This pell-mell essay presents itself a collection of smaller posts I’ve made about the state and quality of all “Big Four” consulting houses’ “blockchain expertise”. It starts with Accenture (a former part of Arthur Andersen), proceeds to E&Y, KMPG, D&T and PWC (makes it, actually, 5 :) and ends with blown out-of-proportion assertions.
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First, we’ve got ourselves “state-of-blockchain” report from Accenture - “Get the full picture: Assessing blockchain’s business value”. I’m happy to see that my former colleagues are fast to adapt their old methodologies to the new environment.
This piece (as many before it) is, probably, made by sending a survey form to all emails downloaded from a CRM spreadsheet and then spending about 3–5 hrs of an intern time to fill in empty fields in a PP lay-out. Anyway, we shall be grateful that it’s free for us to read :)
The main author’s conclusion is what we already well know from so many other reports: “Worldwide spending on blockchain solutions has a forecast annual growth rate (CAGR) of 76.0%, reaching $12.4 billion in 2022”. Again, it lets me wonder, is that consensus or people just keep copying the same old IDC research? :)
There are, however, some other more original findings in it. For example: “ … of those who declared their blockchain investments, 68% are spending more than $1 million, with 27% spending more than $10 million on blockchain activity”. Again, it tells us that DLT has became an expensive corporate game, which is difficult to join for SME.
Another curious factoid: “42% of respondents expected a noticeable or significant brand improvement from simply announcing a blockchain project, with that total jumping to 87% upon delivering a blockchain project.” Does it mean that the main reason for corporation to “implement blockchain solution” is to rise their stocks prices — not to improve efficiency ?
Talking about efficiency Accenture used “ … a real-world example of a blockchain solution for an oil-and-gas company … “ and built “ … a business case to quantify the value of each driver, calculating an expected reduced freight spend of 5% …”.
Yes, in a big company 5% might mean hundreds of millions of dollars. However, how difficult is it to “quantify the value of whatever driver” not only for 5% but, say, for 5.5% or 7% if you know that you CEO client will be made more satisfied with your services as a result?
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Second part consists of the 12-pager tagged “Blockchain: How this technology could impact the CFO”, which was manufactured by my favorite group of “professionals” — corporate consultants. This time I’m talking about E&Y’s ones.
For those who can’t really tell the difference between PWC, D&T, KPMG and E&Y I can explain that E&Y has always highly priced itself for being “methodological” and, even, “scientific” in its “consulting approaches”.
Basically, E&Y partners love selling to their corporate “buddies” the idea that everything in their businesses must be meticulously described in terms of “business processes”, compartmentalised, staffed to / with expensive mainframes, reduced to various types of KPI’s “dashboards” and then periodically “re-invented” with the imminent help of, you know, E&Y.
Consequently, this report begins the following way: “(CFO) roles comprise six segments: trusting the numbers, providing insight, getting your house in order, funding organizational strategy, development of business strategy and
communication to the external marketplace.”
Then, of course, it proceeds to explain how “the Blockchain” will help CFOs to excel in all of those noble “segments” simultaneously. Alas, space and time limits prevent me from digging into each of those six underlying “reasonings” proposed by E&Y consultants, and I’ll provide you with two extracts only.
First (citing): “ … Blockchain could impact future (business) strategies by enabling new transactions and altering entire business models …” Even if this (and the following) “phraseological units” are supposed to convey some useful information E&Y clients are, probably, supposed to be charged for it being revealed to them.
Second (citing): “The CFO must represent the company to external stakeholders, and blockchain technology could provide added transparency for interested parties.” Yes, and because of that E&Y proposes to spend about $10 million (currently, an average cost of implementing “corporate blockchains”) to “provide added transparency” to about ten or so “interested parties”.
We can, of course, understand that E&Y’s target auditory are 45+ y.o. “generalists” — corporate departmental chiefs, mostly — which spend their lives competing for the attention of their superiors or hunting for the next “executive job opportunity” in the “hottest” Fortune 500 company. But even for this type of clients that “report” is a bit shallow, I guess.
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After my first post about E&Y I wanted to give them a second chance and spend my time on reviewing another of its “reports”: “Blockchain in action: Enabling data protection, compliance and workforce growth”. One additional reason being that its title contains both “workforce” and “blockchain” words (re: @thibalaji) That didn’t prove to be the wise choice, however.
My overall impression is that it was made by stitching together two old pieces: one — on GDRP — dated back about 2–3 years and another one, even older, — on “Millennials New Jobs” — which holds Peter Drucker and Paul Krugman as authorities on this question.
At the same time, the word “blockchian” has only twelve (12) occurrences (mostly at the first and last pages) in this 20-pager allegedly devoted to it. Basically, they simply copy/pasted a couple of meaningless paragraphs with “trendy” words to simulate a “fresh” content.
Still, if I’m hard press to extract some value from this “work” it would be the following outdated citation: (refers to 2017 Upwork’s study ) “Freelancers predicted to become the U.S. workforce majority within a decade, with nearly 50% of millennial workers already freelancing …”.
Supposedly, it must suggest that DLT is set to benefit from this trend immensely. However, we shouldn’t forget that “silos” technologies facilitate remote work with no less (if no more) efficiency than the decentralized ones. As to crypto-currencies, freelancers are naturally law-abiding citizens, I suppose, and they would do what their governments tell them to do — transact in “fiat” (except, probably, few places like Venezuela).
As to the “GDPR part” of this piece it’s a complete waist of time. All you can tell after getting trough a dozen or so pages of it is that E&Y partners fill themselves extremely exited about potentially lucrative “clients’ engagement opportunities” which EU bureaucrats are deliberately pushing their way by cornering millions of entrepreneurs with expensive to implement regulations, which, most probably, won’t solve any old issues only creating the new ones.
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Insurance is the business run by anxious people. KPMG’s report “Insurtech 10: Trends for 2019” seems to prove that trivial fact. It says: “Insurance must focus on a digital first approach”. It also says: “AI and machine learning … are expected to greatly enhance the digital ‘face’ of interactions with customers.” However, the word “blockchain” is mentioned only three times in this 36-pages manuscript.
Citing: “And though blockchain is already present within certain insurtech
systems … there is a lot of work that needs to be done at a more basic level — the cultural shift would be a large project without any technology dimension added to it (zic!). Therefore, it would be easy to overplay its role in the next couple of years.”
Authors, obviously, do not intend to deny the fact that DLT might significantly boost industry’s efficiency. For example (citing the report): “Access to better quality healthcare data offers the possibility of a future where secure patient records can be shared in order to settle claims simply and easily, as is beginning to happen with flight delays and lost baggage.”
Nonetheless, immediately after that, right in the next sentence, authors hurry to discard their own claim (citing): “ … and though Estonia is leading the charge with all health records stored in blockchain, that will have to remain aspirational for some time.” However, authors do not provide any real explanation, except recurring to a meaningless phraseology, why, suddenly, they become so cool about the future prospects of blockchain.
At the same time, KPMG’s own “Corporate Blockchain Adaption” survey (reviewed in this group) showed that among 740 tech companies’ executives more than 40% are “very likely or likely” to “implement blockchain technologies in the next three years”. So, what has really changed since that report was released in May to alter KPMG position so dramatically?
If it’s not the proverbial “cautiousness” of industry professionals, then it seems to be Libra. Of course, it also may be just a coincidence, but it also might be one of the first sign of main-stream corporations obediently reversing their stance on DLT in the view of world’s regulators predominately very negative or negative reaction on a first really significant attempt to bring crypto-currencies (and DLT) to mass-adaption (of course, more “by association” then directly).
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As I’ve mentioned in my first post about KPMG, to the best of my knowledge, there are only few DLT related reports, which have ever been placed in an open access and today we’ll review all of them, namely the remaining three: N1: “The blockchain revolution”; N2: “Missing link” and N3: “Realizing blockchain potential”. But don’t you worry that’s going to be fast :)
N1 is a three-pager where KPMG consultants try their best to translate such terms as “privacy”, “cryptography”, “security” and dozen others into the language understood by an average MBA alumni. N2 (16 pages) and N3 (12 pages) are both devoted to enumerating “risks”, which clients might undergo by implementing and / or using “blockchain solutions”. N2 contains ten and N3 — eight of such risks.
There are too many of them for my taste and I will cite only few, imho, the most curious ones.
“Auditability”: “For transactions stored on a blockchain companies may lack the ability to provide information necessary for legal discovery and audit” [If a company does “lack the ability” to disclose information it simply means that it has already not passed the audit.]; “Data management”: “transactions might have additional metadata (and because of that) blockchain providers (must be hold) to similar standards as outsourced platforms” [Wouldn’t it be much easier to not bother to leave “outsourced platforms” first place?];
“Trust”: “participants may resist joining blockhain relationships without assurance regarding the security” [KPMG clients will, probably, need a priest to baptize those “relationships”.]; “Change management”: “changes to the blockchain platform would require agreement and implementation from all participants” [Oh, really?]; “User management”: “with participants from multiple organizations users authorities might be difficult to segregate”.
Looks like KPMG keeps confusing DLT with MSFT.
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My journey of testing corporate consultants’ “blockchain expertise” took me next to D&T, which “Blockchain and the five vectors of progress”, published on their site in September 2018, is the focus of today’s brief review.
First of all, I have to say that bringing such an old piece to your attention intends not only to fill the void created by an absence (almost) of other notable D&T’s DLT related researches but also to validate consultants’ ability to identify strategic tendencies and predict their outcomes.
Although, D&T analysts haven’t been able to perform on this major metric (that is, of course, not trivial to do at all), they, at the same time, hadn’t reached the level of incompetence, which has been established by both E&Y and KPMG.
A year ago D&T authors identified the following five “vectors”, which, they suggested, might define the development of DLT industry in 2019: “transaction speeds”; “interoperability”; “ease of implementation”; “regulatory advancements”, “expansion of consortia”.
D&T consultants accentuated three vectors along which they’d predicted notable improvements taking place in 2019: “regulatory”; “implementation”, which is reduction of “the costs and complexities involved with building and deploying blockchain solutions”; and “consortia”, which is forming “groups of companies that collaborate to advance shared objectives for the (DLT) technology” (obviously, they are talking about permissioned blockchians only).
Instead, we’ve seen so far is not “regulatory advancement” but the full scale “degradation”. On the other hand, “implementations” are still lacking practical exhibitions. At the same time, reduction of “the costs and complexities” is reduced itself to something like Deloitte’s own “Blockchain in a Box”- an “intuitive blockchain demonstrations” consisting of “four small-form-factor compute nodes and three video displays”.
Retrospective views are easy and I do not intend to hold its against D&T. However, as it’s the case with both E&Y and KPMG, D&T specialists, in their attempt to shill “streamlining business processes” by “implementing blockchain-related projects”, seem to be completely missing the main point of the decentralized networks and cryptographically protected digital assets.
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Continuing the “Big 4 in Blockchain” series is Deloitte’s 2019 “Global Blockchain Survey”. It has 50 pages and, although, is solely based on a “polled sample of 1,386 senior executives in a dozen countries” (means, not facts — just opinions), is actually worth of our time.
It almost completely made of the coupled bar diagrams with percentage points representing a distribution of execs opinions about DLT related issues in Feb — March 2019 and a year before that. Obviously, opinions tend to be volatile. So, it’s hard to say whether its true or not in September 2019.
Nonetheless, let’s have a look at some of report’s most (imho) curious findings starting with “macro” or countries’ level. If we take the spectrum of DLT issues, the most optimistic collective view of high-positioned corporate bureaucrats is expressed by Chinese and only then by USA (followed by Singapore) respondents.
As to which countries’ corporations DLT implementation budgets are the most lucrative we have the top three spots taken by: Luxembourg, Switzerland and Germany, where more than 30% of all respondents are ready to commit more than $10 mio for this noble objective (USA — less than 20%).
In more than 47% of all corporations a key decision about DLT implementation is taken by IT departments, followed by CEOs (30%) and R&D (8%).
Now to a bit surprising report’s revelation: 45% of all respondents stated that their “area of focus” is “public blockchain like Bitcoin”, 50% — “private blockchain”, 45% — “permissioned” and 43% — “integration model”.
It means that only six months ago almost halve of all executives (those, of course, which want to be “like Bitcoin”) had still no real clue what blockchain is and how can it be fitted with their company.
On a negative side, many questions of D&T survey appears to be vague (for example — “Views of blockchain relevance with organization”), repetitive or suggestive (like “Criteria organizations use in joining consortia?”, which is clearly shilling D&T’s preferred subject — forming big and costly organizational structures — bonanza for consultants).
However, despite all report’s shortcomings, it appears that D&T consultants made a decent job with that survey. At least without them, we, probably, won’t be able to figure out by ourselves how miserably low was (and, probably, still is) top corporate echelons’ familiarity with DLT.
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After covering in series of previous reviews Accenture, E&Y, KPMG and D&T we’re getting, at last, to PWC — by far the leading publisher of open-for-all reports about the state of DLT industry (its “ICO/STOs” analysis have been mentioned in my posts more than once).
Today, however, I’ve chosen PWC’s “Global Blockchain Survey 2018”. The reasoning for that is, basically, to compare it with the similar report produced by D&T (see yesterday’s post).
First of all PWC survey poll sample is more than twice smaller than that of D&T (600 against 1.4 thousands respondents). Secondly, although, PWC’s report does not reveal its pool’s geographic distribution, it appears that it is disproportionately dominated by USA corporations.
Otherwise it’s difficult to explain why, while China is seen as a “blockchain leader” by 30% of pool participants and USA by 29% (D&T finding shows the much larger gap between those two), the 3d place is taken by Australia (zic!) — one of the most unfriendly places for DLT projects.
Thirdly, PWC respondents see “costs” (31%) as being the number one factor, which is “stalling blockchain progress” inside their companies. According to D&T the main barrier to blockchain implementation appears to be the lack of integration with internal systems. It might be, again, because PWC survey is unevenly includes too many representative of financial industry — traditional PWC clients.
As to the major similarity between D&T and PWC surveys it’s, basically, the heavy accent those two consulting behemoths put on a “consortia”, which is, probably, considered by senior partners of corporate consulting organizations as the important source of future leads and lucrative contracts. Well, at least, it can explain the phenomenal growth of “Ethereum Alliance” :)
Overall, imho, PWC survey is much less detailed, less informative and less original than that of D&T but have a significantly better look and creates a “nice feel” about it, which reveals that much more expensive personnel was responsible for its production in PWC than in D&T.
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Looking through about a dozen “big four’s” reports doesn’t necessary provide me with statistically significant sample allowing me to make a definite conclusion about the state of “blockchain expertise” in E&Y, KPMG, D&T and PWC. However, here are some of my broader assertions, which step a bit outside of a “blockchain issue”.
Big consultancies “houses” have a long history. Some of them were started after WW2 when retiring army generals decided to apply their command & control skills to businesses running them as army units. The next generation of consultants — coming mostly from academic and governments circles — were unable to significantly change its rigid “methodologies” and structures.
After the “golden area” of international engagements in 1980th and 90th, when “The Big Six” had accompanied their Fortune 500 clients in “La Conquista” of the third world countries, the epoch of decadence began during which Big 6 became Big 5 and then Big 4.
In 2000th when innovations stopped to be “a client project” and became the stream of dangerous cataclysms, which have, sometimes, long-term political ramifications, none of traditional “consulting methodologies” are longer practical.
At the same time, despite their formally democratic makeup, “Big Fours” are huge bureaucracies run by partners’ intrigues. Their businesses are predominantly based on “connections” in highest echelons of corporations and governments — not on the quality of services.
Still, thanks to its size and “status”, they continue to attract talented people, which, sometimes (as we’ve seen in the case of a sole D&T survey) managed to do a really good job. However, it doesn’t move the needle. The only question is how many of those “Consultosaurus” will survive the next economic meltdown.
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