IN A WORLD THAT IS INCREASINGLY SEEING DISRUPTION FROM TECHNOLOGY AND DIGITALISATION, BLOCKCHAIN IS ANOTHER RECENT ADDITION. ERSTWHILE USED IN BANKING APPLICATIONS, BLOCKCHAIN TECHNOLOGY IS SLOWLY FINDING A PLACE IN THE WORLD OF FACILITIES MANAGEMENT. HERE, WE TRY TO UNDERSTAND THE IMPACT THAT IT CAN HAVE ON THE UAE FM MARKET…
Many people today would naturally associate blockchain technology with crypto currencies such as Bitcoin. However, whilst this has been the mainstream use case for this tech, the principle of Blockchain can be applied to many industries to provide trust, efficiencies and simplification. Simply put, a blockchain is a digital ledger or a chronological sequence of public data records, which are made accessible then shared and verified by various independent parties. This ledger is then stored permanently meaning there is no margin for error and provides full accountability along the entire transaction. Blockchain technology has multiple impacts on the FM industry and indeed the entire physical asset management market - whether that be from the purchase of the asset, recording of payments, the asset management life cycle and beyond, the technology can enhance security, transparency and performance.
Chris Roberts, CEO, Eltizam Asset Management Group, says “The product provides stronger security than present platforms and, with no vulnerable areas in the design, uses encryption that makes it harder to hack than traditional platforms. It also facilitates data transfer using a single source of truth approach, whilst maintenance schedules, facility work orders, smart contracts and capital improvements are just a few of the relevant applications for blockchain in FM.” He adds that innovation is always accompanied by an element of risk; however, identifying areas within the organisation that can benefit from the implementation of blockchain will demonstrate value and help prepare for the changes that will come as a direct result.
Major industries that engage with real estate are already pursuing blockchain initiatives and are directing resources to explore how it can be utilised to the maximum effect. Looking ahead, it is crucial that the FM and real estate industry seriously consider permanently adopting the technology, advocates Roberts.
Ben Churchill, CEO, CCubed, says, “The largest potential impact of blockchain is in contracting and in the supply chain. A distributed ledger itself doesn't really add value internally within a company, but when you are facilitating trust between organisations then this is where it has potential.” Paul Bullard, Business Strategy Director, FSI (FM Solutions) Ltd., further explains, “In the context of FM, an enormous challenge has always been guaranteeing the quality and reliability of data. Blockchain brings the enforcement of an agreed upon data governance model across the many integrated systems involved in the daily operations. As having the correct structuring and classification of property and asset data is essential, the blockchain is initially mapped to the master source of this core property data thereby ensuring consistency and minimal data redundancy in downstream systems. When specifically considering asset data, a blockchain is employed from pre-production through to installation and operation to finally decommission and disposal. Manufacturing information, performance statistics and evidence of works carried out is all collated in a consistent systematic manner. This also creates a huge opportunity for sound benchmark and forecasting analysis for both the suppliers and purchasers of equipment. By providing a ‘single source of truth’, the owner of the asset can be reassured that with the blockchain in place their Asset Register is able to provide them with data at a higher level of accuracy than ever before. Any trust issues with manufacturers or service providers are eliminated.”
However, despite initial publicity, blockchain applications are not ‘unhackable’, says Bullards. There have been a number of highly visible attacks against blockchain-based tools, which remind us that there is no such thing as perfect security. As with any technology, blockchain has its weak points that can be exploited. However, the vulnerabilities are not the blockchain itself but a result of human error or technologies around the blockchain.
Pros and Cons
While all of this sounds quite positive in the scheme of FMrelated things, it is important to break down the technology into its advantages and disadvantages as a relatively new technology. According to Churchill, there isn’t much value in adding blockchain to an FM module per se. Nothing in the existing tech environment would benefit. However, he feels that it could be interesting in being applied around smart contracts for supplier payments and potentially micro payments based on evidenced work. Bullards finds that the rapid adoption of sensor technology in our buildings brings with it a wealth of new data that, when harnessed correctly, can change the way that facilities services are delivered. “More commonly referred to under the banner of IoT, these devices are collating and delivering enormous amounts of information to our CAFM systems. With the issue of trust moved from people to devices, the blockchain will ensure that this data is both tamper-proof and reliable. This shifts the workforce focus to maintaining the sensors under the blockchain control rather than collecting the data themselves, removing intentional or unintentional bias.” A challenge for implementing blockchain is the availability or accessibility of data. Traditional facilities technology currently in place, a BMS (Building Management System) for example, are usually closed entities, isolated in installation and design from other systems. This situation is moving somewhat with IoT provoking a change of focus for this technology. However, there are still many legacy systems operational within our buildings today, which will need modification or replacement to function within a blockchain.
Another challenge is the requirement for the data held upon the blockchain to be available and then validated by independent parties. Creating this ‘single source of truth’ demands that these checks and balances are carried out freely. Creating a ‘closed shop’ for this process undermines the principle of blockchain. This introduces data confidentiality complexities. The FM industry must first agree upon the data that should be made publicly available and which is hidden without comprising its transactional integrity. The definition of such standards is essential for achieving the benchmarking and analysis benefits across the industry.
According to Roberts, contract management is a major plus, and the migration of data into the cloud is already revolutionising the way we process contracts as paper agreements are being replaced with dynamic, smart agreements on a massive scale. The technology has elevated contracting to a new level and contracts are now watertight as every process is recorded in real time.
Work order processing and tracking is another aspect that has also been bolstered, as the technology has significantly enhanced security with double encryption. Furthermore, blockchain guarantees facility transparency, offering a public record of all transactions. The privacy component comes in through powerful cryptography
used to link public addresses to individual users. In short, anyone looking at a record won’t know who the individual users are. Roberts also highlights some obvious disadvantages. Firstly, a lack of sufficient training concerns some industry players. Data protection and integrity is also an issue at this early stage in the deployment of blockchain technology, with some managers experiencing date collection and application problems that could lead to inaccurate analysis of information and bad decisions within companies because of reliability issues. In addition, implementing any new technology or software requires special knowledge, and blockchain is not exempt from this. Employee training is extremely important, and costs should always be measured against the savings that these systems will ensure in the long term.
The future of blockchain in FM
Despite several cons, the scales are tipping in favour of blockchain being the new revolution. Roberts, in fact, fully endorses the implementation of new innovative technologies to transform businesses. He says, “Blockchain absolutely falls into this category, and the entire physical Asset Management industry (including FM) is beginning to realize that the technology can drive returns in their core businesses through increases in employee productivity. The development is part of our recent announcement to invest USD 5 million in next-generation property technologies over the next three years to solidify our market edge and sustain momentum.” He adds that sustainable business growth can only be achieved by focusing on the development of staff and processes, customer satisfaction and operations efficiency. Technology is one of the core themes of Vision 21, and innovative technologies are essential to our plans moving forward.
Churchill remains skeptical, however, He says, “Blockchain in FM needs a strong use case. There is talk of an immutable ledge of asset maintenance, etc. but this is a red herring. A centralised system is perfectly suitable for this job, especially as the client normally owns the assets. Where adoption is more likely is automating supplier payments and compliance. This would have the potential to disintermediate traditional IFM providers.” Bullards adds to this, “The biggest challenge that we see for blockchain will be the industry wanting to embrace such a recent technology. Traditionally, has tended to adopt a very cautious approach to adopting new ways of delivering facilities services. The opportunity to realise the benefits discussed today is significant enough that blockchain has the potential to disrupt the industry and change operating models. Industry standards must be agreed upon and implemented. There is much learning to be gained from the incredibly volatile crypto currency market."
He emphasizes that for this to happen there must be desire from the organisations for change to happen. We are in times where both new technologies and financial pressures from the uncertain worldwide economy are already affecting the facilities marketplace. Perhaps blockchain is the opportunity for the industry to respond and determine a new future by themselves.