Two emerging technology concepts -- blockchain and microservices -- are critical to enterprises hoping to find success in technology-based partnerships.
Business partnerships are the key to success in our global economy, and in today’s digital world they’re based as much on technology as they are on strategy, products and services. In fact, a survey by industry analyst Gartner found that “participation in digital ecosystems” was a primary attribute of 79% of the companies identified as top-performing.
But the very thing that serves as the foundation for these strategic relationships — an organization’s technology — could be holding them back.
Why? Because legacy systems weren’t built to support technology-based partnerships. They were built in silos, intended to operate only within the business, with the assumption that change would be slow and steady. But as companies expand their networks and engage in ecosystems, outdated systems that can’t keep pace will be the biggest barrier to growth.
Of course, companies are already investing heavily to redesign their systems. But to make these investments pay off, the systems will need to be able to connect quickly and repeatedly to other new systems, both internally and externally. Fortunately, two technologies can play key roles in overcoming these challenges: microservices and blockchain.
Microservices isn’t a single piece of technology, but an approach to technology architecture that uses a suite of tools such as application program interfaces (APIs) and the cloud to break down applications to their simplest component functions.
In a microservices approach, each application is treated as a single discrete service, equipped with its own team of engineers responsible for maintaining their own code and, importantly, API endpoint. Larger applications are then strung together by making API calls to each of the independent services. The benefits are vast, in that applications become lightweight, dynamically scalable and more resilient.
While APIs are at the heart of technology-based partnerships, serving as the pathways by which businesses make services and data available to partners, developing them to only expose part of an application is fraught with difficulty, from the complexity of choosing which services to expose to potential security risks. But in a microservices approach, APIs are built down to the level of individual services. The result is a library of APIs mapped to specific services, for every part of every application, all of which can be made easily available to potential partners. This approach can ensure agility as applications become more modular, providing a foundation for companies to forge partnerships quickly and easily, seamlessly integrating services without hindering partners or customers.
One example is US pharmacy chain Walgreens, which used microservices to rebuild its “healthy choice” rewards program and expand partnerships. The company shared the APIs built during its microservices transformation with third-party developers, who could then integrate Walgreens’ rewards into their own apps, offering points to customers for activities like running, testing blood pressure and even quitting tobacco. Walgreens is now able to build these partnerships in a matter of hours, as opposed to the months-long process of the past, and now works with more than 275 partners, with its prescription API filling one prescription per second through multiple channels.
If microservices is the key to scaling and integrating partnerships, blockchain will be critical to managing and operating them through its ability to hold partners accountable without the need to first build trust. Simply put, blockchain is a distributed ledger system that stores groups of transactions (the “blocks”) and then links and sequences the list of transactions using cryptography (the “chain”).
The real innovation of blockchain is that no single organization owns the blockchain; it’s distributed across a peer-to-peer network, with redundancies and mechanisms to ensure that no one can manipulate the transactions. Because the information stored within a blockchain is replicated and shared among a network of partners, participants have no inherent need to trust each other or an intermediary; they can simply delegate trust to the system.
For companies grappling with managing a wide network of partners, blockchain provides a path to access irrefutable information in real time. Take the food industry, where supply chain complexity is pushing large competitors like Nestle, Unilever, Tyson, Kroger and Walmart to explore blockchain in unison to improve food safety. These and other companies are partnering with IBM to develop a blockchain that will enable better transparency and tracking of food movement across their complex supply chains. In an early blockchain pilot, Walmart reduced the time it took to trace in-transit mangoes back to their source of origin from six days to just 2.2 seconds!
By using blockchain as the single source of truth, any enterprise with a vast logistics network can pinpoint sources of potential risks — e.g., contaminated produce, faulty parts or fraudulent vendors — and react, ultimately enhancing operational speed while protecting the public and mitigating corporate risk.
But blockchain’s partnership benefits extend even further. Analog methods of creating trust don’t match the speed of a business’s technology. Delegating trust to a blockchain means that businesses can pursue broader networks, on-board new partners, or enter new ecosystems with ease. With blockchain-based smart contracts, businesses can outline the terms of a given relationship, and then automatically release data or execute programs for any prospective partner meeting those terms.
And it’s not just the private sector that can benefit from blockchain. The Republic of Estonia uses a blockchain-based smart contract system to operate like an ecosystem of partners. All public data, from medical records to residency information, is stored and maintained exclusively by local offices that create it, rather than in a centralized database. When a task, such as creating a birth certificate or filing a police report, requires cross-departmental information, government employees use the country’s smart contract system, which automatically authenticates the requestor’s identity, verifies their need to access the information, and regulates the time and ways in which the requestor can use the information. The framework enables fast, secure data-sharing between government agencies while giving citizens insights into who is accessing what data and maintaining security.
Technology-based partnerships are the strategic ambition of every business, but leaders must act now to adopt the tools to empower them. Tomorrow’s successful organizations will be those that enable partnerships through technology — including microservices and blockchain — today. Organizations that empower technology-based relationships will find new opportunities for innovation, and a clear path to growth.
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