Conclusions & Recommendations
Blockchain technology has the potential to enhance Hitachi’s existing offerings, increase operational efficiencies and reduce costs. A high-level, quantitative overview of the blockchain ecosystem shows that:
Current investment is dominated by investments in blockchain technology itself and financial services and markets. This is entirely unremarkable given the history of blockchain technology. These sectors show signs of a hype-driven cycle, with interest possibly fading away after the recent collapse of the cryptocurrency bubble.
A second wave of applications is starting to emerge, as startups explore the potential for blockchain to improve other industries. This wave shows differentiated maturity, with IT and energy industries in the lead.
Cross-correlating sectors and applications identifies relatively underpopulated business cases by isolating a given area and permitting a focused analysis on a small number of companies.
Quantitative analysis must be followed up with qualitative analysis to determine whether a white space represents an opportunity for early investment. Qualitative analysis into the five sectors identified as most relevant to Hitachi yields the following conclusions, which are described in more detail in their respective sections above:
A major investment opportunity exists in the development of digital logbooks. Digital logbooks have the potential to reduce unplanned downtime and increase the resiliency of Hitachi equipment, speeds approvals and certifications, while reducing operating costs. This adds value to Hitachi’s products and reduces operational, regulatory, and legal risks to Hitachi.
Hitachi is able to benefit from synergies between business units as blockchain technology is rolled out (where helpful) across the company. Integration and reuse will lead to lower costs overall compared to disjoint applications of blockchain technology. Use and augmentation of data contained in digital logbooks is one such example. Hitachi Capital may add financing data to digital logbooks and use them for the partial verification of rental, lease or loan conditions through smart contracts. Hitachi Transport Systems may use digital logbooks to track the Hitachi equipment they transport. Incorporating energy use data into digital logbooks may help both operators and Hitachi to reduce energy usage. Business units may then repurpose the solutions to the rest of their businesses.
Countless white spaces exist in logistics, supply chain and mobility of goods spaces. The majority of projects would provide benefits for internal functions and process efficiencies, arguably also critical for an optimised and streamlined supply chain, from procurement to international product shipment, documentation and last mile delivery. For such investments or synergies, Novum Insights suggests collaborating with validated projects that have shown to be able to build robust chains, networks or platforms given the importance of corporate data that would be at stake in case of system failure. In contrast, some early investment opportunities that could place Hitachi as an early mover do exist. Novum advises extra due diligence on the projects suggested, as well as looking to projects validated by more well-known institutional blockchain investors. Additionally, Hitachi should assess the transferability of a blockchain solution or application into neighbouring business units or services.
The financial sector is crowded, being the first and most prominent application of blockchain technology. Many of the companies in this sector will fail on merit. However, there are still underexploited niches. For instance, there are relatively few companies offering invoice financing, an existing line of business for Hitachi Capital.
Hitachi should leverage its market position in the energy sector. Hitachi, being a manufacturer and supplier of equipment, can partner with companies planning to build a decentralised energy economy with no centralised energy supply and storage by providing microgrids and batteries.
Hitachi should also join the Mobility Open Blockchain Initiative or a similar organisation to learn more about the potential for blockchain technology in the transportation of people.
Finally, besides the strategic partnerships and corresponding investment opportunities above, another set of options exist in fields adjacent to the current business operations of Hitachi. These can be explored as pure play investment opportunities. Novum Insights has identified the following early investment opportunities for Hitachi and recommends the following actions:
Building digital logbook technology in-house.
Conducting due diligence into Invox Finance, a P2P invoice financing company.
Waiting for major enterprise resource planning software vendors to incorporate blockchain technology into their product offerings.
Considering investing in a blockchain-powered platform that rewards users for sharing their own mobility data. In doing so, Hitachi must pay close attention to GDPR compliance. Said data may be used by Hitachi to improve their existing traffic control systems and develop an advanced vehicle control system.
These recommendations should be regarded as preliminary and are intended as a starting point for further discussion with Hitachi. Further analysis of these proposals should yield a more specific list of opportunities, which will demand a more thorough investigation in Phase 2 of this research project.