By Lisa Stanley
The business world is increasingly digital, and blockchain technology holds promise for creating a foundational change for real estate and facility management. From the purchase of the asset, recording of payments, the asset management life cycle, and beyond, this technology can improve security, transparency, and performance.
Other industries and geographic regions have formed collaborative groups to explore use cases, proof of concept models, and pilot projects. The fintech world’s collaboration through the R3 Consortium has yielded a new blockchain platform, Corda, and the insurance and reinsurance industry formed B3i in October of last year. CoinDesk reports that B3i now has more than 36 members worldwide. They too are building a blockchain platform identified as “Codex 1”, focused on developing a smart contract prototype that will reduce administrative processes for catastrophe reinsurance. Major industries that engage with real estate are moving ahead with blockchain initiatives and devoting resources to explore how blockchain can be utilized to its highest advantage. Consultancies have formed Blockchain Consulting Groups to address this emerging market. Facility executives can learn from these efforts – it’s time to move forward to explore blockchain technology.
Disruptive Technology Or Foundational Change?
In a report published early last year by the U.K. Government Office for Science under Chief Scientist, Sir Mark Walport entitled “Distributed Ledger Technology: Beyond Block Chain”, the impact of blockchain was addressed. The following statement was made in the foreword to the report: “The technology could prove to have the capacity to deliver a new kind of trust to a wide range of services. As we have seen open data revolutionise the citizen’s relationship with the state, so may the visibility in these technologies reform our financial markets, supply chains, consumer and business-to-business services, and publicly-held registers.” Since the report was published last year, the industry focus has moved beyond trust to a focus on truth — a single source of truth. That shift is not representative of a disruptive technology, but most definitely an indication of foundational change.
The first step to exploring Blockchain starts with the data. The accuracy of the data that drives your organization’s business decisions is an issue that must be addressed to move forward in the digital world. It’s about preparation; standards implementation and developing an effective data governance plan have to be addressed first. This standardized data serves as the cornerstone for building an effective data governance program for blockchain and other emerging technologies. If you’re not leading in this effort, you will lose competitive advantage. Conduct a frank assessment of the data that drives the critical decisions in your organization first. Then do a deeper drive of the data collected at every level. Collaboration is key for this initiative and it will help you identify which emerging technologies have the greatest value for implementation in your organization.
What About The Ecosystem?
In July of this year, business and technology services firm Cognizant published “Blockchain: The Challenge of Fashioning Hope into Reality.” This insightful summary report include the results of a global survey of more than 1,500 senior banking and finance executives, with major players reporting advancement beyond pilots to implementation. Based on those surveyed, there is no clear consensus currently on what type of blockchain ecosystem will emerge — private, public, or a hybrid approach. 37% of respondents reported a focus on private blockchains, while 34% support open blockchains. 15% expect a hybrid model, with private and consortium blockchains developing support. (It’s important to note that the need for standardized data remains consistent regardless of the prevailing ecosystem.) The current challenge of interoperability in FM was also a concern shared by 59% of those surveyed, and nearly 70% identified scalability as a roadblock.
Why should we care about a survey of financial services executives? The perspective of these leaders surveyed by Cognizant may very well mirror the facility management leaders of today, who share concerns on scalability and interoperability based on current platforms. Let’s not lose sight of benefits to be gained with Blockchain, including streamlining processes and lower costs by reducing or eliminating manual operations — major benefits over some current systems.
Blockchain provides higher security than current platforms with no single failure point and uses encryption that makes it more difficult to hack than traditional platforms. It also can facilitate data transfer using a single source of truth approach, replacing the traditional trust-based model. It improves data governance using a standards-based focus that can manage simple and complex transactions alike. It’s also regulator-friendly, providing more effective risk management and reducing fraud. Governments outside the U.S. have made more progress in developing regulatory standards addressing blockchain, as well as setting target dates for compliance in submitting information using a distributed digital ledger.
Maintenance schedules, facility work orders, smart contracts, and capital improvements are just a few of the relevant applications for blockchain in facility management. Innovation is accompanied by a measure of risk. Identifying areas within your organization that can benefit from the implementation of blockchain technology will demonstrate value and help you prepare your organization for the technology to come. The time to prepare is now.
Stanley is CEO of OSCRE International, a member-based organization focused on transforming the way digital information drives your real estate business. For more information about OSCRE’s Blockchain Initiative and Data Governance Program, email [email protected], or visit the OSCRE website.