Every year, like other public companies, IBM hosts an Analyst Day where they share detailed plans with investors and analysts. But in this year’s Analyst Day, unlike other companies, IBM’s ambition is nothing short of world domination as they parade their quantum computing, AI, and — YES — blockchain capabilities. We’ve covered IBM before (this article and this article) and the trend is clear: IBM’s enthusiasm for blockchain technology is growing exponentially. Don’t take our words for it, read the excerpts below!
IBM Analyst Day, March 8th, 2018
Virginia M. Rometty, Chief Executive Officer
[Explaining blockchain] And my sort of simplest phrase to describe it is in the value is a blockchain will do for trusted transactions what the Internet did for communications and data. What it allow to happen? To go between people who didn’t necessarily know each other. Same is true here, trusted transactions can move across people who may not even trust each other.
So we are now well in advance of 400 engagements around the world, and they take all different business models. Bridget will be up here – we can talk about some of those. But food safety, it started with Walmart, we’re now [working with] Dole, Unilever, Kroger, Tyson, a long list, some friends, some competitors, is a proof to this point, all around food safety.
Currency derivatives, lots of different work, whether it’s CLS, Goldman Sachs, Bank of America, Bank of Tokyo-Mitsubishi. And then shipping, another model by the way, that’s a JV we formed with Maersk. But the shipping industry has got so many middle people in the middle or middle things. Started with Maersk, there are 30 companies, either in beta, onboarding and it’s a $4 trillion industry, right to have improvement to it. So, blockchain is scaling.
James J. Kavanaugh, Chief Financial Officer
And this is around how IBM is consistently taking a first mover advantage around creating and leveraging and winning emerging technologies. The best example here I picked was blockchain, where today it’s disrupting multiple industry segments that is addressing trillions and trillion dollars of market opportunity.
And if you look at today, our blockchain were the number one enterprise provider. We have over 35 active networks in production already today and we leverage our distinctive competitive advantage around that integrated portfolio you see on the left-hand side of the chart. Leveraging System z, our transaction processing systems and we do so in a permissionable way leveraging, security, trust and governance. We’ve also built this on open standards. We’ve already contributed 5 million lines of code to the Hyperledger project and we are surrounding this with subject matter expertise to ensure that we drive and leverage our capabilities overall.
Bridget A. van Kralingen, SVP: Global Industries, Platforms and Blockchain
So let me talk first about the opportunity now, talk about the monetization. So we moved early in this market, because we saw a very large opportunities start to emerge and just a little note on this and a lot of the hype around blockchain is around cryptocurrencies and that of course, currency is one useful blockchain, but it is hard for enterprises. Blockchain is the ability to have an immutable permission record of all transactions and a flow of a time. So essentially you can think that any multi-party workflow and between organizations could be disrupted and made to be instantaneous versus bilateral, which is a huge deal for organizations processes.
So we recognize this and we moved quickly and we’re seeing that momentum and differentiation continue with the opportunity and essentially it’s really in a couple of key areas technology, skills and capabilities and solutions. So with the technology and we built the first software for enterprises, it’s permission, it’s fast, it’s secure and it can be scaled, which is very different from a lot of the blockchains existing out there, which are not for enterprise and that is required for enterprises to use it.
Secondly, I’ll talk later on this about monetization, it isn’t a cloud. So, it’s a software-as-a-service on a cloud and that cloud is our mainframe for security. Thirdly, we know for anything to scale in the world today that needs to be an open standards ecosystem. So we contributed the code that Jim referenced to Hyperledger and that has become the fabric for enterprise blockchain.
And then thirdly, on technology, we’re right out there with our research blending AI with blockchain, thinking about things like Crypto Anchors which will show physically changes in goods over time. Our skills we think are unparalleled because we’ve basically put our industry skills together with blockchain skills to build solutions, 400 projects in the world which is by far the world leading consulting practice.
And then finally, we’ve taken bet on the processes that are going to be most disrupted, $1.8 trillion we believe will be the value disruption in supply chain, $2 trillion in payments. And so we have actually taken investment and ownership bets in building blockchains with our clients and their ecosystems where we’ve actually built and owned that blockchain network. So when I turned to the monetization from that opportunity, it’s early, early days in this field, but there are a number of models, both our traditional ones, but some very new business models for us.
So the traditional one that you would know is, firstly, we will build and run blockchains, right. We’ll use that software and hardware to create a cloud platform and that will monetize for us. Our consulting practices will build the blockchains and for many, we’ll run and host and manage them. So you know that model, that is a very, very compelling model and we’re seeing that accelerate.
But another one that we’re seeing accelerate which is new for us is the fact that we will actually own these blockchains and be the network owner…. [We] will digitize the global supply chain for shipping and you will see it in our food trust blockchain with Walmart and 18 other of the large food and CPG companies where we will actually build, own, run and be the primary investor in that blockchain.
So that’s an exciting new business model for us, it’s early days. But we believe that network effect that marketplace platform network effect will actually accelerate for us as we own and build these blockchains. I would add that part of the reason for our success is the fact of the security and scale of the blockchain and I really would think I wouldn’t like to leave this section without a comment on how the big role that you play in actually making our blockchain works with mainframes…