CRM Looks for Its Link on the Blockchain
Blockchain has ridden the coattails of cryptocurrency medium Bitcoin to become a common term. A simple Google search reveals about 27 million documents mentioning the word. But despite its financial roots, the technology is no longer limited to financial transactions. Like other horizontal high-tech solutions, such as cloud computing and artificial intelligence, blockchain has the potential to dramatically change how all enterprise applications, including customer relationship management (CRM) systems, are designed.
Though the process is in the early stages, the branching out of blockchain from its financial transaction niche has already begun. “Widespread use of blockchain in CRM is about three to five years away,” predicts Windsor Holden, head of forecasting and consultancy at market research firm Juniper Research.
Blockchain represents a fundamentally different approach for writing software (see the sidebar on page 31). Traditionally, applications functioned as autonomous units, systems that operated within defined areas and followed set routines. Through the years, vendors have devised ways to make applications more modular and more dispersed. Blockchain takes that movement to a new level.
At its heart, blockchain offers a powerful, flexible data management foundation. CRM is all about data—storing and retrieving records of transactions and interactions between suppliers and customers. As CRM and related technologies have advanced, businesses’ front- and back-office systems have become more intertwined, leading companies to seek more of a 360-degree view of customers. Blockchain could help deliver it.
One onerous problem is that data is siloed—stored and used differently by each department. Marketing’s view of a customer interaction is much different than the customer service group’s view. Because of the diverse breadth of information, delivering the appropriate view of a customer to an employee at an important part of an interaction remains a significant challenge. Employees typically rely on Big Data, analytics, and other tools to mine information and create the needed slice of information, but the process is time-consuming and quite often flawed.
Blockchain promises to deliver more data consistency without sacrificing application flexibility. This architecture has an amorphous, open, distributed design capable of morphing in a seemingly never-ending number of ways. Unlike traditional software, this approach borrows from open-source ideals and is designed to be accessible and easy to implement. “Anyone with a computer could set themselves up as a node in Bitcoin’s network and view the records on the chain,” Holden says.
As a result, data silos break down. Rather than multiple copies of a customer’s personal information confined in various systems, all applications have access to one set of characteristics. Consequently, companies could reduce redundancy and increase responsiveness.
BUILT-IN SECURITY FUNCTIONS
Enhanced security is another potential benefit that blockchain brings to CRM. With traditional applications, security is cobbled on top of the applications rather than being an inherent part of them. That is not the case with blockchain. Not only is security included in each piece of code, but it has a distributed architecture. “The beauty of blockchain is that it is inviolable: You cannot erase a transaction from it,” Holden explains.
In fact, the application infrastructure’s security is so strong that many advocates claim that hackers will never be able to break in. (Similar pronouncements have been made about other security checks in the past, it should be noted.)
One way the added security is accomplished is through the destruction of data silos, which could eliminate the need for middlemen, like banks, in the payment process; vendors and consumers could send their payments directly to their suppliers.
“We’ve seen some applications of blockchain in [enterprise resource planning], especially in the supply and distribution channels,” says Denis Pombriant, founder and principal analyst at Beagle Research Group.
For example, blockchain could enable a jeweler to track a diamond from its mining to its eventual owner, thereby reducing the risk of illegal trafficking and fraud, according to Holden.
Blockchain could also help companies address privacy concerns. “CRM, similar to applications like Facebook, ingests all kinds of customer information,” explains Abinash Tripathy, founder and chief strategy officer at Helpshift, a CRM supplier. As companies gain more information about consumers, concerns about how that information is used have increased.
“With blockchain, users gain self-sovereign identity,” says Paul Tatro, cofounder of the Blockchain U Online, a training organization. “They gain control over how information about them is used rather than being at the mercy of their vendors. The consumers, not vendors, decide what qualities they do and do not want to reveal to others.”
Blockchain technology also provides companies with new ways of interacting with customers. Tokens have been a key building block in applications like Bitcoin. New types of tokens can be created: Virtually any type of asset can be tokenized and customers offered various incentives. As a result, tokenization offers new ways to monetize customer transactions. “Customers can gain a stake by participating in various forms of feedback, like customer satisfaction surveys,” says Paul Sebastien, chief marketing officer at Helpshift.
Large firms with multiple product lines can develop tokens for loyalty programs that span beyond one product line. Companies could even work together and pool their programs, issuing loyalty tokens “that span across the entire industry rather than just one company,” Tatro explains.
One company offering a unique spin on this theme is Howdoo, a start-up based in the Cayman Islands that just began offering a messaging and social media network that leverages blockchain. Howdoo provides a platform for consumers who are tired of being tracked, exploited, and bombarded by irrelevant marketing. It’s a platform for content creators wanting to take back creative control and increase their earnings. And it’s a platform for advertisers looking to gain greater transparency into their campaigns, connect with willing audiences, and protect their brand value.
Company founder David Brierley describes the platform as “a single application that combines all the best features of existing social media apps, but with a radical new approach to putting users, communities, content creators, and advertisers together in complete harmony and control, alongside a whole new way of incentivizing and rewarding contributions.”
A key factor connected to Howdoo is the µDoo token, a form of cryptocurrency that can be used to pay for digital products and services. Advertisers can use these tokens to buy the right to contact their target audiences or to reward consumers who engage with them; companies can use them to reward content creators for the ad revenue they generate; and network operators can be rewarded for good performance.
Even Cambridge Analytica, the U.K. political consulting firm which came under intense scrutiny after it improperly gained access to the personal data of roughly 87 million Facebook users in the years leading up to the 2016 U.S. presidential election, was reportedly looking at using blockchain technology to help people secure, manage, and monetize their online data.
ADDED TO ADVERTISING
And now a new project spearheaded by AdLedger, IBM, and Salon Media is looking to apply blockchain technology in advertising. Called the Campaign Reconciliation Project, it seeks to leverage a shared ledger to bring greater transparency and data security to advertising.
The project’s goal is to alleviate long cycle times, manual reporting, and discrepancies across advertising networks. Blockchain will be used to record contractual conditions, publisher payments, and ad impressions. All data will be in a shared system of record that is immutable and fully auditable.
“This is not only a proof of concept for what blockchain is capable of, but how it can help companies make informed decisions about the rules and standards needed for a transparent, shared ledger,” said Christiana Cacciapuoti, executive director of AdLedger, a consortium of companies—including GroupM, IAB, IBM, iSpot.tv, MAD Network, Publicis Media, and TEGNA—that have come together to reinvent the digital advertising ecosystem. “With the digital advertising industry plagued by fraud, transparency, and brand safety issues, we’re using blockchain to indicate to everyone that there is light at the end of the tunnel.”
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What Is Blockchain?
Blockchain, which was invented in 2008 for use as a public transaction ledger in Bitcoin, takes a novel approach to data management. Rather than one entity controlling information, disparate nodes—none of which have absolute control of the data—have access to it.
A blockchain is a list of records, called blocks, that can grow organically. They are linked and secured by a special type of cryptography, a security mechanism. Each block typically contains a cryptographic hash of the previous block, a timestamp, and transaction data. This design makes it difficult for outsiders to modify the data. Once recorded, the data in any given block cannot be altered retroactively without altering all of the subsequent blocks.
Since there are so many blocks, many observers view the system as unhackable. Because of its strong security features, blockchains have many potential uses with confidential information: financial records, medical information, government records, identify management, and even voting.
Chains can be built in two ways. They can be public and open to anyone with a network connection, much like a typical open-source model and the Internet. Bitcoin has taken that approach. In the other scenario, a chain can be closed and sold and supported, like enterprise software applications. Vendors now are building special-purpose enterprise blockchains.
In the past 10 years, blockchain technology has evolved in three phases. In the first phase, Bitcoin proved the concept and used it for its financial transfers.
The second phase added application logic and scripting features. Here, third parties, such as Ethereum, R3, and IBM, have been building special-purpose blockchains, or software modules geared to various functions. Traction for these types of applications has been building with smart contracts. For instance, a firm can create invoices that get paid automatically when shipments arrive, or share certificates that automatically send stockholders dividends if profits reach a certain level.
In the third phase, which is still under way, the technology will operate like an operating system, providing indexing and search capabilities.
With each new generation of solutions, blockchain technology becomes simpler to deploy. Its development has been moving at a quick pace. While a lot of progress has been made to date, much more work remains before blockchain becomes a simple plug-and-play solution, like mobile applications. —P.K.
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Underpinning the project will be the IBM Blockchain Platform. IBM will also help establish the governance surrounding the consensus models or rules by which participants can write, access, and validate data.
“The digital advertising supply chain is notoriously broken. Dimes on the dollar that are lost today can be traced back to issues with transparency and trust,” said Chad Andrews, global solutions leader for advertising and blockchain at IBM, in a statement. “To effectively work together, marketers and publishers need to know how media is purchased, how it’s being delivered, and that payment is being made. Blockchain can restore confidence in digital advertising and help advertising dollars go further by creating greater transparency, providing a single source of truth across all members of the supply chain.”
But blockchain’s benefits in CRM go far beyond advertising.
As the quality of data insights across customer-related activities typically improves with scale, blockchain’s network architecture eliminates the need for an intermediary data manager. Such a system could provide multiple businesses, and their competitors, with deep insights into customers’ preferences, opinions, and buying habits.
Because of its potential, many firms have started to dabble with blockchain technology. A full 39 percent of companies, including 56 percent of those with more than 20,000 employees, are either in the process of deploying blockchain solutions or are considering them, according to a report from Juniper Research. Of the use cases, nearly one-third of respondents identified settlements and payments as their top area of focus, while 10 percent identified smart contracts and another 10 percent pointed to supply chain management.
But blockchain technology has many hurdles to clear before it becomes widely adopted. Many companies are worried about how blockchain might disrupt their existing internal systems. More than half (59 percent) expressed concerns about interoperability that could ultimately lead to lost business, and 42 percent thought that the reluctance or refusal of clients and partners to deploy blockchain technologies downstream might cause difficulties for them, according to Juniper Research.
For now, such concerns seem warranted. What the dabblers find is an embryonic technology. “Blockchain today resembles the early days of the Internet,” notes Helpshift’s Sebastien.
While blockchain has a great deal of potential, the technology has little to no support infrastructure. Consequently, building blockchain applications is a time-consuming, tedious task, one where high levels of obscure programming expertise are needed. Third parties can often create mobile applications in a day, but building blockchain solutions requires much more time because few of the underlying functions, such as the code needed to connect two nodes via a network, are available.
Currently, the individuals dabbling with such issues are largely programming geeks. A Deloitte study examined the evolution of a blockchain ecosystem dubbed GitHub, a global software collaboration platform. On the plus side, the project attracted 24 million participants who started more than 68 million projects. But the stark reality of these open-source initiatives is that most have been abandoned or have not yet achieved meaningful scale. Only 8 percent of GitHub projects are considered active, meaning that they have been updated at least once in the past six months.
So, blockchain supporters need to build up its ecosystem and develop tools and applications for various niches, like CRM. There are signs that such work is under way. At Salesforce.com’s recent TrailheaDX conference in San Francisco, the company’s cofounder, CEO, and chairman, Marc Benioff, said that Salesforce is working on blockchain but didn’t elaborate on which part of the product suite would get the company’s early attention or how the technology would be used.
But businesses aren’t looking to Salesforce as their first choice for such technological innovations. In Juniper Research’s study, 43 percent of businesses were looking to work with IBM as their preferred blockchain partner (the Campaign Reconciliation Project provides a ready example); another 20 percent had Microsoft in mind.
Another challenge for vendors, like Salesforce, is a lack of individuals with the needed skills. Because blockchain solutions are new, few programmers are familiar with the technology, and those who have experience are in high demand and command very high salaries. A quick survey on Indeed.com listed more than 1,400 open blockchain developer positions, and the bulk (960 of them) pay $100,000 or more per year.
Not only are developers scarce but so are all of the other amenities found with commercial solutions: programming tools, management systems, training companies, certification programs, and standards.
Given, the large number of missing pieces, how should firms treat the technology? Observers recommend that businesses pay close attention to blockchain because, eventually, it should be incorporated into CRM applications and dramatically change how these solutions are built.
Given the present infrastructure immaturity, businesses should start small. “Companies should begin dabbling with blockchain and start skunkworks projects just to gain some exposure to it,” Tatro recommends.
After all, expectations are that in the coming months and years, the missing holes will be filled, so organizations will be able to build, deploy, manage, and secure next-generation blockchain CRM applications in due time.
Paul Korzeniowski is a freelance writer who specializes in technology issues. He has been covering CRM issues for more than two decades, is based in Sudbury, Mass., and can be reached at email@example.com or on Twitter at @PaulKorzeniowski.
An Unsolved Mystery: Who Built Blockchain?
Normally, the individuals who create industry-changing technology, like Microsoft’s Bill Gates, Apple’s Steve Jobs, and Facebook’s Mark Zuckerberg, quickly become celebrities. Not so with blockchain.
Satoshi Nakamoto is the name used by the unknown person or group of people who designed blockchain and Bitcoin. To date, the work has been distributed on open-source websites, and the creator(s) have masked their identities. In October 2008, they released a whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” on a cryptography mailing list at metzdowd.com. In January 2009, they launched the first release of Bitcoin software on Sourceforge, an open-source platform.
The mystery developer then created a website with the domain name bitcoin.org and collaborated with other programmers on Bitcoin software design until the middle of 2010. At that time, the work was handed over to one contributor, Gavin Andresen, who became the lead developer. Two years later, Andresen founded the Bitcoin Foundation to support and nurture the development of the virtual currency, and in 2014 that work became his full-time job.
Nakamoto’s identity has continued to be shrouded in mystery. Initially, the developer claimed to be a Japanese programmer, but few think the pen name is real. Speculation has circulated around half a dozen high-profile software industry executives as the original blockchain designer. Others think the work came from a nation state, such as China.
As Bitcoin has gained traction, the shares and value of Nakamoto’s stake in the venture have grown. In December 2017, it was worth $19 billion, placing him among the world’s top 50 wealthiest executives. So when the mystery identity is finally revealed, those responsible will receive a huge payday, not to mention a few requests to explain why they remained anonymous for so long. —P.K.