A primer on the CRM blockchain

Denis Pombriant Profile picture for user denis_pombriant March 22, 2017
While blockchain started its life as an enabler for cryptocurrencies, attention is now turning towards its application in security for CRM. Think that's pie in the sky? Read on.

You may be hearing the first news about a new(ish) technology called blockchain that will find its way into global computing if its supporters have anything to say about it. For those unfamiliar with the concept, the blockchain has been defined as:

...a way to structure data, and the foundation of cryptocurrencies like Bitcoin. This coding breakthrough—which consists of concatenated blocks of transactions—allows competitors to share a digital ledger across a network of computers without need for a central authority. No single party has the power to tamper with the records: the math keeps everyone honest.

In the real world, the blockchain is much more than a digital ledger for cryptocurrencies. As we shall see, attention is now being turned to how the blockchain can be applied in CRM scenarios.

Global computing includes CRM, which has welcomed insertions of new technologies for over 20 years. A brief listing of technologies added to CRM in that time includes cloud computing, social media, analytics, community, workflow and journey mapping, as well as mobility options.

These technologies have added a great deal of sex appeal to CRM and significantly added to the business processes it supports. CRM began life as a simple database application capable of storing and retrieving records of transactions between vendors and customers. It was really aimed at providing a measure of control over the salesforce and very much an inward facing solution.

That style of computing was heavy on management and feather-light on relationship building but all that quickly changed in the second half of CRM’s first decade of existence. Today CRM requires so many inclusions from multiple sources that it has become a defacto fortress that prevents new entrants from rising. This should not be a surprise because that’s how markets evolve. But building relationships requires more than a modicum of trust and which public systems make difficult to execute upon.

These realities mean that blockchain adoption, in addition to not being very sexy, will be handled by the big players already in place. Interestingly, it’s not necessarily the biggest players at the sweetest spots of analyst’s market maps that are showing the early interest.

IBM and SAP have very recently shown interest in blockchain but more as a general purpose technology than as a CRM specific one. Companies like Salesforce and Oracle have not yet made their positions known on this topic. If you look at what’s happening in the current and very early stage, blockchain appears to represent a back office phenomenon.

But before we go too far in handicapping the horserace we should explain the content and its importance. According to this article in Forbes, Blockchain acts to

…link[s] transactions or records in chains of immutable blocks so new transactions or changes in ownership are recorded by adding to the chain while leaving previous records intact…

In a globalized economy (assuming that isn’t disrupted any time soon) nobody in, say, a supply chain, has absolute control of the data in the chain. Raw materials, parts, and components can come from a variety of sources controlled by contracts. In turn, those sources are built according to a blizzard of specifications eventually resulting in quality control data.

Often the veracity of the data blizzard must be provable to end consumers who have every right to be skeptical of their provenances. Blockchain provides a way to drag all of the accompanying metadata along in ways that are both provable and immutable.

It’s the immutability that draws interest because it makes life very hard for those who would either steal or edit the metadata to do such things. This traceability would have a significant deleterious effect on nefarious activity relating to data thefts. Are you listening Vladimir?

Viewed another way, blockchain is a child of the movement to introduce electronic money not tied to specific reserve currencies. The same article from Forbes says,

Both the Ethereum and Bitcoin blockchains are based on a Proof-of-Work (PoW) consensus mechanism, which secures the blockchain by rendering attacks very resource intensive - both in energy and time - due to what are labeled as “artificially arduous computations”, which are demanded from miners participating in the so-called ‘block-verification’ game.

You can get a sense of the buzz around blockchain when you know that the article notes that a crowd funding effort zoomed past its initial $12 million fundraising goals in just a day.

So blockchain is getting its proverbial 15 minutes of fame in the press but it’s likely that the subject will go dark due to its infrastructure orientation and thus its lack of sex appeal. Nonetheless, it will remain in the sites of CRM vendors everywhere as their customers understandably fret over data security in an era of increased dependence on the amorphous marketplace.

CRM will likely be first attracted to the commerce potential of blockchain that enables customers to have greater peace of mind about making purchases over the Web.

Down the road, blockchain could prove useful in a number of robotic or automated situations; for instance in the IoT scenarios. There’s little fraud in IoT transactions today but it could prove to be a fertile new operating theater for hackers. For instance, vendors doing business machine-to-machine in the IoT must have high confidence that an order is valid before deploying resources because there’s no limit to the creative ways that humans could steal and order. Blockchain data could provide the needed information to raise confidence in doing more business through the IoT.

In another example, a business might possess a great deal of customer data that needs to serve all front office departments. Despite multiple efforts to attain 360-degree views of customers, many businesses are still struggling with providing it. Moreover, data developed by departments is often skewed to the interests of the owning department, leaving holes to be filled by outside sources that must be verified. Blockchain could certainly benefit its users in such scenarios.

My take

Don't be fooled by the current emphasis on cryptocurrencies, banking initiatives and talk about finance ledger. That's where this stuff started but it is only touching the surface of much broader application, of which CRM represents a fruitful avenue of research and development in the context of long supply chains.

But...blockchain is in its early days and it looks like a ten-year slog to deploy it to the world. The first steps have already been taken but we can still expect a decade-long effort.

As we come to rely even more on distributed manufacturing and commerce, something like blockchain sounds like an obvious next step. What’s most interesting about blockchain, especially as a security tool, is that it sidesteps the security arms race in which measures and counter-measures have been deployed for decades.

In such an arms race, one side builds a 16-foot tall wall and the other develops an 18-foot tall ladder with each side gaining at best a temporary advantage as they play a perpetual game of catch me if you can. Blockchain upsets the cat and mouse game, perhaps not permanently, but enough to offer a respite so that business can concentrate on more important things. Like stuff that generates revenue.

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