Fast 5: How Close Is Blockchain For Aftermarket?
Craig Gottlieb, managing director of Accenture’s aerospace and defense business, is an advocate of blockchain, but also realistic about challenges to deployment. We asked Gottlieb how he sees blockchain prospects now.
How do you see the SITA plan for blockchain in the aviation aftermarket?
I see SITA’s efforts and other similar ones as trying to build scale. The interesting question will be whether the market will respond better to services that focus on the value of building a blockchain, or services that focus on a more business-oriented value proposition, but with blockchain inside to capture the benefits.
What are the reasonable prospects for the next two to five years for progressing toward distributed ledgers to support aircraft maintenance, part procurement or other aftermarket activities?
The prospects are very good, particularly within a subset of high-value use cases. The industry is getting comfortable with distributed ledgers and their application within multiparty systems, shared data infrastructures that enhance trust, transparency and collaboration, even among competitors. These systems use technologies like distributed ledgers to allow ecosystem partners to see and agree upon a single record of data in real time. In Accenture’s most recent Technology Vision 2021, 87% of aerospace and defense executives stated that multiparty systems will enable their ecosystems to forge a more resilient and adaptable foundation to create new value.
Why is the commercial aftermarket a particularly good candidate for shared systems?
The high cost of building trust and transparency in the commercial aftermarket make it a prime candidate for multiparty systems. Over the next two to five years, we’re likely to see continued growth in areas such certified used-part procurement, lease management and return, and new applications like software entitlements and gradual extensions into aircraft configuration management. That said, there are two big hurdles that need to be overcome.
What are the key remaining hurdles to blockchain implementation in the commercial airline aftermarket?
The main hurdles boil down to two questions: Who pays? And what’s in it for me? First, multiparty systems are successful only when they truly serve multiple parties at scale. Investment in these types of systems requires either a large-scale industry player to lead investment or a consortium of companies to pool funding. Defining viable ecosystem-level value cases to bring investment at scale remains a challenge for many, considering the deployment of multi-party systems.
Any other challenges?
Related to this is the need to get diverse scale. Success and value mean engaging new parties across the ecosystem of every capability, particularly smaller MROs and providers deeper within the supply chain. It’s no good to just have a bunch of shops on a ledger. You need airlines, shops, repair centers, part providers and certifying authorities across the ecosystem to fully capture the value. Importantly, many of these companies and entities may not have the technical sophistication to deploy these solutions or belief in the value they may be able to reap by participating in multi-party systems. Finding the right combination of incentives to participate, monetary and otherwise, will be critical to building the right consensus for these solutions to scale.