Just in case anyone in the world still doubts IBM’s commitment to developing blockchain technologies, IBM sounded their bull horn once again by making some rather bold claims. Last month, we highlighted how bullish IBM was about blockchain technology. This past week, on February 28th, IBM’s Senior Vice President of Global Markets upped the ante by claiming that blockchain will change the world.
International Business Machines (NYSE: IBM), Investor Conference
Martin J. Schroeter, SVP – Global Markets
So from a really practical standpoint, if we just stick with blockchain for a second. Blockchain we believe is going to do for trusted transactions in the world what the Internet did for information. It’s really a fundamentally important technology that will change the way the world works.
In two – the two good examples I think of how we’re having it deployed, I’ll even come back to an IBM example in a moment. But we have a food safety blockchain that we’ve built with Walmart and with Walmart’s partners. And I’ll just go right to the punch line. When you think about food safety, it used to take them about seven days to figure out where was the problem, what was the source, so they can go shut it down. And over those seven days, obviously there’s a lot of misery, right? So you want to get it fast.
We now can do that in seconds. So we’re shortening dramatically the way the world deals with food safety issues in a global supply chain. And Walmart is again leading that with its clients. So I think that’s a pretty good example, right, in terms of how do you translate the benefit to an enterprise?
We’re also – we formed now a joint venture with Maersk, the world’s leading shipping company. When you think about shipping – and by the way, 80% of the world’s goods are still traveling in and around the planet in a pretty complex supply chain. There are hundreds and hundreds of kind of checkpoints, right? It’s got to get onto the truck. It’s got to get off the truck into the port. From the port, it’s got to go to the ship. And all this is a paperwork intensive kind of a business.
And so what our view and Maersk’s view, our vision for this is, with a blockchain now you condense all of that visibility, probably measured in days and weeks into real time, you know exactly where something is which really at a very simplistic way allows you to manage your whole supply chain in a much more compressed and tight fashion.
Supply chains equal capital. But they’re the inverse. The bigger the supply chain, the more capital you need. So obviously the tighter it is, the less capital you have to apply. So in the world of supply chains, there is a ton to be done in putting things on a blockchain.
Now obviously you need something that is secure and scalable. And we contributed millions of lines of code to create that [unclear] project that is now in the open source community, all of which runs on our mainframes. But we now have the scalability, we have the reliability, we have the security of a mainframe on what is a fundamentally better way to run a supply chain.
Just one quick example in IBM. So I am responsible for Global Financing, the world’s largest IT financier. I ran it before my last job, and I kept it with me.
We have a blockchain that manages our Commercial Financing business. So Commercial Financing, think of we provide capital to our business partners so that they can take our systems, build a solution around it, and deliver it to an end user. And so that process takes them 40 days, 50 days, 60 days. And they need the capital for that period.
What we did was put a blockchain in place, so that now we interact with them only through a blockchain. So disputes. You get hardware that says, this invoice says, my domicile is state of Texas, but I’m not. I’m state of Florida. And that used to take us 30 days or 40 days to sort out. And now we do it in less than a day. So the amount of capital we have to allocate to that has gone down dramatically.
So blockchain I think fundamentally changes the way the world works.