Over the past couple of years, blockchain technology has become an ever increasing presence in enterprise. According to recent figures from Deloitte, a staggering 98% of UK businesses have either already adopted a blockchain solution or intend to do so at some point in the future.
It’s not difficult to understand why the technology has piqued the interest of business decision makers across the globe. By providing an increased level of transparency, security and auditability, blockchain has the potential to resolve some of the most daunting data challenges facing businesses today.
So, how can it be employed to enhance existing ERP systems and data architectures?
Increased transparency
With the explosion of the IoT and the arrival of Industry 4.0, the quantity of data generated in the coming years is set to grow at an exponential rate. According to Cisco’s 2018 Visual Networking Index, connections from IoT devices and applications will grow to a colossal 14.6 billion by 2022.
The key to gaining business advantage will be in managing all this information in the most effective way possible. This is where blockchain really hits its stride.
In order to maximise the utility of data, it’s vital businesses are able to trust that it’s both up-to-date and not subject to tampering. Retaining full visibility using a blockchain-enabled ERP system is one way to ensure business data can be relied upon.
Blockchain creates a transparent and indisputable log of data additions, transactions and changes, providing an end-to-end audit trail. This means that businesses can see precisely when a piece of data was introduced into the system, who has access to it, and whether any alterations have been made.
By virtue of the consensus algorithms that underpin the technology, the system (and the data contained within) is virtually impossible to tamper with or corrupt. Blockchain automatically creates a strong and trustworthy foundation of data on which businesses can base strategy and key decisions.
Guaranteed compliance
With the introduction of GDPR, staying on top of who has access to data has become a chief concern for businesses. When data is stored across numerous disparate spreadsheets, and shared amongst a whole host of individuals, this becomes exceedingly difficult.
Harnessing the functionality of private, permissioned blockchain, enterprises can guarantee data is stored and exchanged in an ethical and secure manner. This variety of blockchain is designed specifically to allow for the secure exchange of data within or between organisations, without inhibiting collaboration or agility.
Private blockchain networks are open only to authorised participants, registered by the owner of the network. Further, the addition of permissioning means businesses can dictate precisely which members of the network have access to each class of data. This means data can only be accessed by those for whom it’s role-relevant, and changed only by those with proper authorisation.
Blockchain-enabled ERP represents one means of navigating the regulation gauntlet. By restricting access to specific data to a handful of relevant individuals, and dictating the method by which data is shared, blockchain automatically ensures its users stay on the right side of regulation.
How is it being used?
Organisations are already using blockchain technology alongside existing ERP systems to introduce improved levels of transparency and collaboration. Beyond the spheres of finance and banking, blockchain is perhaps most prominently used to augment supply chain processes.
It allows organisations to track a product through multiple stages of the supply chain in an efficient and reliable manner, as it passes through numerous stages and even locations, over several months.
This comprehensive audit trail allows businesses to move products through customs swiftly, track fresh produce to identify the source of contamination, and even trace the origin of high-value items. By making supply chain processes transparent and paperless, blockchain has the potential to both cut costs and drive productivity.
For example, LVMH, parent company to Louis Vuitton and Christian Dior, is partnering with Microsoft on an Ethereum-based platform to track high-value luxury items. The platform aims to prevent the circulation of counterfeit goods, by allowing owners to trace the provenance of items right back to their source. The timeline of a product — from raw materials through dying, weaving, tanning and shipping — is tracked in its entirety.
In the context of ERP, blockchain is an additive technology. It won’t replace the need for internal ERP, but it can work in tandem with existing systems to strengthen the integrity of data processes.
Though it may take years to resolve disputes surrounding standards, legislation and interoperability, as blockchain reaches maturity, ERP systems will be the natural place to deploy the technology.
By Andres Richter, CEO, Priority Software
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.