Businesses are moving into a software-defined world with usage-based service contracts and an \u201cEverything-as-a-Service\u201d ecosystem of providers. But there\u2019s 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\u2019ve recognized for years. Now there is finally a powerful solution, and I\u2019m excited to share with you how blockchain-enabled \u201csmart contracts\u201d can solve this dilemma.\nThe problem\nCompanies 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.\nThe 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\u2019s why. The contract doesn\u2019t allow for the interruptions in service or degradation of service. Basically, it can\u2019t automatically adjust pricing and conditions in those situations; therefore, most of the adjustments don\u2019t happen.\nLet\u2019s say, for example, that your company\u2019s application resides in the cloud on AWS or Azure, and you\u2019re using several software tools, all of which is administered by Accenture. Accenture can only guarantee its performance. There\u2019s no contract vehicle that allows fairly distributing or administering that performance. It requires too many back-to-back, interconnecting contracts.\nThe solution\nBlockchain enables ecosystems to charge for usage as an ecosystem rather than charging per individual provider\u2019s services. I\u2019ve blogged before about the benefits in the way blockchain technology works. Basically, it\u2019s a digital decentralized mechanism that records transactions in what is referred to as a \u201cdistributed ledger\u201d or distributed database. All participants have a copy of it; the transactions are distributed to all the nodes (participants\u2019 computers) that make up the network or ecosystem. Thus, transactions are verifiable, tamper-proof and transparent to all participants.\nOne of the most exciting aspects is a blockchain-enabled \u201csmart contract.\u201d Simply put, this is computer code written into the blockchain distributed ledger that specifies the agreement\u2019s performance. For an IT services ecosystem, for example, it would include contract terms and conditions and performance metrics and penalties. The automated smart contract then verifies and enforces those performance conditions on a continual basis. It would automatically trigger penalties (or other specified terms) when there is a fluctuation in service. It can also automate payments among the parties.\u00a0\nGet ready \u2013 smart contracts will revolutionize IT services contracts\nBenefits of blockchain-enabled smart contracts include:\n\nAn efficient way to track usage\nAutomatically recognize the varying conditions affecting degradation of service\nInherent fairness due to the transparency to all participants and no central clearinghouse or entity administering the contract\nEase of entering into the contract\n\nBecause of the above functionality benefits, smart contracts are poised to dramatically reduce the effort and improve the fairness of ecosystem relationships and dramatically reduce the effort to administer them.\nToday we have a smart services delivery vehicle, an ecosystem delivering things such as cloud, digital or IoT services. But until now we didn\u2019t have a contractual vehicle to administer systems that depend on ecosystems. Blockchain and smart contracts are the answer.\nThis is an incredibly important development in terms of how usage-based, IT services in an as-a-service model can be sold, guaranteed, billed and administered in an ecosystem. I believe this will revolutionize contracts.