Blockchain technology is changing the way that global enterprises manage their businesses. In fact, using blockchain for Business Process Management (BPM) is proving to be one of its most effective use cases. By ensuring compliance, verifying that processes are being adhered to, and increasing accountability, it is helping to drive efficiency while enabling new business process improvement opportunities.
Thanks to its innate qualities of immutability, decentralization, transparency, and security, blockchain can greatly enhance Business Process Management through better visibility, improved collaboration, ensuring regulatory compliance, and allowing for the instant sharing of information; all while guaranteeing the accuracy and security of your company’s data.
Why Use Blockchain for Business Process Management?
One question many executives find themselves asking is: Why use blockchain in the first place? How can blockchain improve any of their company’s processes, let alone their Business Process Management when there are plenty of providers already offering this service? After all, the issue of business process improvement is hardly new.
However, traditional BPM providers are typically used to managing a company’s internal workflow. Blockchain technology provides your organisation with a decentralized, cryptographically secure way of storing and sharing information that lends itself extremely well to optimising your BPM as it allows you to share data quickly and frictionlessly with external parties. Its transparency and immutability make blockchain revolutionary when it comes to collaborating with external parties.
A study by ResearchGate points out: “Currently, BPM as a management approach builds on the explicit dentition of BPM-related roles and responsibilities with a focus on the internal operations of a company”. This may make for high-efficiency throughout your firm but what happens when you need to share data or comply with regulators?
Opening up your databases to auditors or trying to synchronise your systems with partners often causes friction. It also places your company at a heightened risk of cyberattacks as data stored in centralized repositories is more vulnerable to security breaches.
Cyberattacks are becoming more frequent costing enterprises an average of $824,750 per year. At the same time, most businesses need to be more transparent about their data handling and storing practices thanks to initiatives like GDPR. This makes blockchain for business process improvement all the more important.
Blockchain technology, in fact, goes hand in hand with many of the fundamental cornerstones of Business Process Management, such as transparency, efficiency, and collaboration. Incorporating a blockchain-based solution into your existing infrastructure can greatly help to streamline operations and have a positive impact on your bottom line.
Benefits of Blockchain for Business Process Management
Blockchain-based systems remove existing issues with BPM solutions by creating peer-to-peer BPM systems that are decentralized with no single point of failure. This eliminates the need for centralized servers vulnerable to attack, and mitigates the costly threat of cybercrime.
Moreover, in a peer-to-peer system, multiple parties can exchange information easily in real-time. Thanks to blockchain’s immutability, they can trust in the integrity and accuracy of the data within. Any party on the network can verify that the right processes are being followed, and smart contracts can even enforce adherence to these processes.
This transparency is particularly pertinent when it comes to practices such as auditing. Enterprises can comply with regulations through a system that provides immutable audit trails of data to share with regulators. This real-time auditing reduces the opportunity for internal fraud and the consequences of regulatory non-compliance which costs businesses an average of $14.8 million a year.
Blockchain’s transparency doesn’t mean that your company’s confidential information is viewable by all, however. On the contrary, permissioned blockchains allow organisations to share information between authorised parties only, thus creating cross-organisational processes that ensure confidentiality and benefit all parties by leaving the frustrating days of data silos and system incompatibility behind.
Industries where the exchange of data occurs on a frequent basis, such as Finance or Telecoms, are already reaping the benefits of blockchain for Business Process Management. Many companies are even opening up new revenue streams that diversify from their core business models.
The Use of Smart Contracts for Automation
Blockchain-based applications allow companies to collaborate more efficiently and reduce costs. They can also allow for the automation of many repetitive manual tasks. In pretty much any area of your business that involves settlements or compliance, for example, smart contracts can be used to automate the process.
Smart contracts enable agility in Business Process Management as they can be time–defined and created based on certain conditions. For example, once a good is delivered, the payment is released, or certain data is sent upon a regulator’s request reducing your compliance burden.
Smart contracts also increase accountability and reduce the risk of human error. Logistics providers or supermarket giants no longer have to worry about sending out consignments or batch numbers to the wrong third party in the supply chain as everything is stored, verified and automated on the blockchain. This allows companies to establish their own rules and even define penalties where agreements are not completed.
A report by McKinsey revealed that at least $50 billion can be saved by businesses in B2B transactions by 2021 using blockchain. Utilised as a secure and decentralized foundation for BPM platforms, blockchain-based solutions including smart contracts can integrate with your company’s existing IT infrastructure to further streamline processes.
How Blockchain Is Being Used Across Industries
Blockchain is being used for business process improvement in versatile ways across all major industries. In the Supply Chain, for example, it is playing an important role when it comes to sustainability. Immutable digital ledgers are able to track and authenticate the movements of sustainable ingredients and commodities.
Having tamper-proof data on the blockchain allows organisations to ensure the source of just about any item from diamonds to raw vegetables. This not only eradicates erroneous information and pinpoints any issues in the supply chain but it also has a direct impact on organisations’ quality and compliance process management.
In Manufacturing, blockchain for Business Process Improvement is also being harnessed in many ways. Perhaps one of the most compelling of these is machine-led maintenance through the combination of IoT and blockchain. Unplanned downtime of equipment is extremely costly for manufacturers. In fact, having machines lying idle can cost a company as much as $260,000 an hour. These two technologies combined can address any issues quickly and, in some cases, before they even arise using reliable real-time diagnostics and tamper-proof maintenance records. In this way, blockchain technology enables machine maintenance processes to be streamlined, more accurate and more proactive — not to mention free of fraud and human error.
Energy is another industry benefiting from blockchain for business process optimization through the mitigation of fraud in Renewable Energy Certificates (RECs). With an immutable digital ledger, REC transactions can be instantly traced and automatically validated through smart contracts without the need for central actors.
Generating Value from Blockchain for Business Process Improvement
This is a small sample of how blockchain is being used to enhance Business Process Management across diverse industries. How to get the most value from blockchain for your company, though, depends upon selecting the right enterprise blockchain services provider.
From enabling collaboration and ensuring compliance of processes with third parties, to eliminating human error and executing processes automatically; blockchain can greatly benefit your company’s BPM. It allows you to work faster and more efficiently while reducing the risk data breaches, and mitigating costly non-compliance issues.
At Protokol, we not only help to create custom blockchain solutions to enhance your business process management, but help craft your blockchain strategy, by identifying the processes in your business that are ripe for disruption, and challenges that blockchain can solve. Through our range of professional services — from Digital Advisory to Blockchain Consulting and Blockchain Engineering — we start by understanding your challenges, identifying areas for innovation, then set about preparing a customised solution that will work best for your unique requirements.
Our cutting-edge blockchain solutions integrate seamlessly with your existing infrastructure ensuring minimal disruption and enabling an accelerated time to ROI, so that you see the results of your investment quickly.
Request a free consultation with our blockchain experts today to find out how blockchain can streamline your Business Process Management and ensure compliance in your internal and external processes.