Digital Transformation Requires Trust Verification at Scale

By: Rebecca MacDonald

24, November, 2017


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Digital Transformation initiatives continue to dominate the top of executive priority lists, as organizations strive to create new business models and reinvent existing processes with digital technologies to stay competitive. Consider:

• By the end of 2017, two-thirds of the CEOs of Global 2000 companies will have digital transformation at the center of their corporate strategy. (IDC)

• At the same time, 47% of companies haven’t started to embark on digital transformation. (Progress)

Why are so many organizations still so far behind in their digital transformation journey? In many cases it comes down to one significant challenge: Trust.

One has only to read the latest news headlines to understand why trust is an issue: it seems the systems of even the largest corporations, who are spending millions on cybersecurity, are breached on an all too regular basis. For organizations in industries that are heavily regulated or have strict compliance requirements to fully embrace digital business, there needs to be a new model of trust that verifies the authenticity and integrity of transactions, people and processes through the entire product or service lifecycle.

Blockchains have the potential to provide this new level of trust for digital transactions, providing a digital architecture for verifying trust and irrefutable proof of transactions. While cryptocurrencies are among the most well-known uses of blockchains today, the potential of blockchains to transform enterprise business processes in regulated use cases such as:

• Automated compliance
• Tamper-proofed transactions
• Immutable life cycle management
• Connected insurance

and other complex business processes holds even more potential. If that is the case, why aren’t enterprise organizations already embracing blockchains to address their trust challenges?

It turns out that most blockchains simply are not scalable enough to take on the challenges of complex, high-performance business applications. Typical blockchains are constrained by one of two things: Throughput speed and the number of participants (nodes) on the blockchain available to verify trust. For example, the typical blockchain processes 3-5 transactions per second, and fees range from .30 cents to $1.00 per transaction. This is far too slow and expensive for complex, high-volume enterprise applications such as the ones mentioned above. To make blockchains practical and verify trust at enterprise scale, a new model is needed. Fortunately, a few companies are pursuing innovation in this area.

For example, US regulations now require pharmaceutical companies to identify and track the life cycle of every item they sell from the original manufacturer to the shelf to the consumer.
To meet the challenge, two leading pharmaceutical companies, Merck and Amerisource Bergen, have successfully run a fast-track proof of concept, partnering with SAP and Cryptowerk. The goal: to much more efficiently detect counterfeits and irrefutably document compliance at scale. As a result, the companies were able to achieve the following benefits in just a few weeks:

• Full compliance with DSCSA sellable returns verifications
• Instant verification of the authenticity of returned items
• No replication of manufacturer data required for wholesaler
• Minimal complexity, maximal security
• Immutable, single source of truth provided to all parties, including regulators
• Can also be used for supply chain track and trace applications
• Scalable to consumer scanning at the point of dispense

Furthermore, the POC also demonstrated its applicability for ultimately tracking and tracing billions of items throughout their supply chains.

To learn how they did it, attend the case study session at the Verifying Trust in Pharmaceutical Supply Chains event, taking place in the Blockchain for Enterprise conference track.


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