Blockchain Can Pay Off for XaaS Businesses and Others That Don’t Dismiss It, Study Says

As the potential for blockchain usage moves beyond its roots in digital currency, a new study sheds light on how blockchain can bolster “everything-as-a-service” (XaaS) business models, now pervasive in the e-procurement area.

“For the emerging ‘everything-as-a-service’ delivery model, blockchain application code will be a key to enabling pay-by-the-use arrangements between service providers and consumers,” says the study by The Hackett Group.

The XaaS trend has taken off because business can pay for the technology they need instead of buying software, computers, servers and other hardware that needs to be installed and maintained on site.

Blockchain is often dismissed as just an “electronic ledger” but it also offers a level of data security and flexibility that’s helpful for multiple customers and clients to record transactions up and down the supply chain. And the cost of setting up basic blockchains can be less than the ones with multimode networks that access multiple databases, the study says.

The study also evaluates the many ways companies are considering blockchain implementation and uses for their businesses.

The study’s authors state that there are three main categories in which blockchain may primarily benefit business operations: by streamlining transactions, efficiently tracking and auditing money or goods, and monitoring data and records management.

And the pay-per-use arrangements seen in XaaS also could forge a path for new business models, the study says, such as enabling offshoots of the recent rise in subscription-based enterprises.

“For IT, procurement and finance functions working with vendors of software and platform as a service, blockchain will make it more practical and effective to pay for services on a usage basis,” the study states.

For example, the study outlines the ways in which supply chain, procurement and operations functions could be affected by the adoption of blockchain technology.

Because blockchain offers what the study calls an “unimpeachable audit trail,” tracking and auditing use cases can provide value to those seeking to bolster their business or government’s data integrity, security and auditability — like those working in consumables lifecycle management and/or ingredient tracking, e-commerce and counterfeit goods reduction, or even customer loyalty programs. Those areas include businesses in industries like pharmaceuticals, healthcare, agriculture, food and beverage, retail, shipping, online retail, law enforcement, hospitality and entertainment industries.

Among the study’s recommendations for action, the authors suggest that companies evaluate the most complex or convoluted aspects of their business models to identify areas in which blockchain technology could simplify or streamline operations.

A 2017 paper by two Harvard Business School professors titled “The Truth About Blockchain” also suggests that despite common perceptions that the technology is primarily used for financial transactions, it is a “foundational” technology with the ability to do much more, such as tracking items through complex supply chains.

Food service companies, for example, may take interest in how blockchain can verify supply chain issues pertaining to the origins and routes of their products and ingredients, tracking such goods from farm to manufacturer, and then on to the distributor, restaurant, consumer or regulator, the study notes.

In the medical field, data management and tracking are crucial, whether it be regarding patient files or the origins of medical devices

“We spend a great deal of time within the medical-device and life-sciences industry doing a lot of traceability,” the study quotes Edwina Payne, chief information officer for medical-device company Halyard Health, from a speech at The Hackett Group’s Best Practices Conference earlier this year. “We could start to leverage blockchain to get that traceability information from our raw materials through our contract manufacturers and be able to record it as part of our own manufacturing processes.”