How To Buy When You’re Not Sure What You’re Buying: HfS’ First Evaluation Of Blockchain Service Providers

October 19, 2016 | Christine Ferrusi Ross

The funny thing about innovative projects is that everyone likes to talk about buying them as if innovation is a product you just pick up off the shelf at the store. But real innovation – exploring ideas, opportunities, risk, and implications of change – means you likely don’t even know what you’re buying. You’re not buying a packaged piece of software or a defined solution. You’re really buying someone who can be a co-creator with you, helping you wade through the mass of tangled and often conflicting options available to discover and build something that adds a unique value to your business.

When you’re experimenting with business opportunities it’s complicated enough, but when you add a technology or solution area that’s just emerging, it gets doubly complicated because often the service providers don’t have tons of experience themselves in the new area. Blockchain is a perfect example – most service providers are themselves exploring what blockchain can do for their clients and vertical industries. My latest research into emerging blockchain services shows this, with most providers still in the early days of the blockchain efforts (see Exhibit 1)

Exhibit 1:

Click to enlarge

Clients and their service providers are learning blockchain together. This is bad if you want someone to hold your hand and tell you everything is going to be ok, that they have the answer for you (by the way, no judgment from me on this – if there’s a well understood solution and you can hand it over to someone to get it done, go for it.) BUT it’s fantastic if you really want to take control of your own business destiny, be strategic and really work collaboratively with a partner to find the right opportunities and create solutions together. It’s a rare chance to be an equal intellectual partner with your services firm and in fact potentially for the provider to learn from you as your team researches opportunities and bring in the provider to help test some of those opportunities.

Five considerations for selecting a services partner for blockchain experiments

If you can’t just send out a standard RFI with what you’re looking for, how can you pick a service provider to help you explore blockchain? Try some of the following criteria:

  • Look for design thinking capability. Because design thinking is about looking at the human aspects of a situation, finding the problem to be solved, and then working backwards from that solution, it’s a great way to discover opportunities with blockchain. It also allows you to be respected an expert in your own right, unlike more traditional discovery projects where the consultants feel like they already know 80% of the answers.
  • Find great storytellers. It’s really important to understand the technical aspects of blockchain, of course. You’ll have an easier time finding technical skills than you will finding people who can really dream with you and tell you stories of how blockchain can change the world. This isn’t just about looking for strategists, it’s about looking for providers who can clearly communicate a vision for what’s possible, so you in turn have an easier time digesting the different scenarios and selecting the right ones to move forward on to the proof-of-concept stage.
  • Conflict resolution, problem solving, and negotiation. Innovation engagements are by definition environments of strong disagreements, opposing views, and conflicting information. Most providers are great at marching when you tell them to march. Far fewer are capable of disagreeing without causing an escalation in the account. Look for consultants with negotiation backgrounds and a methodology that explicitly calls out conflict resolution processes as part of their work.
  • Put more emphasis on service providers’ partnerships than usual. The market for an emerging technology like blockchain is filled with consortia, startups, and small vendors. Service providers that are just exploring should be comfortable saying they’re looking at a lot of players and haven’t made formal partnerships yet (we saw this often in our latest research.) But they should be able to demonstrate a broad view of those players and the segments where they’re trying to map the vendors. Spend more time understanding what criteria the providers are using to evaluate the technology vendors than you would normally, since this deep dive is going to be more important for you than in other more mature areas.
  • Ability to work in agile development environments. Yes, I know, you’re likely not even close to building anything right now. But keep in mind that you’re looking to find someone to co-create with you and that requires the ability to be iterative and flexible while still not losing sight of the original goals. Providers who have more rigid engagement methodologies will put more pressure on you to define your requirements probably even before you really know what those requirements are. So look for a player that has strong agile skills since those skills will transfer well to your blockchain exploration.

Of course this doesn’t mean you forget your best practices for hiring service providers: client references, checks into their technical depth and execution, client management and governance, etc. But those best practices need to be supplemented with a few more non-traditional evaluation criteria like the ones above. Ultimately, these kinds of engagements are a lot more push/pull than engagements for more mature areas.

What did I miss? What other less-asked qualifiers do you use when evaluating new areas like blockchain services? I’d love to know your thoughts as I keep researching blockchain. 

In the meantime, here’s a link to the full HfS Research Emerging Blockchain Services Blueprint Guide, with definitions and descriptions of the current activity (particularly in BFSI) and how service providers are approaching this inevitably integral part of the future fabric of any industry.

Posted in: Buyers' Sourcing Best PracticesHfS Blueprint ResultsBlockchain

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