This article examines the state of the industry; this is not intended to be a comprehensive review, rather, the goal is to focus on the primary market participants. With this report-out for context, it then posits a platform strategy for industry success based on my multi-decade experience building platforms (SOA, .NET architecture, Azure incubation etc.) and tools (Visual Studio .NET/Fx, patterns & practices etc.).
First, let us review what today’s prototypical enterprise IT customer has been accustomed to expecting from an enterprise blockchain product line.
The kernel of an enterprise blockchain product is expected to enable a cryptographically trusted ledger of corporate data; this data is shared across a network of entities; multiple parties are able to securely access this data in real-time, with constraints in place for identity, authorization, entitlements and data privacy; the primary participants treat this as a read-write ledger and there are typically secondary participants whose roles span governance, risk and compliance enforcement and reporting.
Second, let us review the dominant camps of industry watchers; what drives the “Whither” (Pollyanna) and the “wither” (Cassandra) perspectives?
On one side, we have (to oversimplify) – blockchain is the antithesis of top-down, centralized command and control; a corporate entity will not abdicate authority; enterprise blockchain is a solution in search of a problem and there are no real-world use cases; enterprise projects are still in prototype/proof-of-concept stages; the legal and governance models that need to be in place for multiple corporate entities to connect and collaborate are exorbitantly complex and expensive.
On the other side, we have (to oversimply, again) – blockchain does not have to be a dis-intermediator to disrupt business models; similar to the cloud, medium-term benefits arise from cost reduction and increased efficiency; the requirement for trust (at the corporate/consumer level) continues to critically surpass today’s IT centralized cloud capabilities; global cross-organizational collaboration demands a resilient, scalable foundation to build new revenue streams; the first-movers will dominate and take-all.
With this frame, let us now review the primary industry participants.
Amazon: The AWS Strategy, Replayed
Amazon’s enterprise blockchain strategy is in many ways a replay of their hugely successful AWS strategy. Given the scope of the AWS stack, it is sometimes easy to forget that it all began with storage (S3) and compute (EC2); from a small seed a mighty trunk may grow, and that is how AWS has scaled to now be the leading cloud vendor in the market. Amazon’s Quantum Ledger Database may very well play the role that S3 and EC2 did a decade earlier as Amazon’s enterprise blockchain ambitions scale.
QLDB is a managed ledger database that provides a transparent, immutable, and cryptographically verifiable transaction log (albeit owned by a central trusted authority). QLDB may be used to track each and every data modification as it maintains a complete, verifiable, and auditable log of the changes. In real terms, QLDB is not close to being a blockchain platform; it does not have a model for consensus, nor does it have any smart contract execution environment et al; however, it does serve a precisely defined business need.
Amazon also provides a full managed cloud service to create and manage enterprise blockchain networks (restricted to Hyperledger Fabric at this time); it supports the ability to quickly create networks spanning multiple entities, enabling a collection of entities to collaborate (again limited to Hyperledger Fabric).
Customers who have grown up with AWS, and who are able to start small with the ledger and scale up as Amazon eventually extends their portfolio of capabilities will likely look to Amazon.
IBM: The SOA Strategy, Redux
IBM’s enterprise blockchain strategy is reminiscent of their hugely successful SOA/Websphere strategy. They took an early marketing position in the industry with their Hyperledger portfolio of initiatives; they were able to clearly articulate the business opportunity and translate this into a broad-based set of business capabilities that appealed to the enterprise CxO; and they led with their focus on business outcomes.
The Hyperledger set of projects focused on developing a family of frameworks, and libraries for enterprise blockchain scenarios; they also serve as a ‘container’ for a variety of distributed ledger frameworks including Hyperledger Fabric, Sawtooth, Indy etc. IBM took the initiative in placing these under the Linux Foundation, and further embraced a broad swathe of scenarios and use cases with a diversity of projected extensible building blocks. The breadth and scope of the Hyperledger portfolio is possibly a double-edged sword.
Unlike the hugely success SOA/Websphere strategy, which relied on harnessing complexity and enabling customers with consulting and professional services, the enterprise blockchain market has been less amenable to a services-led play. Enterprise customers are still in the early stages of aligning their business and technology priorities and have tended to focus more on in-house prototyping and pilot initiatives than on outside vendors.
Customers looking for a full-scale enterprise-wide blockchain architecture and associated industry blueprints, and who are committed to extensive customization and joint development with a services partner will likely look to IBM.
JP Morgan/ConsenSys: The Private Cloud Strategy, Cloned
Quorum was not JP Morgan’s first blockchain project; ‘Juno’ was their pioneering attempt at building a “distributed crypto-ledger.” With Quorum, JP Morgan set out to develop a private, permission version of the public Ethereum network and this project was subsequently taken over by Consensys. JP Morgan’s strategy may be viewed in retrospect as a variant of the “Private Cloud” approach pursued by a number of industry vendors in their attempt to compete with the early successes of the public cloud.
Quorum consists of two projects: one based on Hyperledger Besu and another on GoQuorum. Hyperledger Besu is a Java-based client and Apache 2.0 licensed; GoQuorum is a Go-based client and GPL licensed. Consensus algorithms supported include PoA (IBFT/Clique), PoW and RAFT. Tools that work with the mainnet are able to be repurposed to work with Quorum, and this is an advantage for a customer that is knowledgeable with the mainnet tools.
Similar to the lessons learned from the battle of private versus public clouds, there are key elements to consider using the People/Process/Technology troika. First, Technology: trading-off ‘symmetry’ of the on-premises stack at the expense of the customer’s on-boarding experience/their initial set of needs. Second, Process: the ‘morphing of the governance mechanisms and their relevance/fit inside the entity. Third, People: the ‘translation’ of the incentive models and their application within the organization. An attempt to “directly” map from the public to the private has not been successful in the past.
Customers looking for near-complete symmetry with the Ethereum mainnet will likely look to Quorum.
Microsoft: Developers, Developers, Developers, and Azure-first
Microsoft continues to lead the industry when it comes to their focus on developers.
Decades of experience at obsessing over developer tools and frameworks is evident in their strategy of investing in tooling, guidance, and samples.
The Azure Blockchain Development Kit was a pioneering effort at delivering a comprehensive set of tools; capabilities included the ability to connect various data producers and consumers to and from a blockchain, integrating legacy tools, systems, and protocols, as well as samples and guidance via accelerators. The preview of the Azure Blockchain Workbench focused on ease of experimentation with the ability to plug-in integrations and extensions to the Azure cloud services.
Consistent with their Azure-first platform strategy, Microsoft have invested on their managed Azure Blockchain Service, rather than leading with a pure-play blockchain platform; the Azure Blockchain Service enables simple network deployment and operations, with built-in consortium management. Continuing their focus on developer tools, the Azure Blockchain Service emphasizes application development and business logic over managing virtual machines and infrastructure.
Microsoft builds on their strengths with the breadth of their managed services to take on a broad industry focus in enabling partners and customers with their vertical offerings and go-to-market, and their extensive support of industry standards.
Customers embarking on broad-based industry digital transformation and building on a vendor-neutral managed services cloud framework will likely look to Microsoft.
R3: Different Rules, Different Game
R3 are playing a different game, with a different set of rules; as they themselves say – ‘When is a blockchain not a blockchain? When it’s Corda.’
Transactions on Corda have a cryptographic dependency chain; in practical terms, Corda may be deemed a domain-specific blockchain platform, designed for the highly regulated financial services domain.
Why a domain-specific blockchain platform?
In the financial services sector, there are extensive regulatory requirements that focus on the agreements across involved parties; these agreements need to be recorded by all the entities concerned, and often this happens in a diverse set of systems (with diverse tools technologies etc.). When these systems are in synch and in their happy path all is good; however, when different systems have different views of the resulting states of transactions, hundreds of billions of dollars are at stake.
The Corda domain-specific blockchain serves to provide a shared system for recording and managing financial agreements across multiple entities; the primary goal is to ensure that the agreements are recorded identically and consistently, and that regulators have the matching shared view of the participating entities. R3 stand alone and as pioneers with their stack.
Customers in the Financial Services sector, looking for a proven platform that meets regulatory requirements and constraints will likely look to R3 Corda.
Looking Ahead: A Winning Enterprise Blockchain Strategy
If you stayed through this article, it is probably apparent to you that different vendors are and have been staking out various segments of the market, as they look to scale their enterprise blockchain market share.
What then does a winning enterprise blockchain strategy look like?
Two things are obvious.
Developers: Clearly, the strategy has to lead with developers-first (ala Microsoft): without developer tools and frameworks, a platform will not have a fair shot at serving a majority of the customer base.
Managed Multi-Cloud: the strategy should support multiple cloud infrastructures: a plurality of enterprise customers will have applications and infrastructure spanning multiple cloud providers (Microsoft Azure, AWS etc.)
Here are the key unmet needs and challenges: 1) enterprise customers want to start small initiatives, and then grow out; 2) they want to control or at least have the illusion of control in being able to choose and mix/max components and capabilities as they scale; 3) they want to be able to lock-down and deploy the services that they absolutely require without being forced into a one-size-fits-all model.
Modularity and Componentization: a winning enterprise blockchain platform should be modular and composable: deploy as a centralized ledger ala QLDB if required; deploy in full-scale model ala Hyperledger or Quorum if required; deploy as a decentralized ledger and lock-down the smart contract execution if required; deploy in domain-specific modes ala R3 Corda and more. This enables the enterprise customer base to scale with the vendor as opposed to being boxed into any one provider.
Whilst Developers first and Multi-cloud are table stakes, modularity and componentization of the capabilities and the ability to configure and customize multiple extensible deployment scenarios in order to scale up (and down and across organizational models) is the dark horse that we have yet to meet in the enterprise blockchain market.