Blockchain & Project Management: Could Decentralization Improve Your Industry?
There’s an alphabet soup of project management tools from Asana to Zendesk out there and a neverending list of methodologies and certifications from Agile, PMP, PRINCE2 to Scrum and Kanban.
It seems like project management is getting more and more centralized, relying on proprietary tools and rigid methodologies that make things more complicated than they have to be.
What if we started going in the other direction and took a decentralized approach to project management?
A project manager’s job is controlling chaos. But instead of trying to control chaos, what if we leveraged it to our advantage? That’s the premise and the promise of blockchain-based project management technology.
Traditional project management is a closed book, with the project manager meditating between client expectations and team productivity. Blockchain is a way to keep parties honest with each other, with 100% certainty, and no middle-man required. So how could blockchain
What is Blockchain Technology?
The blockchain is a digital public ledger that keeps track of transactions made. These transactions are publicly recorded so everyone using that network can see the transaction in the ledger, depending on the access rules of the blockchain. Blockchain was invented initially as the backbone of cryptocurrencies back in 2008, but has since been further developed in other use cases.
Tech developers, specifically, have been uncovering new ways to use this technology outside of just financial transactions. The Ethereum network and smart contracts are a prime example of this, as the network allows developers to build for the platform with several perks that were previously solved by middle-men.
For example, developers building decentralized apps (dapps) directly on an Ethereum blockchain have several advantages over traditional apps right from the start.
First, there is no need to integrate a payment system since Ethereum-based dapps use ether as their universal payment standard. Users don’t have to sign up to use the service since public and private keys are automatically generated using user session and metadata. No outside logs are needed either, since Ethereum contracts create their own logs which can be queried to determine exactly what has happened.
That’s great for software developers, but how will blockchain technology revolutionize project management?
Blockchain & Project Management
The need for new project management solutions is abundantly clear. For every $1 billion invested in the United States, $122 billion was wasted due to poor project management, according to research by the Project Management Institute. In 1994, 31% of projects were completed on time and under budget. Two decades later, despite the IT revolution, that number had only improved to 36%, according to the Standish Group’s 21st annual CHAOS Report.
Current project management solutions rely on a top-down, centralized approach that puts the responsibility for success or failure on the shoulders of the project manager or Project Management Office (PMO). Project managers are ultimately responsible for oversight and accountability despite the fact that almost half of them are not even certified. There are plenty of software solutions that can improve project efficiency, although an astounding 44% of project managers don’t use any software, according to research by PwC. When a company invests in a PMO, half the time it’s money wasted as 50% of PMOs are shuttered within three years.
We clearly need to overhaul how we manage projects.
In March 2017, the Russian government-owned bank VEB announced plans to use blockchain-based project management technology. Asked why they considered blockchain technology for their project management platform, VEB’s CEO said they saw no other feasible solution that would scale into the future, improve quality of government and reduce bureaucracy. As the global economy becomes more complex, decentralized solutions like blockchain will become more and more necessary, argues Bettina Warburg, a blockchain expert.
How the blockchain will radically transform the economy | Bettina Warburg
Blockchain project management solutions won’t replace traditional project managers, but they will empower project participants and open up the books so everyone–not just the PM–can see the workflow from a global perspective.
With so many benefits, it’s no wonder businesses are now turning to the blockchain to help them manage day-to-day operations. The idea is that the blockchain could revolutionize the supply chain by recording everything in a public ledger available to everyone involved with the project. This allows transparent and secure monitoring of the project, with side benefits like understanding how long employees take to complete their projects.
Blockchain is already being deployed in industries like healthcare, real estate, supply chain management, and more.
In the example of supply chain management, most businesses do not produce all of the parts that go into a device, which can cause significant problems if a product fails due to a third-party component. Most design projects involve dozens of subcontractors and suppliers providing hundreds of different components that have to work just right, and any point of failure can lead to disaster.
Major retailers like Wal-Mart are already applying blockchain technology to track and trace imported Chinese pork from farm to table by arming farmers and field workers with smartphones and blockchain ledger that tracks the vital data of every single pig.
Blockchain is already changing supply chain management, but what promise does it hold for project management and project managers?
Blockchain Project Managers
At the head of the decentralized ledger is the project manager, who keeps developers on point with the scope of the project while managing client expectations for the project itself.
An excellent example of this is RiskBlock, which is an industry-wide effort from insurers, reinsurers, brokers, and agents to establish more efficiency and better communication among those in the insurance industry. RiskBlock is seeking blockchain project managers to manage expectations among its consortium of participants and clients who will benefit from better communication and increased efficiency in the industry. This is just one of the many projects that are seeking to utilize this new technology to disrupt how the industry functions on a daily basis.
- Decentralized ledger of activity between all parties involved helps establish a network of trust for the project.
- More security since each transaction is executed exactly as the creator intended and is added to the ledger permanently. Any changes made are also recorded, so there is less of a possibility for deception.
- Blockchain-based projects do not have a central failure point, so they are more resistant to malicious attacks.
- A transparent project ledger allows everyone on the team to see how the project is progressing, which helps project managers better direct each wing of the project.
- Blockchain-based transactions and ledgers tend to be slower than other centralized databases thanks to additional signature verification and redundancy that provides many of the benefits of decentralization.
- Signature verification is computationally complex and is the primary bottleneck for blockchain transactions. Centralized databases only require one connection, whereas blockchain-based ledgers individually verify each request that comes through the node.
- Blockchain-based technology is still in its infancy and technology developers are just now exploring new ways to use the technology outside of purely financial transactions.
- Some detractors of the technology have pointed to uncertain regulatory restrictions that could be placed on blockchain technology, especially since the goal is to cut out middlemen in established industries like financial institutions.
- Another adverse side effect of the scope of blockchain-based projects is the amount of energy they require to operate. Ethereum’s electricity usage from just December 2017 to March 2018 rose nearly 25% and now rivals Azerbaijan in electricity usage. This kind of growth isn’t sustainable in the long run without less reliance on fossil fuels for electricity production.
Overall, it is clear that blockchain technology will definitely change the way we think about project management in the long-term. Some developers have already begun to experiment in industries like insurance, real estate, and supply chain management. These projects are seeing varying degrees of success with producing a more secure and efficient means of transacting with one another without relying on expensive middle-men to handle essential parts of a project.
Blockchain technology is still in its infancy, which means there are still many more applications to be discovered. A cursory glance at hiring websites like Glassdoor and Blocktribe show many openings at companies who are seeking to radically change specific industries for the better in the same ways that cryptocurrency has changed how we think about finances.