Businesses are moving into a software-defined world with usage-based service contracts and an “Everything-as-a-Service” ecosystem of providers. But there’s a problem: Contracts have not kept up with the desire to buy things in an as-a-service model in an ecosystem. Thus, the contracts provide no accurate way to account for usage adjustments that need to be made. This is a huge, nettlesome problem for service providers and customers, which I’ve recognized for years. Now there is finally a powerful solution, and I’m excited to share with you how blockchain-enabled “smart contracts” can solve this dilemma.
Companies want to pay for services based only on usage and only pay when they get the results. In addition, companies are moving to as-a-service models delivered across an ecosystem instead of services delivered by just one party. Our current contracting structure is woefully inadequate to administer this environment. No one contract between two entities can appropriately administer usage-based services delivered in an as-a-service (SaaS, IaaS, PaaS) and delivered by multiple providers.
The friction associated with administering normal paper contracts in an as-a-service ecosystem of multiple service providers is overwhelming. Consequently, the contracts work in theory but not in practice. Here’s why. The contract doesn’t allow for the interruptions in service or degradation of service. Basically, it can’t automatically adjust pricing and conditions in those situations; therefore, most of the adjustments don’t happen.