Salesforce offers blockchain lite to entice users

Salesforce is the latest company to offer customers a managed distributed ledger over which business transactions can be tracked.

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Salesforce is now offering select customers blockchain as a permissioned, centrally controlled service, which in some ways runs counter to the basic premise of the technology: that it's an anonymous, distributed network with no central authority.

Salesforce is not alone, as numerous vendors have lined up to offer blockchain networks via cloud services. Amazon, IBM, Microsoft, SAP and Oracle are all part of a burgeoning blockchain-as-a-service (BaaS) marketplace; only IBM, however, has begun to open up its ecosystem, offering some limited interoperability between different blockchain platforms. Others control who can join and on which blockchain data can be shared.

Even as those moves take place, a new study released today by Gartner indicates that CIOs continue to overestimate the capabilities and short-term benefits of blockchain to help them achieve business goals, and have unrealistic expectations when assessing offerings from blockchain platform vendors and service providers.

By 2021, 90 per cent of current enterprise blockchain platform implementations will require replacement within 18 months to remain competitive, secure and avoid obsolescence, Gartner predicted as part of a new study.

"Compounding this challenge is the fact that blockchain platform vendors typically use messaging that does not link to a target buyer's use cases and business benefits," Adrian Lee, a senior research director at Gartner, said in a statement.

"For example, 'transactions' was the term mentioned the most in relation to blockchain, followed by 'secure' and 'security.' While these may be functions of blockchain-enabling technology, buyers are still confused as to how these functions are achieved or what benefits blockchain adds compared to their existing processes."

Nonetheless, as enterprise interest in blockchain technology increases, the number of blockchain platform vendors continues to grow, Lee said.

"Due to the lack of an industry consensus on product concept, feature set, core application requirements and target market, we do not expect there to be a single dominant blockchain platform within the next five years. Instead, we expect a multiplatform world to emerge," Lee said.

By 2025, the business value added by blockchain will grow to slightly more than $176 billion, then surge to exceed $3.1 trillion by 2030, according to a recent forecast by Gartner.

"Product managers should prepare for rapid evolution, early obsolescence, a shifting competitive landscape, future consolidation of offerings and the potential failure of early stage technologies in the blockchain platform market," according to Gartner's study.

While simplistic, BaaS still enables a shared, single version of truth for a consortium of distributed ledger users – and it can create an audit trail and an open platform to help manage disputes among business partners.

For example, if a Salesforce customer is a fast food restaurant chain, and they're using the blockchain as a supply chain tracker for their worldwide beef supply, the transparent ledger can enable them to distribute that beef more intelligently.

"You can find out if more people are eating beef in Illinois than in California and if the ranch in Argentina has better beef than the one in Chile because more people like it. So, you can use that information to help your sales," said Avivah Litan, a vice president of research at Gartner. "You can target customers in Illinois, for example, because they love Argentinian organic beef more."

In its announcement, Salesforce listed "select design partners" currently testing its blockchain service, including Arizona State University, S&P Global Ratings and biopharmaceutical research giant IQVIA Holdings Inc.

IQVIA is testing the service for regulatory information management and drug label processing, the company said in a statement. Potential benefits include cost savings through label automation, improved audit traceability and quality improvements based on agreed collaborative rules. The company also sees potential in enhanced security from immutable content sharing.

Arizona state is testing the blockchain ledger for storing student transcripts, which would allow users to share those records by offering a public key.

Salesforce's blockchain was built on Hyperledger Sawtooth, an open-source, modular blockchain suite developed by the Linux Foundation and IBM. Salesforce said its new blockchain service should be generally available in 2020.

While similar to other permissioned blockchain services, Salesforce's iteration is not just centrally controlled by one company, enabling partners to come on board as part of a consortium; it's also a Salesforce-controlled network that allows one customer to connect with other Salesforce customers.

Salesforce did not respond to a request for comment on whether it allows users other than Salesforce customers to join the network.

The CRM vendor is pitching its blockchain service as a "low code" solution because it's based on an online menu enabling users to simply point and click to choose a node on the distributed ledger network and then create their own blockchain consortium or join others.

"I think it's only for Salesforce customers. Chances are a lot of your supply chain is on the Salesforce platform, but certainly if they're not, they'd have to join it and that may be part of Salesforce's strategy, too – to get more customers," Litan said.

"They've got a pretty realistic view of what blockchain's good for in the enterprise, but they're using it to keep customers within the Salesforce platform and get more customers," Litan added.

Blockchain can solve a "trust gap" by delivering an immutable ledger that authenticates data across every business partner in a network, Salesforce argued in its announcement.

By combining CRM workflows with blockchain data, companies can create new business processes and models that span sales, service, marketing and beyond to accelerate the speed of business, Salesforce said.

Last month, Microsoft announced that its Azure-based blockchain service had added menu tools, which are similar to Salesforce's point-and-click model. Microsoft partnered with J.P. Morgan to use its Quorum blockchain ledger as the first available in its Azure Blockchain Service.

Salesforce and other recent BaaS market entrants highlight the trend of big vendors and cloud service providers who offer an effective – but simplistic – version of distributed ledger technology for customers to experiment with.

"I think Salesforce is indicative of an immature blockchain marketplace that over time will morph into something more akin to a real use of blockchain, but for now is still in its infancy," Litan said.

"So Salesforce is spoon feeding it to customers and they know if McDonalds is using it, their partners will also want to get on board. And, if you're not a Salesforce user, well, now you may want to be if you want to be part of the McDonald's blockchain consortium."