Blockchain technology in service management

It feels like everyone is talking about blockchain these days. And yet it turns out that this technology is often misunderstood, overhyped and at the same time underestimated. Why is this important for the service?

Most people know the topic of blockchain primarily in connection with the cryptocurrency Bitcoin. However, there are many other possible applications that are not yet widely known:

In the automotive industry, blockchain is intended to make driving safer. WalMart is experimenting with IBM on a solution to track pork from China and mango pieces from Mexico in order to increase food safety. TÜV Rheinland, on the other hand, hopes to use blockchain to make speedometer manipulation impossible. These are just a few examples of applications.

19 percent of all large companies with 2,000 or more employees already use blockchain technology. The banking sector is the main pioneer. A further 23 percent are planning to use it in the future. Blockchain has already arrived in our everyday lives in many different ways, even if we as consumers are not always aware of it. So the question for us is: can blockchain also improve service?

What is the blockchain?

The blockchain describes a data structure for a distributed system that guarantees the integrity of the transaction history thanks to a consensus algorithm among the participating nodes of a peer-to-peer system. This is the somewhat abstract and technical definition.

As the name "blockchain" suggests, it is a chain of blocks. It is not a database in the traditional sense, but rather a decentralized database, a list, so to speak, of all transactions that have ever been carried out, which are stored in the form of blocks. Every participant in a blockchain has a copy of this list on their computer. It is constantly updated and validated, which is why the process is very secure. The respective cryptographically secured blocks can contain any digital assets, i.e. documents, transaction records, program code, etc.

Thanks to its architecture, blockchain does not require a central controlling authority and solves a paradox: it creates trust or consensus between players who neither know nor (have to) trust each other. This is a key game changer, especially for online transactions. Consultant Axel Apfelbacher therefore describes blockchain as "the condom of the internet", as it enables "secure transactions between strangers without the involvement of a third party".

Smart contracts, tokens & co.

Smart contracts are a possible area of application that is also interesting for the service. These are computerized transaction protocols that automatically execute the terms of the contract. This is intended to minimize the risk of fraud, legal disputes and foreclosures as well as transaction costs in general.

Key features of smart contracts:

• a digitally verifiable event (here: payment of the leasing installment: true or false),

• a program code that processes the event (here: software in the car's on-board computer),

• a legally relevant action that is carried out on the basis of the event (here: making the car ready for operation).

Smart contracts can technically map the logic of contractual regulations, such as service level agreements or digital purchase contracts, in an if-then logic and check whether certain contractually defined requirements have been met in order to then carry out actions without human intervention. Blockchain technology makes it possible to do without a central validation instance, meaning that the combination of both technologies has particular potential for efficiency.

In principle, all assets can be digitized. This "tokenization" creates a maximum degree of transparency and at the same time enables the step from the "Internet of Information" to the "Internet of Things".

Pay-per-use and Everything-as-a-Service (XaaS)

One of the most frequently discussed business cases in connection with IoT and financing is pay-per-use or everything-as-a-service (XaaS). Thanks to IoT sensors, fully automated billing is possible and, thanks to blockchain, this can be done without media discontinuity.

With XaaS models, the manufacturer/dealer bears the (investment) risk with regard to the utilization and profitability of the machine/leased object. Although it is also possible to pass these risks on to insurance companies, in most cases dealers/manufacturers bear them themselves for business reasons and see them as a side effect of sales financing.

In technical terms, XaaS models are processed using programmable payment flows in smart contracts. The sensors that record usage send the usage data to the blockchain as oracles and the smart contracts are used to automatically debit the payment. There is therefore (ideally) a seamless integration of IoT sensors from the industry and payment debiting by the financing partner.

The blockchain enables seamless and completely transparent integration of all parties involved. This is also the goal of many traditional digitalization initiatives outside of blockchain, but when it comes to payment processing in particular, there is regularly a media disruption. This is particularly relevant to security, but is also time-consuming and involves manual intervention.

Practical implementation and key questions

Blockchain is here to stay. It therefore makes sense for you to get to grips with the technology and have an answer to the most important questions ready.

A blockchain can always be advantageous if at least one of the following questions is answered in the affirmative. If all or several of the following questions are answered in the negative, the blockchain benefits are less relevant and centralized standard software is more expedient in many cases.

• Does your company act as an intermediary between parties or do several parties work simultaneously with one object (exchange of data or transfer of assets)?

• Is there no unconditional trust between the parties or does trust play an essential role in your business?

• Is there a desire for a digitalized process or is there a separate digital strategy for your company?

• Should/can intermediaries be bypassed in the process?

• Are your business processes - at least partially - automated or should they be?

Other possible areas of application in service

Depending on the area of activity, there are also interesting areas of application for blockchain innovations in after-sales and service management:

• Digital "service booklet" not just for cars: Transparent proof that original parts have always been used, that all service technicians have the necessary qualifications, etc. - across the entire value chain!

• Linking additional services and predictive maintenance with smart contracts and XaaS

• Fully digitalized process mapping - including payment via cryptocurrencies or, in future, the e-euro - no separate invoice dispatch, dunning process, etc. required

• Linking of service and sale of products, independent of the respective buyer in the form of tokens. These "tokens" are freely transferable

• Sharing is caring: The shared economy could gain even more momentum with the "trust layer" of blockchain. This in turn opens up additional markets for service management!