Though blockchain is a hot trend in technology right now, not everyone seems to know exactly how to use it or precisely what it is. There are still few experts in the field. However, one thing is for sure: Businesses are eager to harness blockchain technology and software as a service (SAAS) as a kind of distributed ledger technology to support desired outcomes.
Learning about blockchain technology and how to leverage it to support business outcomes can be critical to success for professionals interested in a career in information technology (IT) and business management. Aspiring IT leaders can learn about blockchain and other emerging tech opportunities through advanced coursework in the online Master of Business Administration (MBA) in Information Technology Management program from Florida Institute of Technology.
What Is Blockchain Technology?
Blockchain technology is an important technology trend in business today, one that IT leaders must grasp and selectively incorporate to keep their organizations relevant and competitive. Its integration is becoming central to secure financial and IT management practices in numerous industries.
According to Amazon, “Blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network.” Blockchain functions by storing data in “blocks.” These blocks link together in a “chain.”
Effectively, blockchain technology creates an “unalterable or immutable” distributed ledger to securely and consistently track various types of transactions and accounts. A distributed ledger technology (DLT) incorporates strict rules that prevent unauthorized deletion or modification of recorded data, maintaining chronological consistency and accuracy.
Though most applications of blockchain currently focus on financial tokenization and transactions, blockchain has the potential to impact numerous fields, such as music, law enforcement, ride sharing, health care, supply chain management and education. Its early stages will determine its future applications, but blockchain users must first learn how to incorporate it effectively and responsibly.
How Are Modern Businesses Incorporating Blockchain in Software as a Service Offerings?
Software as a service (SaaS) solutions are increasingly popular for enterprises looking to minimize overhead by leveraging third-party technology service providers. Third-party vendors can focus their efforts on developing and scaling advanced software solutions to offer, host and manage those services for other organizations. Outsourcing technology applications by contracting with SAAS providers can lessen an organization’s upfront and ongoing investment in that service.
Several companies are stepping up to the immense demand for blockchain technology by establishing cloud-based blockchain as a service (Baas) offerings. These companies include both industry juggernauts and small, agile startups.
For instance, Amazon Web Services (AWS) already provides SaaS cloud services to companies all over the world. Logically, the service provider quickly developed its own BaaS to integrate into existing SaaS-managed services for customers. These blockchain offerings allow easy and adaptable information sharing since they integrate smoothly with the already-popular AWS cloud service.
Microsoft’s Azure-integrated BaaS platform makes it easy for businesses to collaborate and experiment with new business processes before they launch them in-house. R3 Corda provides a permissioned blockchain and (DLT) platform so participating parties can tokenize digital assets and automate business processes, enhancing privacy, security and scalability with integrated systems. By working together using blockchain platforms, companies can ensure accurate and safe transactions without discrepancy or risk while minimizing complications surrounding central authorities and complex regulatory markets.
Advantages and Disadvantages of Blockchain Technology
Blockchain is complex and evolving, both as a technology and as a challenging platform to regulate — or to understand, for many people. IT directors and other business leaders must strive to understand both the advantages and disadvantages of blockchain and BaaS services to make informed decisions about its effective applications for various business functions. The following are a sampling of the many pros and cons of blockchain technology and BaaS:
Pros to Blockchain as a Service
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- Transparency and security: Businesses are looking to blockchain technology not only to store and share valuable information. Blockchain allows high levels of transparency and traceability of transactions that consumers expect in the digital age. Further, encrypting all records is a critical component of blockchain technology, which, coupled with the decentralized design and rules-based DLT architecture, creates a highly secure, anonymous and immutable system.
- Time and money: Building blockchains can be expensive and time-consuming. BaaS providers like the ones mentioned above provide third-party blockchain application outsourcing options which can help organizations save time and money, offering reliable ways to use the technology without prohibitive upfront cost. BaaS also saves costs on hiring developers to deploy and maintain software.
- Customizable, future-proof template: For those looking to avoid building their architecture from the ground up, companies offering blockchain services can provide templates for users to easily integrate into an existing system and applications. In this way, BaaS providers also help to “future proof” an organization’s blockchain integration. BaaS providers continuously update services integrated into templates, so organizations do not have to worry about reworking code to accommodate later developments and new features.
- Focus on features: Additionally, since they don’t have to build it from scratch, an organization’s development team can focus on their own job requirements and allow the blockchain service to complement their projects. Once the blockchain’s infrastructure is set-up, the service provider maintains it, usually with bandwidth management, resource allocation, hosting and security features.
- Testing: Perhaps the most exciting outcome of BaaS options is its ability to let organizations try out new technology without the risk of a failed deployment in-house. Organizations can test their code within the confines of the blockchain, which creates a “proof-of-concept,” or confirms the tested feature’s feasibility.
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Cons to Blockchain as a Service
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- Lack of knowledge: Organizations rushing to join the club may be too eager to take up blockchain technology. Those without the proper know-how, training, and understanding could unintentionally put their organizations at risk for failure and a wasted investment. Alternatively, companies that are intimidated by blockchain technology may miss out on its potential to improve business outcomes.
- Blockchain is still a young technology: While blockchain technology is known for its ability to heighten transparency and security, the applications of the technology are new, with potential for unknown risks and poor utilization. Possible inefficiencies and security challenges still exist. Plus, startups developing blockchain technology may not be using verified and time-tested algorithms.
- Personnel and support required: A qualified and dedicated staff or host is vital to this type of technology since one vulnerability could cost a lot. For instance, coding vulnerabilities could lead to immense sums of digital currency and assets being put at risk or frozen temporarily.
- Energy use: Blockchain uses a lot of energy, causing major environmental concern. For example, the cryptocurrency Bitcoin uses more energy each year than many countries. Though people are working on solving this issue, it is having massive repercussions both economically and environmentally.
- Compliance issues: Since blockchain relies on dispersing information across a global network, international regulations could affect the information shared across borders. So, for instance, though AWS centralizes its offering, the decentralized nature of blockchain could lead to compliance issues concerning data residency in other countries.
- Scalability issues: Decentralization can create an environment where the drastic increase in usage of one blockchain application could impede processes of another. Users must understand the nuances and select the best method to work with their needs and capabilities.
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Explore New Technologies and Their Applications in an MBA in IT Management Program
Clearly, the development of blockchain technology and BaaS services offers businesses many opportunities. Yet, the challenges this evolving technology poses are also complex and worth investigating.
Future IT leaders must gain competence with leveraging blockchain technologies for business applications, understanding the pros and cons of the technology itself as well as BaaS opportunities. Aspiring professionals can explore the nuances of blockchain and many other emerging technologies in the MBA in IT Management program from Florida Tech, preparing them for success in evolving information technology leadership roles.
Learn more about Florida Tech’s online MBA in Information Technology Management program.
