Earlier this year I posted a note regarding why we believe Libra, or something like it, will be a required architectural component as the blockchain tech industry matures. I also futured on our thoughts as to how we will compete against existing infrastructure. This follow-up note frames up some of our thinking on that topic as well as offers some additional perspectives.
At Libra we are focused on accelerating the adoption of blockchain tech. As part of that effort, we have spent considerable time thinking through how to tell the story of the technology to non-technologists. We believe this is an important endeavor because almost all of the literature in the “What is Blockchain?” canon, some of which I wrote while leading the practice at PwC, describes the technology but doesn’t contextualize it in a way that draws on the experiences of non-technical business users. We think this is a gap that needs more focus, otherwise we are going to face challenges in persuading executives to pull the trigger on pilot/production budgets.
With that said, we would ask that you consider our thesis, which I first discussed publicly at a great IMN event last week, that blockchain tech is the enabling technology of next-gen ERP, or as we prefer Ecosystem Resource Planning, or ecoRP for short. The rest of this note will talk to this idea and then conclude with thoughts on how Libra uses this idea to drive our positioning.
If one looks back across business process redesign history, what’s clear is that we have been subsuming the efficiencies of lower-level less complex process flows and applying the gains to higher-level more complex flows. What started out as the desire to optimize processes at the base manufacturing department level, remember MRP and MRP2, has scaled up and across entire enterprises to become Enterprise Resource Planning, or ERP.
The sales story that drove the ERP industry, and made many a multi-million dollar ERP sales person, was pretty straight-forward..
..buy Larry’s relational database, centralize all your data there..
..buy Hasso’s integrated applications for all your functions, then..
..share trusted data between and across silos within your enterprise.
Once that’s in place you can improve your enterprise’s operating leverage. You don’t have all those redundancies and reconciliations or have to carry all the interface costs – both human and technical. Executives went wild for the stuff, and SAP and Oracle rode that wave to become some of the most important companies in the world.
Now, if you step back and think about it, what are we doing in blockchain tech?
- For many (not all) use cases, we are again focused on business process flows, except this time we’re focusing between and across multiple enterprises.
- From a database perspective, we are focused on offering a single version of trustful data that multiple enterprises can share.
- From an application perspective, we’re creating new software co’s that integrate and optimize the process flows of multiple enterprises.
Yup. Essentially, we are back to eliminating silos and removing interfaces all by facilitating the sharing of trusted data. Except now, we have moved up an organizational level from focusing on optimizing the flows of a single enterprise to that of multiple enterprises, or as we prefer, focusing at the ecosystem level.
Note: We call software companies that specialize in building enterprise ecosystem applications, ecoApp co’s for short.
To further this idea, consider what “central authorities/CA’s” are….in most cases, they are interfaces between producers and consumers. For which, if you redesigned the process flows, you can potentially reduce/eliminate their cost. Now, that is not to say central authorities don’t play critical roles. What it does say is that a CA’s value is going to be tested versus better/faster/cheaper alternatives process flows and if they don’t match up, well, they’re disrupted. Simply stated, if peer-to-peer has a better value proposition we don’t think any level of intervention is going to stop the drive for optimization.
In using this mental model, and looking back at what happened as enterprises evaluated and adopted ERP, there are critical lessons learned that we want to exploit in order to grow our business. For example, what has been helpful to us is categorizing processes as follows: old/new – processes that get altered but for which you are still doing the same thing; and, new/new – emergent processes that only become apparent and possible as the system unpacks.
For Libra, we think about each of these process types differently. To support old/new processes (and infrastructure) we decided to make our flagship product, Libra Enterprise, protocol and legacy data agnostic. In doing so, an enterprise can import anyblockchain/smart contract and/or third-party data into the application, synchronize all data into a consolidated data model, then export/render out any data element via our API/GUI.
Libra has taken this approach as enterprises will always want to find ways to get value out of already deployed and operational technology and workflows. An example of using Libra Enterprise to support an old/new process might be using our integration layer as an ETL bus so a company can grab protocol data, synchronize it with non-blockchain data (i.e. risk rating, customer ID data etc.) and then push the synchronized data into something like Tableau or Qlik Sense for analysis.
However, as you can imagine, supporting old/new processes is not going to be revolutionary or disruptive, so we focus most of our time on considering new/new processes. Our goal is to build interfaces, tools, and user profiles that enable the invention of net new processes that aren’t possible until you integrate data at an ecosystem-level.
As we have focused on these new/new processes, it has becomes very evident that existing solutions aren’t designed to support them. How do you produce “secure reporting” between and across companies? How do you execute “blockchain audits” of chains? Who owns and how is “ecosystem data” monetized? Forget going from T+3 to T+0… have you considered that legacy internal audits, in some cases, are T+730!
These are some of the new/new process flows we are focused on at Libra. We are working to make sure chains have strong assurance and reporting capabilities and digital currency infrastructure has the regulatory and tax capabilities to support FI’s compliance requirements.
Just as SAP, Oracle, Workday and many other currently successful software companies grew out of enterprise-level process redesign. So to will ecoApp companies, like Libra, grow out of ecosystem-level process redesign as we all march into the next big thing in software: Ecosystem Resource Planning or ecoRP.