Using Blockchain to Improve Processes and Value Networks in Enterprise Settings

Christa Koenen, CIO, DB Systel And Michael Kuperberg

Christa Koenen, CIO, DB Systel

Blockchain and Distributed Ledger Technologies (DLTs) have grown beyond Bitcoin and the hype-like over expectations of the ICO craze. Enterprise-grade frameworks such as Hyperledger Fabric and R3 Corda are now used as the integration layer in real-life projects, where multiple partners have to agree on shared, tamper-resistant business rules and shared data. These permissioned (non-anonymous) frameworks do not use mining for Proof of Work and are therefore energy efficient. As the blockchain technology expands the portfolio of integration tools, a CIO’s perspective on blockchain and DLTs must include the aspects of data protection (especially GDPR), scalability, and governance.

Unlike centralized databases and dedicated intermediaries, blockchain networks are designed for value networks with consensus-driven cooperation, data replication for all participants, and high transparency of data and processes. This approach has a particular appeal in transportation, logistics, and value transfer industries, where prevention of monopolies and oligopolistic dominance is crucial. Using blockchain to improve processes is also helpful to streamline the data exchange - e.g., by removing the costs of (manual) data reconciliation and of error-prone message exchange protocols. In cross-border freight transportation, establishing a shared authoritative truth about the goods has the potential to reduce the handling time at the border, where the bill of lading papers need to be processed, e.g. by customs.

Before the new technologies can unfold their potential, trials and research need to be performed. Integration into an existing landscape has to be engineered, and employees need to be educated and trained. Through intensive exchange with other companies and interest groups, we regularly validate our strategy and learn from the community. Finally, the massive investment into blockchain-based trade finance networks underscores the need to coordinate API-first strategies with the data-centric/ process-centric nature of blockchain technologies.

DB Systel, a wholly-owned subsidiary of Deutsche Bahn AG and a digital partner for all Group companies, follows a multi- level approach: it performs an ongoing critical evaluation of both the products and the business use cases. Through workshops and business analysis, relevant scenarios have been identified and prioritized; PoCs and pilots have been successfully implemented. In this context, intensive hands-on, vendor-independent trials of technologies and frameworks ensure that the company gains its own expertise, e.g., in multi-cloud, multi-company operations of a blockchain network. 

Michael Kuperberg

One of our goals is to make the customer-centric use of blockchain frameworks as simple as possible: projects should be able to pick a blockchain as a COTS (component off the shelf), i.e., CI/CD and the automated deployment on the blockchain platform should be as seamless as with other integration frameworks. In other words, projects should be able to focus on business and customer-focused application components (smart contracts, data structures, business network definition). At the same time, no single solution can fulfill all needs, and we enable the projects to choose between Ethereum, Hyperledger Fabric, etc.

To identify opportunities at an early stage, we continuously evaluate the ideas from different areas such as research and startups against our business needs. One such approach is the coordinated efforts to establish „sovereign identities“ (exemplified by Sovrin/Evernym, Civic, and others), where the end-users have more power over their identity data as it is no longer under the sole control of centralized identity providers. At the same time, the concept of trusted sovereign identities includes the exchange of signed claims and assertions, which would simplify „Know Your Customer“ (KYC) processes across enterprises and value chains.

Within Deutsche Bahn, the individual companies participate in many different value networks. For example, multimodal tariff unions in public transportation offer an integrated single ticket to the end-user - but behind the scenes, the revenues from the ticket sales have to be distributed between the partners (e.g., operators of trains, trams, and buses). Traditionally, this process has required tedious coordination of stakeholders, exchange and manual post-processing of spreadsheets, and required the participants to put trust into the process even though there was no electronic audit trail. Based on Hyperledger Fabric technology, the blockchain team at DB Systel has created a solution, which implements instant revenue sharing, where the revenue from each sold ticket is instantly shared between partners, following the mutually agreed split. The blockchain technology adds transparency (through chaincode „smart contracts“), both at the level of the sharing rules and of the money flow. In partnership with IBM, we are working on offering this solution to other transportation providers.

As the technology matures, we are confident that it will help us further improve both the end-user experience and business processes.

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