Blockchains: The biggest challenge for CIOs since the web?

IT leaders need to ensure the rapid adoption of blockchain technologies by departments and users across the enterprise is set within the context of an overarching IT strategy, advises best-selling business author Don Tapscott.

CIOs will play a pivotal role in the business adoption of blockchain applications, argues digital visionary Don Tapscott. But they need to be ready to guide that potentially disruptive journey as the peer-to-peer transaction technology takes hold across the enterprise.

That will apply to CIOs everywhere, he says. “Blockchains will affect the enterprise very profoundly, regardless of what industry you’re in.” Across key areas of business and government, as well as at an individual level, the distributed database technology will radically reduce transaction costs by facilitating the establishment of trust and the transfer of value without the involvement of traditional intermediaries like banks and intellectual property brokers, he says. As a result, “it will cause us to rethink the boundaries of the firm.”

“Overall, blockchain technology drops the costs of creating trust in an open market, so peers can now collaborate in ways that [have historically] required a central agency to do that. That doesn’t mean that firms will disintegrate or that every company will be a small company, it just means that the way that we get capability is going to change profoundly.” (See From the internet of information to the internet of value for more details on the power of blockchains.)

“Blockchain is the biggest thing for CIOs and CTOs since the World Wide Web — and it may be bigger.”

Tapscott believes that blockchain technology will be a catalyst for business model and process change right across the enterprise, with IT leaders charged with managing the rapid take up.

“If you’re a CIO, CTO or someone who cares about technology in your company, this is the biggest thing since the World Wide Web — and it may be bigger,” says Tapscott. “The reason is that new [blockchain-inspired] business models are emerging that will even disrupt the disrupters like Uber and Airbnb.”

This will present a formidable challenge to IT executives, he says, as business units will feel compelled — whether because of competitive or efficiency pressures — to embrace the opportunities presented by blockchains.

“They are going to start pilots and start acquiring technology [independent of the IT organization]. But we’ve seen this movie before. This happened with minicomputers and PCs; it happened with the web and the internet, and then with mobility. Well, now a new wave of that [user-driven IT] phenomenon is about to hit the IT shop.”

That is not necessarily a bad thing, says Tapscott. “You do want end users to take responsibility [for applications] but on the other hand you still need to function as an enterprise, you need to have standards, you need to assure security, you need to make sure that there’s good data management.”
IT services supermarket

So how do CIOs address the coming blockchain revolution? “This is the ‘having-your-cake-and-eating-it’ challenge of IT strategy,” says Tapscott. He argues that it is incumbent on IT executives to create an ‘IT services supermarket’ that offers an array of blockchain capabilities to users — and one that is enterprise-compliant, imposes security standards and is part of an overall enterprise architecture. That will allow end users to venture in new directions with blockchain without endangering the enterprise.

“This is going to be the art of IT strategy over the next period,” says Tapscott. “And it’s so critical that CIOs and CTOs get going now and don’t wait until the tidal wave [of new blockchain-inspired models] has swept them away.”

Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World by Don Tapscott and Alex Tapscott is out now.

• Photography: Emmanuel Fradin