2020 was a year of rapid acceleration in the adoption of new technologies, with COVID-19 pushing companies to find ways for people to work and collaborate virtually almost overnight. For companies that hadn’t done so already, it quickly became a strategic imperative to get the majority of applications and infrastructure—a rule-of-thumb target is about 80%—to the cloud to meet the challenges of the current environment and to build for the future.
Converting your physical data center into a digital one is clearly the critical first step, but the building-for-the-future part of the equation is where most of my conversations with business leaders tend to focus. With the technology innovation that’s on the horizon, if blockchain and distributed systems aren’t part of your digital transformation strategy right now, you may not be best positioning your business for what’s just around the corner. And since most businesses are in the processes of making significant investments in their digital infrastructure, chances are your partners are, too.
So the question is: If you’re moving your applications and data to the cloud, and your business parties are as well, why not do it together? Why maintain a structure in which one side sends its view of the world, the other side sends theirs, and each then reconciles and confirms the state of play just to get anything done. To leverage the full slate of innovations on the horizon, you’ll need to share data and insights with other organizations. Imagine what we could achieve through a collaborative data infrastructure and single source of truth!
This is less of a technology-driven question than a business mindset question. Business leaders will have to break from the existing belief that maintaining their own data provides the key to their competitive advantage. It doesn’t—and it will keep them shackled to a model that will likely become obsolete.
Consider the average supply chain processes to get goods from point of manufacture to point of consumption, which includes, on average, 20 bill-of-lading documents traded between the manufacturer, logistics and distribution providers, and retailers. Each step, with its own bill of lading, requires a back-and-forth set of messages and reconciliation, along with teams of back-office workers just to reconcile the data discrepancies between counterparties. This structure has proven to be a catastrophe during the pandemic, as 78% of organizations faced moderate to complete supply chain disruption.
In a cloud environment, all those parties could share access to a single source of truth with the appropriate controls, security and business logic as to “who” could see “what” and “when.” So when disruptions occur, everyone is aware and can act to minimize the impact.
This is enabled through the use of cloud-based multiparty systems—a combination of new techniques and technologies, including but not limited to areas such as blockchain and other distributed ledger technologies, as well as privacy-preserving techniques and tools such as confidential computing.
Cloud-based multiparty systems change the control point of data to one based on policies set by all parties—from data owners to AI and application developers—regardless of where the data and compute take place. These data protections, built on top of cloud’s elastic architecture, make it possible to easily accommodate shared data opportunities.
The immediate value for organizations that share business logic and access to a single source of information is the decrease in cumulative computing and storage costs. The long-term opportunity is the reshaping and reimagining of business processes that historically were limited by the focus on an individual company instead of a focus on an end-to-end holistic process unlocked by multiparty systems capabilities.
This type of business model shift is happening now. Several industries have begun to re-think how to transform their ecosystems using cloud-based multiparty systems. Key infrastructure leaders in the capital markets industry—the DTCC, ASX, Swiss/SDX and others—are building DLT-based multiparty systems that will simplify how securities are bought and sold through shared data infrastructure and tokenization. Microsoft is implementing a cloud-and-blockchain-based multiparty system for its cloud hardware supply chain, delivering mine-to-datacenter traceability and end-of-life disposition while also achieving transparency on the sourcing of critical or raw materials.
The key to success for such projects is that the business and technology leaders reshaped their cloud journey from a single business focus to one that included the broader business ecosystems. The result has been that the true value of their move to cloud surpassed cost-cutting and internal opportunities; it will allow companies that are part of the collaboration to rethink and reimagine their processes, their business, and even their industry. It can also help shift from a data accumulation structure, where only a tiny fraction (as little as 1%) of available data is ever analyzed, to one where shared learnings are uncovered from much more of the data so it can be applied for the greater good.
The time to evolve from internal to collaborative processes is now. Companies that leverage the benefits of working from shared data with their partners are going to have an advantage when it comes to co-innovation that companies that go it alone will miss out on. Collaboration-minded companies will be able to identify areas of redundancy, streamline data reconciliation and improve the experience for all parties. And working with a partner may lead to new opportunities that previously were thought to be implausible due to technology barriers or siloed information.
In the next phase of cloud adoption, the companies that lead will be those that shed the orthodoxies of the old physical data center world and embrace working in blockchain-based multiparty systems. Collaborating across an entire integrated business lifecycle and ecosystem—working with partners, peers and customers—opens massive frontiers not just for greater efficiency, but more importantly, for new innovation, products and services to help organizations thrive—regardless of what the future holds.