Finally, a strong vision of the desired future is essential to drive an organization forward with blockchain. To accommodate change, it is critical to revolutionize everything from mindsets, systems
To future proof your enterprise with blockchain, contact us for a free consultation.
