A blueprint for initiating business change using Blockchain

A blueprint for initiating business change using Blockchain

The Blockchain phenomenon The Blockchain ‘hype-cycle’

The latter half of 2015 was a rollercoaster ride for those involved in the Blockchain phenomenon. In the financial services sector there was a rush of activity in the innovation space to prove Blockchain capabilities. Many service organisations rushed to release their Blockchain service or to introduce Blockchain into legacy processes to prove their capability. Most recently the industry is realising the true potential of Distributed Ledger Technology.

Visibility Peak of inflated expectations Bloc 20

2015

At GFT, with some help from our partners at Applied Blockchain, we took a different approach and we would like to share with you our ‘Blueprint’ for a successful Blockchain project.

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Platform & Solution

Slope of enlightenment Investment growth stage

Trough of disillusionment Technology trigger

The following is our proposed blueprint for the implementation of a successful corporate Blockchain project, based on our own in-house experience and the extensive experience of our business and IT specialists.

Time

2014

1. Create a Blockchain incubator

GFT’s blueprint for successful business change using Blockchain

You need a platform that provides the framework for rapid selection of Blockchain ideas and the subsequent prototyping. As this is such a new but rapidly maturing field (technology and business process) there can be significant internal challenges to getting a project off the ground. At GFT we have addressed this by creating a lean incubator to develop these ideas. When designing the incubator, we agreed on topics such as funding and ongoing funding approvals, decision points, when to fail a project, business and technology mentoring and support for project teams. Deciding on this framework upfront avoids slowing down innovation later in the process. This enabled GFT’s management to support cultural change and create an environment conducive to technology entrepreneurship.

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2. Idea creation - source business propositions

For our Blockchain incubator, we evolved the following 10 quality metrics that we test all ideas against. Only if an idea passes enough metrics will it be progressed.

The true potential of the Distributed Ledger phenomenon, does not lie in Blockchain technology alone. In fact, it is the macro-level business process reengineering properties of Blockchain that really interests people. Consequently, this is what we focused on when we introduced an innovation competition to source ideas for our Blockchain ideas incubator.

a. Does the proposition attempt to address a broken process or one that has lots of legacy processes? b. Are there a number of untrusted high-cost parties that contribute to the end-to-end process?

We set out a vision for the financial services Industry that described an operating model where all stakeholders held their own immutable view of the transactions within that industry, connected seamlessly and without the need for a centralised body. We then asked our experts to present ideas that delivered that vision using a Distributed Ledger business model. We encouraged our experts to include stakeholders from the full length of the value chain and not those that currently participate within the existing operating model.

c. Are there cases of fraud that have resulted from the touch points between untrusted entities? d. Is there an incumbent central authority that retains unbalanced power in the end-to-end process? e. Are there stakeholders in that process that would benefit from a rebalancing within the industry?

This generated some truly transformational ideas and concepts. We needed a mechanism for selecting the most suitable ideas for progression through our incubator.

f. Would the increased transparency and visibility that a consensus and immutable Blockchain view of transactions deliver value to some or all of the stakeholders?

3. Select relevant business propositions

g. Does moving from a central to a decentralised industry model deliver overall democratic benefit to the majority of the constituents?

We observe many organisations that are designing Blockchain solutions for all sorts of business processes that would be far better suited to a traditional technology stack, such as an Oracle database. It is important also to consider whether your idea is suitable to a Blockchain enabled model.

h. Would built in redundancy and secure, tamperproof controls be a valuable property for the business process? i. Is physical or logical asset tracking a key constituent of the process?

‘Blockchain enabled solutions’ are not suitable for all reengineered business processes, so it is important that you assess each business process against the main themes that represent a valid Blockchain use case.

j. Is a recording of immutable, traceable and transparent fact a key constituent of the process?

Example of quality metrics to support progressive decisions

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4. Select your ‘A’ team for rapid prototyping

¬¬ Business analysts that get innovation, work well with product owners and who can distil the business concept that you are developing into the key design points

When embarking on technology prototyping for new business innovation, it is important to choose a team that supports rapid decision-making so that you do not spend extended periods and limited resources going down dead ends. It is therefore key that you ensure you choose your ‘A’ team to build in-house capability, alongside partnerships with industry experts. When trying to accelerate knowledge and build expertise, the team must be driven by success, but not to be afraid to fail fast.

¬¬Technical architects who fully understand the industry that you are attempting to reengineer ¬¬ Technical architects who fully understand Blockchain, its latest developments, and who are able to apply these to business propositions ¬¬ Visual designers who are able to quickly represent a business process on paper, and then effectively communicate that vision to the development community

The key roles and responsibilities of an effective team are: ¬¬ Strong sponsorship at a very senior level so that decisions can be made quickly with little bureaucracy that could slow things down

¬¬ A development lead who has a deep and wide range of technical expertise in the technologies that you choose

¬¬ Strong product owners that understand the business process that you are attempting to reengineer

¬¬ A highly accomplished set of developers who are able to talk to business users and hate operating in isolation

¬¬ Scrum leads that are able to understand blockers, remove those blockers as quickly as possible, and who can manage a strong, highly performing team

¬¬ If you intend to use external resources for key roles that you cannot fill internally, ensure that you engage the best that are available

Participants for a successful Blockchain project

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5. Develop prototype

5.3 Choose your infrastructure carefully

5.1 Intensive design solution

When using a technology that is not yet mature, setting up a development and deployment environment can often be the most complex part of the project. It would have been easier and quicker to build and deploy in a public cloud infrastructure. However the decision was taken to build and deploy the solution on GFT’s own in-house servers. The reason for this approach was to better understand the infrastructure and security implications of the technology.

You must ensure that you get the right people in the room, and get them all to agree to a base design. Blockchain technology is still very new and is continuing to evolve. It was developed for a specific purpose (to decentralise digital cash transactions), and it is now being adapted to a variety of other use cases. The core technology platforms were not designed and built to be used in the way that is now being demanded. The platforms are therefore not yet mature and continue to evolve, and as such, there is a relatively slow and steep learning curve in starting to build solutions on top of them.

Our first sprint was dedicated to creating a development and deployment environment, including a basic ‘hello world’ Blockchain application. This was achieved relatively quickly, again, by leveraging previous experience.

Examples of areas where there is a lack of maturity of the platforms include: a fairly complex development environment (different versions of the Blockchain components which may or may not be compatible with other components), online platform documentation which may not always be up-todate due to the in-flight nature of the underlying platform development, and a lack of meaningful error messages when things don’t work (e.g. smart-contract not being deployed, smart-contract execution failing); and finally - tricks and tips in this process to ensure a much faster development time.

Initial sprint planning also included an outline of subsequent sprints and required outcomes, which was not particularly formal. The team was made of up a range of experts, each of whom were able to understand the requirements, and who could deliver quickly in their space.

5.4 Be bold We made some fairly fundamental design decisions early on that were relatively controversial. We decided to avoid at all costs the implementation of a local database as this would have defeated some of the properties of a Blockchain solution that we were aiming to achieve.

GFT chose to accelerate its capability in this space by leveraging Applied Blockchain’s experience and open source framework (BApp). This enabled the GFT team to hit the ground running and deliver quick results.

We quickly identified that there were two different approaches that could be adopted

GFT ’s architects were able to very quickly produce a solution design and architecture that would enable smooth delivery of the prototype. This includes an architecture stack based on the most mature platform components and API’s (e.g. node js with Ethereum’s web3), and a decoupled architecture more suited to enterprise applications rather than standard distributed Blockchain applications.

a. Use Blockchain as a point of immutable record validation only This first approach involves ‘hashing’ documentation and activity that occurs outside the Blockchain, and storing only the resulting ‘hash’ (an alphanumeric string of characters) in the Blockchain transactions. This is useful for validation purposes, as one could turn to the Blockchain ledger in the future and check that a hash exists on the chain that represents the data that was claimed to have been persisted. This type of functionality is available in even the most primitive Blockchain implementations, such as Bitcoin.

5.2 Go VERY Agile Do not be too formal with your sprint planning. First sprints should be design and infrastructure setup. In fact, the more previous technology experience and learning you can inject into the initial design session, the faster everyone can begin real development. In our case, the GFT team was able to get started on actual project component installation and development, rather than spending a long period of time on trial and error, thanks to a comprehensive initial sprint planning session.

b. Use the Blockchain as a transactional data and workflow store smart-contract

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The more sophisticated smart-contract based Blockchains, such as Ethereum, allow data and workflow to be stored and shared through the Blockchain itself, thereby eliminating the need to: store and manage the data off-chain, synchronise between the parties, or manage permissions for the data. The smart-contract allows us to encapsulate all of the data, distribution and permissions in one elegant shared piece of code.

The architecture, design and framework therefore decouple, the solution (as much as possible), from the underlying platforms, so that the underlying platform may be swapped out with relative ease if required. The assumptions include the fact that Ethereum-style smart-contracts may become the standard, and if not, then something fairly similar based on the same underlying principles is likely to emerge. Ethereum is certainly the most widely used platform for Blockchain experimentation across the financial services industry.

We chose the second option, utilising smart-contracts for our solution, deploying critical data on our Blockchain.

5.5 Maintain a vision for the end product

Beyond the smart-contract environment (e.g. virtual machine, smart-contract language), the underlying Blockchain mechanisms, including consensus, could be swapped with relatively little impact on the application.

We cannot stress enough how much the addition of a visual designer greatly improved the end result, not only from a design point-of-view, but also from a time-to-market perspective.

It is also assumed that the Blockchain API (the API used by the application to call the Blockchain) is fairly generic. We have studied a number of implementations, and they generally follow a similar structure.

At GFT, we are lucky enough to have available some of the best visual designers in the industry. The visual designer works with the product owner to develop a wireframe (a visual representation of a user interface, stripped of any visual design or branding elements) and then uses this document to communicate requirements to the development team. Having this perspective allowed us to quickly decide what was possible and what was not possible in the time available. We have now decided to add a visual designer as a core resource in our incubator.

5.7 Focus on interfaces The interoperability of your Blockchain with your UI and other applications is an important consideration that you should spend particular time to get right as it may have a significant impact on the function of your prototype. There are few standardisations of an interface design in the Blockchain ecosystem right now, and there are a number of technical limitations that you need to get over so: choosing the best approach can help you succeed where others fail.

5.6 Make careful technology choices When working with a rapidly maturing technology, the key is to make technology choices that will not limit future development. If there is no de facto standard, make choices based on majority consensus and use industry experts to advise on this.

6. Remove blockers fast When innovating with a completely new green field development, identify internal and external blockers and have a plan to address those blockers up front.

The GFT technical architects, supported by Applied Blockchain, worked hard to define a clear Blockchain technology architecture strategy. This is based on the assumption that private Blockchains utilising smart-contracts provide the most value for use cases involving more than just cryptocurrency. The most mature smart-contracts platform available today is Ethereum. This platform was actually built with a very different architecture in mind, and it solves many problems that are not relevant for a consortium / private Blockchain deployment. Applications can therefore be developed and tested on Ethereum, with a view to migrating them onto a more suitable platform in the future (e.g. Eris, Hydrachain, Tendermint, Open Ledger / Hyperledger etc.).

For example, ensure your management understands what you are trying to achieve and fully ‘buys in’ to the process. Give them regular show-and-tells so that they can see progress and to ensure that they remain on-board.

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Conclusion At GFT, we have gained a great deal of experience in a very short period of time with our Blockchain incubator. This is true not only across our technical capability, but also including our business advisory, sales teams and management. This achievement was possible thanks to the ability of the GFT team to react quickly, develop understanding and embrace a new technology, by engaging with the right internal stakeholders, and gaining approval to make an immediate start. GFT assembled the right team from across a range of disciplines, from both inside and outside the organisation, in order to maximise the opportunity and create a foundation for future work in this space. We firmly believe that the experience we have gained in creating a successful Blockchain prototype can form the blueprint for any future Blockchain development. We, at GFT, also believe that there are some important considerations that will require further analysis to determine the best course of actions. These are as follows: ¬¬ Scalability and performance ¬¬ Permissions and security ¬¬ Sharding ¬¬ Platform (cloud vs in-house) ¬¬ Standardisation ¬¬ Interoperability Please listen out for GFT’s perspective on these topics in the near future. If you would to discuss your Blockchain goals with a GFT specialist, please reach out to us at [email protected]

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Featured Specialists Nick Weisfeld

Adi Ben-Ari

Co-Head of Data Practice, GFT

Co-Founder at Applied Blockchain

Nick has extensive experience of leading a large, highly skilled and successful consulting team at GFT with a focus on data, regulation and risk within the investment banking industry. Believing passionately in the capabilities of the team he leads, Nick ensures that the team members are able to reach their full potential and that clients receive consistent quality and value. Building on the success of his team, a key passion of Nick’s is driving innovative and targeted new propositions by facilitating ideas generation and utilising agile and ‘fail fast’ concept prototyping. Most recently Nick helped develop GFT’s Project Jupiter Blockchain Incubator which delivered a prototype Blockchain enabled solution for the commodities industry.

Adi co-founded Applied Blockchain, a pioneering Blockchain consultancy. Prior to this, Adi worked for 20+ years as a data scientist, enterprise / solution / integration architect at leading blue chip organisations in telecoms and financial services. Adi also co-founded startups in mobile payments and e-commerce, and registered a number of patents for inventions. Formal education includes a B.Sc. in Computer Science from the University of Bristol, and an MBA from TelAviv University.

Julian Eyre

Nicolás González

Senior Sales Executive, GFT

Technology Lead, GFT

Julian has extensive experience in working with clients to support innovation and business solutions across the enterprise. A successful Sales and Business Development Manager, Julian creates longstanding customer relationships between GFT and its clients, and works proactively to identify their key business needs and the solutions necessary to meet tactical and strategic requirements. Julian joined GFT UK from OpenLink in 2015, the leading Energy Trading and Risk Management solution provider.

Nicolás is GFT’s leading Blockchain technical architect. With a strong technical leadership focus gained delivering innovative solutions for Financial Services and Telco industries, Nicolás now heads up development within GFT’s Barcelona based technology Incubator and is able to understand the technical innovation and advise on its application to product owners. Nico was recently seconded to Project Jupiter, GFT’s Blockchain incubator, and led the near-shore development on GFT’s commodities prototype. 8

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About GFT GFT is one of the world’s leading solutions providers in the finance sector offering consulting, implementation and maintenance for a broad range of IT applications. Combining technological expertise and seamless project management with a deep understanding of the financial industry, GFT is a reliable partner for well-known companies all around the globe.

This report is supplied in good faith, based on information made available to GFT at the date of submission. It contains confidential information that must not be disclosed to third parties. Please note that GFT does not warrant the correctness or completion of the information contained. The client is solely responsible for the usage of the information and any decisions based upon it.

Headquartered in Germany, GFT has stood for technological expertise, innovative strength and outstanding quality for over 25 years.

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