Analytics promises to complete reshape our world. But while analytics is poised to “eat the world,” business leaders are reporting less trust in their company’s data.
In a recent KPMG survey of 2,200 IT and business decision makers, only 35 percent expressed a high level of trust in their company’s analytics and data. This lack of trust in analytics comes with a high price tag: Poor data quality cost companies $15 million in 2017 alone, according to Gartner.
Sixty-one percent of CEOs report that building trust in analytics is currently one of their top priorities, according to the same survey by KPMG. Forward-thinking organizations are looking for a solution to re-establish trust in data—one that doesn’t rely on centralized institutions and can scale. One surprising solution to the lack of trust in data is blockchain.
The Time for Transparent Data
Blockchain has come a long way from its roots in cryptocurrency. In simple terms, blockchain is an electronic ledger that stores and manages transactions across computers (nodes) connected to a network. It has enormous potential to establish trust, verify entities, chronicle events, and trace data in a variety of business transactions across all industries.
For example, in modern supply chain management, blockchain is making complex processes more transparent. Supply chain management involves hundreds of interlocking processes, including product design, sourcing raw materials, distribution, packaging, branding, and shipping on a global scale. Blockchain makes each stage of the process traceable, eliminating guesswork and empowering companies to see exactly what happened, when, where, and by whom at every step of the data’s long journey.
Supply chain management is just one of many industries that are growing increasingly complex in a globalized, digitized world. The vast amounts and rapid growth rate of data from mobile devices and the Internet of Things (which encompasses everything from automation, robotics, sensors, and monitoring devices) make it hard to efficiently store, manage, and mine information for accurate, real-time analysis.
Blockchain doesn’t make these industries less complex—but it does make data much more transparent and traceable. Blockchain makes each stage of the process traceable, eliminating guesswork and empowering companies to see exactly what happened, when, where, and by whom at every step of the data’s long journey.
The Unique Value of Blockchain
The MIT Technology Review article aptly titled “In Blockchain We Trust” gets to the heart of what makes this technology a compelling solution to the complexities facing enterprises today:
- Single source of truth: While any node can make changes to the ledger, a “consensus pool” has to be reached by a majority of the nodes. The “consensus pool” is dictated by a mathematical algorithm, and the nodes will only update their copies of the ledge when consensus is reached. If a node tries to make a change without consensus, the whole network rejects the update. As a result, the data in a blockchain is complete, consistent, accurate, and available to all the nodes.
- Immutable: Transactions are stored in “blocks” and “chained” together using cryptographic locks that are created by the consensus algorithm. This makes the data immutable and resistant to tampering.
- Transparency and provenance: Whether it is a “permissionless” ledger where anyone can set up a node and join (as with bitcoin and most other cryptocurrencies) or a private “permissioned” ledger setup, everyone on the ledger can see all the details of the transactions. This characteristic assures that intellectual property and goods can easily be traced to their rightful owners.
The last point on transparency and provenance cannot be overstated in its value. Tracing every piece of data to its origin and being able to track all the changes ensures data integrity and quality. Since untrustworthy data comes at a high cost, transparency in data is vital in building trust and consensus among multiple parties in any enterprise transaction.
Let’s go back to our supply chain management example. Tracing every raw material and every good back to their sources makes product recalls much more efficient and targeted. For instance, in the food industry, instead of recalling thousands of heads of lettuce, we can easily isolate only the infected ones, which could be 100 or fewer. The current maze of supply chain management lacks this level of transparency, making routine product recalls cumbersome, inefficient, and costly. Blockchain’s transparency can benefit every industry from food to pharmaceuticals, manufacturing, retail, and more.
Blockchain records can also offer assurance to the end consumer about the authenticity, provenance, and custody of goods. Consumer labels such as “Fair Trade” and “organic” can easily be traced for veracity. Anyone on the blockchain can verify that the same good that was shipped was the same one that arrived and reduce the appearance of counterfeit parts in the supply chain.
A growing number of forward-thinking companies are investing in blockchain to help with new business models, revenue sources, and efficiencies, according to Deloitte’s 2018 global blockchain survey. The survey indicates a shift from the commonly held image of blockchain as a cryptocurrency tool to a new role full of potential in establishing trust, verifying entities, chronicling events, and tracing data in a variety of business transactions across all industries.
As mobile devices and the Internet of Things continue to churn out vast amounts of data, blockchain offers a promising solution to make information manageable on a large scale and forward thinking enterprises are wise to take note.