The Scope and Impact of Web3 on HR Systems

As the world continues to emerge from the crippling pandemic, we can only assume that change will occur continuously, impacting work forces, HR practices, and technologies. Yesterday’s HR platforms are incapable of doing pivoting since they are resistant to disruption by design. Further by intent, HR platforms prefer a monolithic architecture consisting of various applications interfaced with one another.1  By contrast, emerging and innovative systems are cloud-based and decentralized, offering a flexible, composable platform that can respond to change as it happens.2 Tomorrow’s systems in HR will be designed and deployed to minimize the kinds of interruptions encountered over the past two years.

New strategies have already been developed to transition to Web 3.0 or Web3, described as a composable platform on a distributed ledger technology called the blockchain.3 4 5  From a transitional view of Web2 to Web3 migration, there is a hybrid architecture where employee-owned data resides securely on a blockchain while company-owned data resides on a low-code Web2 platform. A mixed arrangement is necessary for business continuity and suitable for prototyping before migrating to a full distributed ledger technology (DLT), i.e., block-chain. Systems were evolving toward this type of solution before the pandemic, but a global event wrought by COVID-19 catalyzed change, forcing many to clarify project scope and accelerated the acceptance of new practices. This article offers insight into the powerful features of a new Web3 platform for HR.

New Technology Requires a New Platform

New front-facing applications based on old back-end architectures left HR strategists without a cohesive vision, and strategy without vision is no strategy at all. Pressure on HR departments to embrace initiatives that promised business improvement led to a patchwork collection of applications with fragile interfaces and little technological stability. For example, edge computing exemplifies a distributed framework that brings enterprise applications closer to data sources like Internet of Things (IoT) devices, machine learning via Artificial Intelligence (AI), and secure, low latency, ultrawideband networks using 5G protocols. But easy integration with existing HR applications built on monolithic architectures is elusive, leading to discussions, even debates, over the suitability of long-established infrastructures and the need for fundamental change.

Almost everything associated with current HR software could reside on a Web2 platform characterized by a network of centrally managing and sharing information. The robust deployment of Web3 promises more value on a decentralized infrastructure.6 The entire user experience and data warehouse administration are about to be impacted by the emerging Web3, accompanied by an entirely new glossary, such as Metaverse,7 Multiverse,8  Blockchain, Post-Blockchain, Non-Fungible Tokens (NFT),9  Distributed Autonomous Organizations (DAO),10  and DLT. The way applications are developed, and the growth of Decentralized Applications (dApps) will take DevOps to a new degree of developer engagement, where a robust component marketplace supports modular component assembly 11 based on composable design, will drive innovation in every human process. Fully implemented, Web3 promises to be as radical a change to everyone’s digital existence as Gutenberg’s printing press was to the Scriptoriums of the Middle Ages.12

Assisted by the recent COVID-19 crisis, longstanding barriers between operational and technological teams have begun to disappear  as specifying solutions to new challenges have demanded creative thinking and streamlined collaboration among all business areas. Everyone’s point of view matter to identify, prioritize and address business needs holistically while simultaneously considering technology capabilities and their impact on the workforce. New methodologies, roles, and organizational structures will continue to emerge from new thinking methods about composability and information architectures. For example, one significant change expected from decentralized computing will be integrated hardware and software management. With the introduction of DLT networks, participants, i.e., data owners, will be able to self-administer their “node” or computing device, e.g., smartphone or tablet, in a peer-to-peer network. This allows engaging with other members of the web, and establishing data types, rules, and hardware options they prefer, including sustainability factors, like the power source and economics required to operate their node.

 

The Problem with Web2 as an Enterprise Application Platform

Web2’s Architecture Is Vulnerable

Web2 architectures are fundamentally easy prey. The centralized data storage model of applications running on a Web2 platform has made it easier for hackers to target private identifiable data and make every organization vulnerable to extortion. The information supply chain offers an obvious target for unscrupulous profit-seekers with its centralized data storage and monolithic HR systems. Unfortunately, technical solutions on Web2 are mainly ineffective, evidenced by increasing ransomware events and increasing ransom demands. Unfortunately, the implementation of data privacy laws can do little to impede nefarious actors from seizing a company’s most important asset from falling into the wrong hands – its information.

Personally identifying static data such as name, birth date, home address, mobile phone number, etc., has already fallen into the wrong hands through phishing and email scams promising rewards for volunteering private information to enter competitions, receive gifts, and register for legitimate events. No technology or laws exist to recover all that information from unintended data gatherers. What is possible is to recompose and combine private information with dynamic data, such as bank account details, pay records, merchant transactions, passwords, etc., to prevent further financial loss and “lock-down” the various data elements floating on the Internet and especially the Dark Web.13 This recombinant data is broken into hundreds, even thousands of pieces or blocks, and encrypted across countless nodes around the planet; to successfully read just one block in the new DLT environment, the bad actor would need to breach several servers simultaneously and guess the cryptographic key used to render the illegible data– a virtual impossibility with a 1-in-15 trillion chance of success for a single block.14

Web2’s Carbon Footprint Is Unacceptable

Although data centers’ energy consumption and carbon emission performance have improved over the last few years, the amount of data accumulated during this time has surpassed the value of improvements, creating an alarming trend.15 Predictions estimate that 14% of the world’s carbon emissions will come from data centers by 2040, about the same amount of all emissions attributed to the USA in 2019. The number of data centers is estimated to double every four years from the launch of 5G networks, the rise of IoT, the emerging Metaverse, and the growth of the crypto-economy (in particular, the proof-of-work, consensus, and mining processes).16 17 This estimate does not accurately include the number of innovative companies and new ventures that will undoubtedly develop, such as Meta (formerly Facebook), building 47 new data centers to support the Metaverse.18

The Emerging Web3 Platform

Today’s Internet was conceived in the 1960s, not to be mistaken as the World Wide Web. Although the terms are often used interchangeably, they are two different things. The internet is a node-to-node form of communication funded by the U.S. Department of Defense and became known as ARPANET (Advanced Research Projects Agency Network).19 In 1990, computer scientist Sir Tim Berner-Lee invented the World Wide Web that has run atop the internet for decades.20 We now refer to stages of the Web as Web1, which was mainly static content, then Web2, which allowed interaction between users and delivered social networks that prevail today. Web3 offers the next generation of social and business interaction and enables safe and secure communication.21

From a technology perspective, moving from Web2 to Web3 is not a “commodity-like” upgrade to new features on an existing Web platform.22 Quite the contrary, Web3 is an entirely new platform with a new technology stack, different operating systems, and other communication and security protocols. There is no patch or tweak to Web2 products to allow immediate running in a Web3 environment.

Web3 and Blockchain Technology

According to many researchers, Web3 will be founded on a blockchain, one of many possible distributed ledger technologies.23  However, blockchain may not be the right, final solution for Web3 adoption by HR departments or large-scale computing. The environmental impact of today’s standards makes blockchain an unsuitable solution for enterprise applications. New hosting platforms cannot ignore the carbon impact from operating massive data centers, especially when offset against features such as employee data ownership, immutability, global scalability, realistic hosting costs, and universally adopted governance rules.24

The DLT that will ultimately emerge as the right solution for HR incorporates business-specific channels and enables efficient and secure interoperability within acceptable economic and environmental constraints. An ecosystem that catalogs and offers marketplace components for developers to employ will lead to better, change-enabling solutions that match the mutual needs of the company and the worker – an emerging requirement and influential criteria for success in observing industry-wide paradigm changes among the workforces.

New Platform Hosting Models, Tokenization, and NFTs

With DLT and an open-source market, hosting and supporting development platforms will emerge that enable standard and customized assembly of core and innovative systems. However, with new integrations come new gaps, and the issue of not only who pays but how they pay for services and software components will need to be addressed. With everyone accessing common logic on a shared infrastructure, community-resolved or democratic mechanisms replace monolithic, central control.25  The concept of democratization of data handling and governance has led to the DAO model, gaining support among early adopters across the enterprise, but it is not suitable for HR’s permissioned network and semi-centralized administration.26

The answer lies in cryptocurrency and NFTs to overcome a global network. For many early adopters, crypto pioneers have started addressing issues of many countries with fluctuating currencies, varying exchange rates, and privacy legislation dictating where servers must be located.

Along with the promise of up to a 90% reduction in technology ownership comes the challenge of understanding an environment that will return control of a simplified hosting infrastructure consisting of microgrids to an organization’s computing resources along with a crypto-payment model that is probably used elsewhere, e.g., supply chain payments, account receivables, and other financial transactions.27 28

Before HR can masterfully develop and deploy emerging technology, we must get the new decentralized Web3 platform right. In other words, HR must become comfortable with and deeply understand new and complex platforms; otherwise, like many Web2 applications, HR will be reactive objects of change, rather than the managers of change.

Microgrid Network Hosting

The new HR Web3 platform must divest itself from early versions of the blockchain. From an HR Technologist perspective, the solution will focus on microgrids, contributing to lower carbon emissions and delivering innovative HR solutions that can pivot almost in real-time to changing conditions.

The Concept of Virtual Microgrids and Shared Capacity

With more demands for data, risks will undoubtedly increase. A new hosting model is needed to address energy usage and provide “virtual microgrids” where electricity can be shared with others, including business consortiums. For example,

(1)  The Australian Monash University received a government grant to launch a project to “virtually connect one business and approximately 20 homes into a microgrid.”29

(2)  The U.S. Department of Energy’s Smart Grid initiative creates electric generating units that intelligently route power between nodes when needed. Customers form “collectives” to share the power they generate to lower costs or improve reliability by providing backup facilities and ensuring clean, uninterrupted supply. The model can be scaled to create a Web3 model for HR technology infrastructure.30

Microgrids, fueled by renewable energy sources, e.g., windmills and solar panels, supply power to nodes on demand, while semiconductor inventions lead to less power-consuming devices.

Conclusion

The Web3 HR platform offers an imminent future consisting of open-source frameworks for modular assembly and composable application development and energy-conscious hosting services for a sustainable future. Current enterprise platforms will be disrupted, and the adoption of new Metaverse-style applications and edge computing devices will render existing applications obsolete – and very quickly.


End Notes

1 Bigelow, Stephen J., “An A-to-Z Guide to a Microservices Architecture Transition,” TechTarget, August 5, 2021, https://bit.ly/358Ppyc.
2 McKie, Steven, “The Decentralized Web,” Medium. Amentum, August 19, 2020, https://bit.ly/3uSMzYR.
3 “Top Strategic Technology Trends for 2022,” Gartner, Accessed January 12, 2022, https://gtnr.it/3LBZtR3.
4 Wheatstones. “Web 3: The Future is Nigh,” Medium. Coin- monks, December 7, 2021, https://bit.ly/3rVxfIV.
5 Rodriguez, Leonulous, “Various Types of Distributed Ledger Technology,” Data Driven Investor, December 4, 2020, https://bit.ly/3uIAp4B.
6 Wu, Gloria, “Why a Decentralized Metaverse is the New Web3 Frontier,” Forekast, November 30, 2021, https://bit.ly/3IdoCzr.
7 Marks, Gene, “On CRM: Mark Zucherberg’s Metaverse is Coming and it’s Going to Totally Disrupt CRM. Are You Ready?” Medium. Medium, August 2, 2021, https://bit.ly/3rUQ7Yw.
8 Hertz, Leeway, “Multiverse Nfts,” Predict, October 30, 2021, https://bit.ly/3sOCtW5.
9 Macaulay, Michael, “3 NFT Business Models That Work,” Me- dium. Yard Couch, November 2021, https://bit.ly/3sGp7es.
10 Hackl, Cathy, “What Are Daos and Why You Should Pay Atten- tion,” Forbes, June 1, 2021, https://bit.ly/3JALPvo.
11 Kleyman, Bill, “How Cloud, Edge Computing, and Connectivity Impact Modular Solutions,” Data Center Frontier, November 12, 2021,.
12 Milner, Richard. “The Dramatic Way the Printing Press Changed History Forever.” Grunge.com. Grunge, October 11, 2021, https://bit.ly/3GFbFN5.
13 Kaspersky Staff. “What Is the Deep and Dark Web?” www. kaspersky.com, August 23, 2021, https://bit.ly/3BbX7U0.
14 Haritonova, Anastasiya. “Decentralized Data Storage: Pros, Cons and Prospects.” PixelPlex. PixelPlex, December 28, 2021, https://bit.ly/3uFPZya.
15 Gillin, Paul. “The Rise of the Sustainable Data Center.” Data Center Frontier. Vertiv, July 20, 2021, https://bit.ly/3oCM6pE.
16 Kleyman, Bill. “Cloud and the Data Center: How Digital Modernization Is Impacting Physical Modular Infrastructure.” Data Center Frontier. ABB, 2021, https://bit.ly/3svZAon.
17 Rhodes, Delton. “Moving from WEB2 to WEB3: What Technical Improvements Are Needed?” Medium. The Green Light, July 29, 2019, https://bit.ly/33bJQhL
18 Rhodes, Delton. “Moving from WEB2 to WEB3: What Technical Improvements Are Needed?” Medium. The Green Light, July 29, 2019, https://bit.ly/33bJQhL.
19 Leiner, Barry M, Vinton G Cerf, David D Clark, Robert E Kahn, Leonard Kleinrock, Daniel C Lynch, Jon Postel, Larry G Roberts, and Stephen Wolff. “Brief History of the Internet.” Internet Society, June 1, 2021, https://bit.ly/3ssJpYR.
20 Foundation Staff. “History of the Web.” World Wide Web Foun- dation, 2012, https://bit.ly/3ozTrX2.
21 Madurai, Vivek. “Web Evolution from 1.0 to 3.0.” Medium. Medium, February 21, 2018, https://bit.ly/34uRPag.
22 Kumari, Darpan. “Web 2.0 vs Web 3.0: The Transition to a Decentralised Web.” Medium. Medium, July 10, 2019, https://bit.ly/3oDvON8.
23 Wo, James. “Web 3.0 Won’t Happen If Blockchain Platforms Don’t Lead the Way.” Medium. ReadWrite, November 8, 2021, https://bit.ly/3Jmk2yX.
24 Trueman, Charlotte. “What Impact Are Data Centres Having on Climate Change?” Computerworld. Computerworld, August 9, 2019, https://bit.ly/3rDK1M2.
25 Moy, Christine, and Jill Carson. “Cryptocurrencies Can Enable Global Financial Inclusion. Will You Participate?” World Eco- nomic Forum, June 9, 2021, https://bit.ly/3Bq5FqF.
26 Kropp, Roman. “Crypto HR: Three Ways the web3 Is Redefining Work and Careers.” LinkedIn. LinkedIn, December 14, 2020, https://bit.ly/3ozPNMQ.
27 Trueman, Charlotte. “What Impact Are Data Centres Having on Climate Change?” Computerworld. Computerworld, August 9, 2019, https://bit.ly/3rDK1M2.
28 IOEN Staff. “Ioen Currency Whitepaper V2.1 PDF – Global-Up- loads.webflow.com.” Internet of Energy Network (IOEN), 2021, https://bit.ly/3Bq6oYV.
29 University Press Release. “Monash Uses Net Zero Expertise to Trial Microgrids in Regional Communities.” Monash University, September 13, 2021, https://bit.ly/3BaN5T7.
30 Gillin, Paul. “The Rise of the Sustainable Data Center.” Data Center Frontier. Vertiv, July 20, 2021, https://bit.ly/3oCM6pE.

Dennis Hill

Dennis Hill, Ph.D. is Founder of Sagacity, LLC, and inaugural chair of Consortium DeHR. Dr. Hill is an expert C-Suite Change CatalyzerTM who “solves problems and makes measurements” and #1 International Bestselling Business Author. He is an award-winning software designer and engineering teacher. He has worked for four decades on creating integrated business systems involving workforce recruitment and human resources, traditional ERP, and CRM with a unique design focus on data ownership and privacy. He has served as a Board Member of more than 20 companies and organizations, including IHRIM where he is responsible for Partnerships and Alliances. His education includes degrees in Engineering (Biomedical/Electrical/Computer) from Marquette, Business from Sorbonne, and Law from Champlain, as well as memberships and certifications from SHRM, HRCI, and IHRIM, the Association for Change Management, and the Association for Conflict Resolution. He may be reached at Information@DeHR.org.

John Macy

John Macy is a globally recognized thought leader in HR technology and has been an industry leader for the last two decades. He founded Competitive Edge Technology in 1994. He was awarded a Life Fellowship with the Australian HR Institute in 2013 and inducted in AHRI’s Hall of Fame in 2020. He is a member of AHRI’s Technology Advisory Panel, a member of the ISO Standards Committee for Blockchain and was a member of a working group developing Australia’s Blockchain Roadmap. As an HR consultant specializing in technology, he has worked throughout Asia and China and spent several years working in America. He has written several books on HR technology and contributed to numerous publications over many years. His extensive HR experience was gained working for Qantas Airways in senior HR positions. You can reach John at Information@DeHR.org.

Related Articles

Join the world’s largest community of HR information management professionals.