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How to start a blockchain project: Questions for IBM's Jerry Cuomo

A blockchain project starts with a belief that business needs to be done in a different way. Here's what happens next, including the role CIOs play in a blockchain journey.

What do IT and business leaders need to know about getting started with blockchain, the distributed ledger technology?...

For starters, a blockchain project is driven by a shared conviction that there must be a better way to do a business process. That's according to Jerry Cuomo, vice president of blockchain technologies at IBM. The conviction must be shared by others, because blockchain is not a solo venture, but a collaboration among many organizations. Here, Cuomo discusses what CIOs and their organizations need to consider when embarking on a blockchain project. Below are his responses, edited for brevity and clarity.

Why is blockchain valuable to business?

Jerry Cuomo: At the highest level, blockchain is a team sport, meaning that it is really about how multiple organizations could achieve more than any single organization can by itself, particularly around executing a business process.

No business runs in isolation, and more and more CIOs are concerned about how to connect to value that others are offering so their value can be enhanced, whether it's for data or insights from business partners or other collaborators.

For example, we see value when we're looking for better ways to onboard customers. It can provide a better customer experience [and save] customers time. Another value is around the better security and protection that can be delivered by multiple organizations using blockchain to verify identity.

What's the starting point for enterprises?

Cuomo: Last year, there weren't a lot of enterprise blockchain networks. Now that some of them are starting to take shape and go live, the CIO has choices. One is to join an existing consortium or network, and the other is to explore creating one.

So, there are two on-ramps. One is an industry network, for example, a blockchain network that's for healthcare or financial services or government. And, two, I or one of my business partners has convened a blockchain network.

Jerry CuomoJerry Cuomo

How do these consortiums form?

Cuomo: Consortium is a double-edged sword of a word. It's a group of companies working together. The key to executing on a blockchain project is having multiple companies collaborating. You can call it a consortium or a B2B relationship. There are thousands of those. It's just now how can we better exploit those [with blockchain].

Can you provide an example?

Cuomo: SecureKey is one example. It's a small company in Toronto that has convened a network for doing identify verification. A CIO burning a lot of his or her IT budget doing KYC (know-your-customer activities) could look at that network for doing KYC. A lot of the major banks in Canada have joined the SecureKey network.

What should prompt a blockchain initiative?

Cuomo: Blockchain is completely business-driven. Not only that, it's not just driven by your business. It's more driven at an industry or at a business-to-business level. It's looking at those use cases where your business connects with other businesses and there's a desire across multiple businesses to do things differently. There has to be a motivation, such as costs have gotten out of hand or security is a major issue.

Do CIOs typically drive blockchain initiatives?

Cuomo: It's not always CIO to CIO, and it's not always initiated by the CIO.

We have a project that we're running that started with our chief procurement officer and a digital transformation that he was going through to onboard suppliers to IBM. He then pulled in the CIO to say: How do we digitize this? And they came up with the idea that if they're digitizing this and a supplier also wants to sign onto Cisco, then let's work with Cisco so if a partner signs up, they can sign up for either Cisco or IBM. It's completely enabled by blockchain because it provides a level of trust. If someone signs on with IBM, Cisco can trust that we vetted that supplier and vice versa.

So, what is the CIO's role in a blockchain project?

Cuomo: The CIO is going to want to be part of a steering committee or a governance group. The CIO has a very important seat at the table, but others have to sit there, too. You need a business leader there, and a minimal viable ecosystem. You need representatives from business, legal, the CIO group [from the different companies], but you need the smallest number of representatives in order to not impede progress.

I wouldn't sit down and start a project as a CIO unless I saw a reasonable committee to determine the minimal viable ecosystem and minimal viable project -- who can play this back, who can define the problem and who can define metrics. As CIO, I would want the committee to define the milestones for success, the milestones to prove that this idea has legs.

So, this steering committee comprises players from multiple companies?

Cuomo: Blockchain is a team sport, so the CIO has to be able to collaborate with other CIOs and other business folks. We typically see a small number of groups work together -- maybe two -- when an idea comes about. If you start with a consortium of seven or eight, good luck, you're never going to get agreement. But you can't start with one, either.

On the tech side, what does the CIO need to bring to the table to get a blockchain project started?

Cuomo: A wise CIO is going to spend some time evaluating the technologies out there: what are the core skills required for utilizing that technology, understanding the basics about permission blockchain vs. permissionless, understanding how to write and manage smart contracts.

Platform selection is a key part of this: picking a platform that is within the sweet spot of the CIO's investments for skills, and looking at the technology from the eyes of what that CIO's industry is all about. For example, if I'm in healthcare, is the technology complaint with HIPAA (the Health Insurance Portability and Accountability Act), because a lot of the platforms are running in cloud with different levels of compliance.

How should CIOs determine milestones and metrics?

Cuomo: This is much more important here than with a project you would do internally. It's always important, but I would say that there are so many ways to get tripped up here, and the way to pull groups together is around shared metrics and defining success.

But it's best to do it in bite-size pieces, so keeping the milestones in two-week sprints with very clear outcomes, typically culminating in some sort of proof point where you're running a transaction across multiple organizations.

Looking at the blocks come onto the chain is something everyone wants to see, especially the CIOs who are thrilled to see how this block is verified by both companies and immutably placed on ledger.

Any final words to help ensure a successful blockchain pilot?

Cuomo: The best CIOs collaborate with business, they're able to dream big and set a north star that's very bold but work incrementally against that. Those are the ones who have the best success. They have a roadmap with incremental steps to get there.

This was last published in June 2018

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Does your company believe there is value in embarking on a blockchain journey at this point?
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Is there an established minimum cost point for a business to enter into a blockchain pilot? Due to cost, I expect that mid- to large-size firms would naturally be early innovators because entry would be cost prohibitive for small companies / entrepreneurs?
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