Blockchain For Enterprises

Break-out Session
Blockchain for Enterprises

IBM Research
Blockchain for Enterprises – Agenda

14:00 Welcome
14:05 Blockchain for Business
Andreas Kind, Manager Industry Platforms & Blockchain, IBM Research Zurich
14:20 Use Case: Concert Tickets

Björn Tackmann, Security Researcher, Industry Platforms & Blockchain, IBM Research Zurich
14:30 Use Case: Blockchain for Sensitive Data

Daniel Thyssen, Director / L&H IT Business Partner & Information Architect, Swiss Re
Alessandro Sorniotti, Research Staff Member, Industry Platforms & Blockchain, IBM Research Zurich
14:40 Use Case: Aircraft Maintenance

Jens Jelitto, Senior Researcher, Cognitive Computing and Industry Solutions (IoT), IBM Research Zurich
14:50 Adoption of Blockchain – Insight from Empirical Studies

Urs Karrer, Associate Partner & Digital Consulting Practice Lead, Global Business Services, IBM Switzerland
15:05 Q&A
© IBM Corporation, 2017
Blockchain for Business
Bringing trust into transaction processing
Blockchain: A shared distributed ledger allowing participants in a

business network to work with one system of record
Party A’s
records
Party D’s Bank
records records
Shared, replicated, strong consistency
Party C’s
records Party B’s Auditor
records records

Provenance, global truth, no single control point
Characteristics of a Blockchain for Business
Selective Strong identity
Scalability
participation to management
authorized users Viable system for large
number of participants
Privacy / Access
Control Audit support
User activity & contract logic
Performance
concealable to unauthorized Pluggable
entities Components Optimizing
Compatibility with transaction
Authorized throughput,
standards
Execution processing
parallelization
Logic is executed only
after authorized entity
Accountability Liveness
request
Non-repudiation Consistency
Entities are accounted for the Correct & consistent transaction
transactions they create, cannot execution among members, e.g.,
forge others’ transactions dealing with non-determinism
What is Hyperledger Fabric?

• Linux Foundation Hyperledger
– A collaborative effort created to advance cross-industry Blockchain technologies
– Over 120 members
• Hyperledger Fabric
– An implementation of blockchain technology that is intended as a foundation for
developing blockchain applications
– Key technical features:
• A shared ledger and smart contracts implemented as “chaincode”
• Privacy and permissioning through membership services
• Modular architecture and flexible hosting options
http://hyperledger.org
• IBM is one contributor to Hyperledger Fabric

Use Case:
Concert Tickets
Use Case:
Sensitive Healthcare
Data
Use Case:
Aircraft Maintenance
© IBM Corporation, 2017 7
Concert Tickets – New Types of Fraud

This barcode “is” the ticket
“Barcode-tickets” enable new types of fraud:

• Stealing tickets from selfies
• Re-selling a ticket but still using it
• Selling tickets with invalid codes
Blockchain-based Concert Tickets
Fabric Blockchain
transfer
Ticket vendor
Control agent
Seller
© IBM Corporation, 2017 Buyer
Demo Concert Tickets on Blockchain
Live Demo

Benefits of Blockchain for Concert Tickets
• Guaranteed consistency My tickets are valid and

No more ticket fraud! cannot be stolen. But I can
still safely re-sell if I need to.
• Distributed trust
No designated trusted party!
My customers can
• Smart contract semantics immediately check the
Determines when/how often/between validity of their tickets.
whom tickets can be transferred.
I know there is no forged
ticket. And no hassle with
dissatisfied guests either.
Blockchain for Sensitive Data

I Have a Dream
How to Change the Data Game
and Un-Scare the End Customer
Blockchain Valley Conference June 2017 Daniel Thyssen, Alessandro Sorniotti

The Dream – All the Cover I Need in 10 Minutes a Year
Your Individual Jigsaw of Modular Products
Tailored to You on Your Data
Blockchain for Sensitive Data | June 2017 | D. Thyssen (SwissRe), A. Sorniotti (IBM)
Blockchain for Sensitive

Blockchain Data Data
for Sensitive “B4S”“B4S”
MarketProblem
Market Problemandand Blockchain
Solution Solution
End consumers Insurers Regulator
An outdated system where data power and pain lie with the insurer
Lack of trust Costs & Risks Lack of transparency
A consortium-driven platform for data & access rights that empowers you & me
Control & Transparency Savings & Compliance Higher transparency
Opportunity: Blockchain for Sensitive Data

• Enables trust by giving full control back to the end- customer • Shared system reduces overall cost
• Full auditability of access to personal and sensitive data • Immutability ensures correctness over time
B4S:
Blockchain
Consumers
for Sensitive
ControlControl
B4S: Consumers Their
Data Data
“B4S”
Their Data
Market
What
Problem
Does It
and
Do?Solution
Putting You & Me in Control
End consumers
Insurers Insurer C Identity provider
§ Information
Insurer B
§ Access control
Insurer A
Secure
data pools digi.me etc.
personal data
A collective system for data access management that empowers the policy holders
15
Blockchain for SensitiveControl

B4S: Consumers Data “B4S”
Their Data
Market Problem and It
How Does Solution
Work?
Blockchain for Sensitive Data “B4S”
AndProblem
Market now, enjoy
andthe Live Demo !
Solution
Blockchain & IoT for Aircraft Maintenance

Dr. Jens Jelitto
Research Staff Member, Services Research & IoT
University Relations Manager
Motivation
• Imagine you had access to data from all relevant
stakeholders in the aviation ecosystem
• Flight and landing information
• Operating conditions
• Weather conditions
• Airport runway roughness
• Maintenance records
• …
• Then many things could be improved
• Maintenance planning
• Spare parts logistics
• Incident resolution
• Lease transition management
• …
Blockchain: Record in a legally-binding manner the flight and other events, maintenance actions, and operating conditions
Photo: T. Pesonen, V Kulikov, http://www.avocetaerospace.com/products-supported-avocet-tech
Aviation Ecosystem
OEMs (assemblies, parts)
Rolls Royce
UTC
Maintenance, Repair & Aerospace
Airlines
Overhaul • Design documents
• Development and test data
UAL KLM
• Specs
GECAS • … DLH
LHT
• Model and series,
• Damage extent Ledger • Age and history
• Maintenance records Ledger • Weight / quantity of fuel
Ledger
?
• Incidents records • Vibration levels
• Wear and tear evolution • Landing quality
• … • …
Ledger Airports
Regulatory Agencies Ledger
Ledger ZRH LAX
EASA Ledger
FAA 3rd Party Data FRA
Manufacturers providers
• Incident, accident reports
• Maintenance requirements • Temperature
LAX • Runway quality
• … Airbus • Visibility
• Geolocation • …
Boeing • Wind direction + speed
• Design documents • Salt
• Development and test data • Dust, sand
• Specs
• …
Use Case: Asset Management - Assembly Tracking/History
What?
• Provenance of each component part hard to track in a
complex system
• Manufacturer, production date, batch, commissioning,
operation, maintenance, …
How?
• Blockchain holds provenance trails of all assemblies
• Accessible by manufacturers, operators,
aircraft owners, maintainers and regulators
Benefits
• Trust increased, no authority "owns” provenance
• Increased system utilization
Use case: Maintenance Planning for Life Limited Parts

https://youtu.be/yRs0ctyalto
Airline view + Airport data (wind, runway roughness) MRO view
Alert
Flight data Landing data
Register checks
Weather data Blockchain information
Record
Maintenance forecast
Potential Blockchain Applications in the Aviation Industry
• Tracking/Tracing: Back to birth history of parts including operational data

Recording • Contract Enforcement: Evaluate maintenance conditions and enforce actions (checks, inspections)
of transactions in an indelible, • Conflict resolution: Warranty/liability claims; incident/accident legal investigations
secure, authenticated, verifiable, • Counterfeit prevention: Detect “double installation” of parts with identical serial numbers
consensus-based manner
• Access control: Data access control through smart contracts, secure logging services
Analytics /
• Maintenance planning /scheduling optimization
• Improved/individualized maintenance based on component history and operating conditions
Optimization • Spare part inventory optimization
based on shared multi-party data •…
Blockchain Adoption
Rethinking enterprises, ecosystems and economies with smart contract frameworks
Urs Karrer, Ph.D. © 2017 IBM Corporation

Introduction
Key business frictions drive delays, costs and risks
Imperfect information
1 | Information Inaccessible information
Information risks
2 | Interaction FRICTIONS 3 | Innovation

Transaction costs Restrictive regulations
Degrees of separation Institutional inertia
Inaccessible marketplaces Invisible threats
Source: IBM Institute for Business Value , Fast forward, 2016

25 Blockchain Valley Conference
© 2017 IBM2017 | © 2017 IBM Corporation
Corporation Blockchain
Blockchain Adoption Adoption
in Switzerland
Introduction
As industries grow blockchain use, fundamentals change and new business models enter the
stage
Reduces Saves Mitigates Opens New

Time Cost Risk Business
Models
Business transactions Business networks can Business transactions Business networks
can be conducted in eliminate intermediaries become verifiable and reshaped and profit
near real-time and scale easily auditable pools are redefined
Source: IBM Institute for Business Value , Fast forward, 2016

26 © 2017 IBM Corporation Blockchain Adoption in Switzerland
Introduction
From theory to reality

To what degree do enterprises view blockchain as a competitive enabler to preempt or counter disruptions
Key questions Empirical studies
How fast should I move? IBM CH Adoption Study
? First movers and early adopters can position

themselves for quicker returns and sharper
competitiveness by leveraging blockchain efficiencies
•
•
Geo scope: Switzerland - cross-industry
Structured questionnaire, mostly face-to-face interviews
• 50+ participants - excluded FinTechs/Start-ups – Close to
50% have more than 5’000 employees
• Conducted in H2/2016
How can I realize the business potential?
? Although implementing new technologies may be

daunting, understanding how they can help your
business profit is paramount and then start to scale
IBV Forward Together Study
• Geo scope: Global – cross-industry
Can we achieve network-wide accepted • Structured questionnaire
?
standards? • 3000+ participants
Success in blockchain adoption will depend not on
who has the best technology or app, but who can • Conducted in Q1/2017
build the strongest network
27 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption
Readiness to engage
From lack of interest to awareness and

tangible initiatives

Readiness to engage
Distribution and Financial Services companies are further ahead than Industrial, Communications
and Public companies
Blockchain Innovation Cycle by Sectors

1/3 1/3 1/3
40% Most Distribution sector respondents are
implementing or are at least interested in
blockchain
30%
20%
Financial Service companies are divided
between being actively engaged and not
10%
being interested in blockchain
0%
Productive Are Started to Just getting Not heard of Not interested
use and implementing work on interested in in Participants from the Industrial sector are
expand across Proof of concrete use mainly at the beginning of the blockchain
enterprise Concepts in cases innovation cycle and the Public sector
preparation for mostly falls into the limited awareness
productive use categories
Financial Services Industrial Distribution Communications Public
Question no. 11: Where in the innovation cycle is your company when it comes to applying and leveraging blockchain?
Of 3,000 cross-industry C-suite executives surveyed,

33 percent are active in or considering blockchain
Explorers
Already active
33% 8% in blockchain
Explorer activity is very high in
several industries – in Banking
Investigators
and Financial Markets for Considering
example, the Explorers alone 25% blockchain
already make up one-third of

those considering or actively
engaged with blockchain
Passives
Not considering
67% blockchain
Source: Performance of blockchain explorers; P.3 – What is the market perception of your enterprise’s innovation capability, relative to that of your industry peers?; n=2,965

As in earlier studies, we see high activity in several
industries
IBV 2016 Blockchain study focused on IBV 2017 Blockchain C-suite Study focuses on
Trailblazers: those that plan to implement Explorers: those that are experimenting, piloting,
blockchain in 2017* or implementing blockchain in 2017 or beyond*
Banking and Financial Markets Banking and Financial Markets
15% 33%
Healthcare Healthcare
16% 31%
Government Government and Public Services
14% 21%
Electronics Electronics
14% 19%
*as % of all that are active or considering
Readiness to engage
Technology and its potential is the main interest factor
Main Reasons for Interest in Blockchain by Sectors

0% 5% 10% 15% 20% 25% 30% Beside the understanding of the technology
and its potential, participants view
To explore the technology and understand blockchain also as a vehicle to transform
its potential
their operating model or to sustain their
value proposition in the market
To transform our business operating model
To sustain our value proposition and Some respondents also view it as an

strategic direction option to contain or preempt digital
invaders
To contain digital invaders or existing market
participants that try to cannibalize our
market
To preempt potential digital invaders and
leapfrog the market
There are no significant relative weight
variances of the interest factors across
industries and size of the companies
Other
Question no. 20: What are the main reasons for your enterprise's interest in blockchain today?

Transformation upon us
It is coming for sure – when and how are being
worked on
Readiness to engage
Respondents view increased operational efficiency as the number one advantage of adopting
blockchain
Areas of Biggest Advantage for Blockchain
Increase efficiency of business operations 30% Process efficiency is rated notably higher
than product and service efficiency
Extend the value chain into new areas not
22%
covered yet
Develop stronger customer relationships 17% Extending the value chain and developing
stronger customer relationships are the
Develop better products and services 13% other key advantages of adopting
blockchain
Make products and services more
12%
economical
There are no relative weight variances of
the advantage areas across sectors except
Other 5%
for Public sector respondents who more
often foresee blockchain as an opportunity
Improve effectiveness of marketing and to develop better products and services
2%
sales
Question no. 21: What are some of the areas in which you see the biggest advantages of adopting blockchain?

Readiness to engage
Lack of capability, urgency and maturity are key inhibitors to consider blockchain for business
model innovation
Top 3 Inhibitors for Blockchain Innovation
Lack of maturity 20% The lack of maturity, day-to-day

operational issues and priorities as well as
Management team has more pressing… 18%
the lack of internal capabilities and
Lack of internal capabilities/resources 18% knowledge are considered to be key
inhibitors
Complexity of solution 14%
Lack of established co-operation or alliance … 8% Lack of security and lack of executive

management support are not viewed as
Other 7% key inhibitors
Board/Exec Management does not consider … 6%
Lack of security 5%
Lack of external capabilities/resources 2%
Lack of scalability 1%
Question no. 13: Rank the top three inhibitors to consider blockchain for business model innovation.
Blockchain impact is undebated – the question is when and to what degree it will make a
difference in the market
Timing of Blockchain Impact by Sectors

50% In the next two years, 22% foresee
blockchain to make a difference. Mainly
the Distribution sector anticipates an
40%
early effect
30%
The majority foresees a difference in
2019 or beyond, especially Financial
20% Services companies expect an impact
after 2018
10%
Only 6% of respondents have the

0% opinion that blockchain will not make a
2017 2018 2019 - 2020 2021 - 2025 Never N/A difference in their market
Question no. 22: When do you foresee blockchain will make a difference for your enterprise and the market it operates in?

Every second respondent foresees limited impact in their own industry in the next 3-5 years
Degree of Blockchain Impact in the next 3-5 years
Half of the respondents anticipate only a

Not at all 11% limited impact
Limited impact as a user of solutions that

50%
will get implemented
39% of respondents expect a significant
impact on their value chain
Significant impact on our value chain 39%
May cause our enterprise to be in danger if

0%
we do not act
No respondent foresees their company and
industry to be in danger
May cause our enterprise and industry to
0%
be in danger if we all do not act
Question no. 18: To what degree will blockchain impact your industry and your enterprise in the next 3-5 years?
Explorers 100
are poised to 90
break away 80
67% 70
59% 61%
60
50% 52%
44% 50
38%
40
25% 27% 30
23%
20
Explorers 10
Passives
0
High revenue Leading Effective Have the necessary Have a formal

growth and innovator at responding people skills and business strategy
high profitability compared to to emerging resources to respond to
industry peers business trends disruption
+117% +108% +119% +39% +76%

Source: Q2.2 – To what extent do you agree with the following statements concerning your business strategy? [4,5]; n=2,965

Mind the ecosystem engagement
Stakeholder engagement is key to success
IT, Strategy and Business Development are the key internal drivers of the blockchain agenda
Drivers of Blockchain by Functions and Sectors

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% In addition to IT, Strategy and Business
Development - Operations and Product
IT
Development complement the top three
Strategy drivers to make up the top five
Business Development & Joint-Venture Team
Product Development
This aligns well with the finding that most
Operations of the respondents view business and
Not clear yet - working it out product efficiency gains as the biggest
advantage of blockchain
Other
Sales and Marketing
Legal and Compliance Blockchain is a topic that is driven by
Finance
almost any function in Financial Services
and Distribution companies
N/A
Question no. 23: Which '"departments" or "functions" within your enterprise are driving your enterprise's blockchain agenda?

Nearly 75% of respondents see the need to engage with partners to realize business innovation
with blockchain
Leverage of Alliances & Partnerships
3%
18% 71% see the need for limited or
significant partnering and
cooperation with alliances
Joint-venture with an ecosystem partner

8%
Significant partnering and alliances Only few foresee Joint Ventures as
Limited engagement with ecosystem a model of success for making
alliances or partners business innovation with
53% blockchain happen
Not at all – we do it ourselves
18% Other
Question no. 17: In case you already started to work on a business innovation using blockchain or you plan to do so in the near future: To what degree do you leverage co-
operations and/or partners to make it happen?
Explorers swarm to new platform

business models
Intention to adopt a platform business model

Platform business models
create value by facilitating
Explorers exchanges between two or
Passives 11% 66%
more independent groups
in an ecosystem.
500% more
Source: Q2.8 – In terms of adopting a platform business model*, what stage is your enterprise at [3–5]?;
n=2,965
Explorers recognize value of collaboration with
customers and competitors to blockchain projects
Customers are important Industry consortia are important

to advance blockchain efforts to advance blockchain efforts
“Blockchain has the potential
78% 71% to build a huge and versatile
trust network.”
48% 36%
Explorers
Passives Chief Human Resources Officer

Electronics
Japan
63% more 97% more

Source: B4 – How important are the following participants to your enterprise’s ability to move forward with blockchain technology
at commercial scale? n=2,965
Adoption patterns and conclusions

Putting blockchains to work for you – disrupting
the disruptor

Summary of blockchain study findings
Our point of view ... ... and what respondents tell us
How fast should I move? 1/3 are engaged with blockchain in concrete
ways. 2/3 are getting up to speed on blockchain
? !
First movers and early adopters can position
themselves for quicker returns and sharper or are not interested in the topic. Distribution
competitiveness by leveraging blockchain industry respondents and some financial services
efficiencies respondents are moving faster compared to other
industries
How can I realize the business potential?

Respondents view efficiency gains, either
? !
Although implementing new technologies may be
internally in business processes or externally
daunting, understanding how they can help your
related to products and services, as the key
business profit is paramount and then start to
advantage of blockchain
scale
Can we achieve network-wide accepted Although technology and its potential is the main
? !
standards?
interest factor to get started with blockchain,
Success in blockchain adoption will depend not
on who has the best technology or app, but who participants recognize that the lack of a a clear
can build the strongest network value proposition is the missing link to success
Blockchain adoption pattern considerations
Our point of view ... ... and what respondents tell us
!
Value is limited within the The value proposition is often not clear because use cases are either too
boundaries of one narrow and, therefore, do not demonstrate the full potential or may be solved
organization with existing technology solutions
Distributed ledger standards are emerging, will help to clarify the potential of
!
Ecosystem participants
permissioned blockchains and facilitate the enablement of disruptive use cases.
have to agree on a
standard The confusion between blockchain concepts, e.g. permissioned distributed
ledger vs. crypto currency is wide-spread and needs further awareness creation
!
Risk of overregulation Besides some exceptions, financial services companies in Switzerland appear
exists without coordinated to view blockchain as «a nuisance» instead of a blessing to disrupt the
control disruptor
!
Respondents recognize the efficiency gains blockchain can help to realize; to a
Efforts may require large
scale re-engineering lesser degree they view it as an enabler for large-scale transformation and re-
generating the business value proposition

Your contact for making blockchain real ... and beyond
Urs Karrer, Ph.D. How IBM can help

Associate Partner and As one of the world’s leading research organizations,
Digital Consulting Lead and one of the world’s top contributors to open source
projects, IBM is committed to fostering the
IBM Switzerland collaborative effort required to transform how people,
Global Business Services governments and businesses transact and interact
Vulkanstrasse 106 | P.O. Box
8010 Zurich IBM provides clients the consulting and systems
o +41 58 333 7317 integration capabilities to design and rapidly adopt
distributed ledgers, digital identity and blockchain
m +41 79 832 7051
solutions. IBM helps clients leverage the global scale,
e urs.karrer@ch.ibm.com business domain expertise, and deep cloud integration
https://ch.linkedin.com/in/urskar experience required for the application of these
rer Technologies
www.ibm.com - www.ibm.com/blockchain -
http://ibm.biz/BdiRiK Learn more at ibm.com/blockchain

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Break-out Session

Blockchain for Enterprises – Agenda

14:20 Use Case: Concert Tickets

14:30 Use Case: Blockchain for Sensitive Data

14:40 Use Case: Aircraft Maintenance

14:50 Adoption of Blockchain – Insight from Empirical Studies

Blockchain: A shared distributed ledger allowing participants in a

Shared, replicated, strong consistency

© IBM Corporation, 2017

What is Hyperledger Fabric?

© IBM Corporation, 2017

Concert Tickets – New Types of Fraud

“Barcode-tickets” enable new types of fraud:

Demo Concert Tickets on Blockchain

© IBM Corporation, 2017

• Guaranteed consistency My tickets are valid and

Blockchain for Sensitive Data

Blockchain Valley Conference June 2017 Daniel Thyssen, Alessandro Sorniotti

Blockchain for Sensitive

End consumers Insurers Regulator

Opportunity: Blockchain for Sensitive Data

Blockchain for SensitiveControl

Blockchain & IoT for Aircraft Maintenance

Photo: T. Pesonen, V Kulikov, http://www.avocetaerospace.com/products-supported-avocet-tech

Use case: Maintenance Planning for Life Limited Parts

Airline view + Airport data (wind, runway roughness) MRO view

Flight data Landing data

• Tracking/Tracing: Back to birth history of parts including operational data

Urs Karrer, Ph.D. © 2017 IBM Corporation

Key business frictions drive delays, costs and risks

2 | Interaction FRICTIONS 3 | Innovation

Source: IBM Institute for Business Value , Fast forward, 2016

Reduces Saves Mitigates Opens New

Source: IBM Institute for Business Value , Fast forward, 2016

From theory to reality

How fast should I move? IBM CH Adoption Study

? First movers and early adopters can position

? Although implementing new technologies may be

27 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

From lack of interest to awareness and

28 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Blockchain Innovation Cycle by Sectors

Financial Services Industrial Distribution Communications Public

29 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Of 3,000 cross-industry C-suite executives surveyed,

already make up one-third of

30 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Banking and Financial Markets Banking and Financial Markets

*as % of all that are active or considering

31 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Technology and its potential is the main interest factor

Main Reasons for Interest in Blockchain by Sectors

To sustain our value proposition and Some respondents also view it as an

Financial Services Industrial Distribution Communications Public

32 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

33 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Areas of Biggest Advantage for Blockchain

34 Blockchain Valley Conference 2017 | © 2017 IBM Corporation Blockchain Adoption

Top 3 Inhibitors for Blockchain Innovation

Lack of maturity 20% The lack of maturity, day-to-day

Lack of established co-operation or alliance … 8% Lack of security and lack of executive

Lack of external capabilities/resources 2%