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Blockchain for Business Series: Enterprise (Blockchain) Business Network Investment Rubric

Published and Written by Nitin Gaur - Director, IBM WW Digital Asset Labs at IBM

01.02.2019 NewsPublications
blockchain
Image Credit: www.mhi.org

As I mentioned in my previous post. I along with a few authors have been working over the last few months to write a book titled “Blockchain for Business”. The primary focus of this literature is to provide a framework and various business, financial and risk models as a guide for business leaders to make informed decisions. Here is one last excerpt from our book, before it is published (and available soon after) at IBM THINK 2019 in San Francisco, CA. For rest of 2019 I plan to dedicate my time, energy and focus on core technology and business hurdles that may impede blockchain adoption. In next few posts I plan to go back to deeper technology discussions around security, cryptography, scale, consensus system and it’s impact on technology decision matrix and meaningful choices to address some very specific industry problems. In this regard I do look forward to your participation, comments and aid in building the right community regardless of platform preferences. My next post will be on analysis on CAP (Consistency, Availability and Partition awareness) theorem and FLP (Fault tolerant, Liveliness and Protection) theorem, and the dichotomy they present in Blockchain system design.

It is vital for an enterprise to establish an investment rubric as a risk mitigation technique. An investment rubric is a layered abstraction that represents the investment criteria and landscape. The rubric evaluation criteria have inputs, outputs, and continual analysis. The inputs are generally assumptions that drive the model, such as technology design, architecture and talent acquisition, compliance costs, and cost-efficient versus new business opportunity models. The outputs are the projected performance metric that is measured against the stated input objectives. The investment rubric also can serve as a model that you can use to evaluate multiple sets of performance metrics with different assumptions.

This investment rubric is a guide and evaluation tool for blockchain projects. The continual assets of the rubric define the merits of potential investment and objectify the decision and justification of the investment. The rubric is a financial model that employs various business valuation techniques, such as net present value (NPV), benefit-cost ratio (BCR), internal rate of return (IRR), and GRC. Governance risk management and compliance analysis, which provide a holistic investment and risk profile, is not considered at the proof of concept phase.

Devising a comprehensive investment profile and model is a significant step in communicating to investors, business partners, and stakeholders the extent and depth of an analysis with a clear defensible plan for project execution, deployment, and subsequent risk mitigation that is embedded at every layer of the rubric. You can use the investment rubric as an important tool for modeling and analysis with a feedback look mechanism. The tool is used as a scoring guide to evaluate the intended investment objective and stated outcome.

 

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