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WHITE PAPER
BLOCKCHAIN FOR ENTERPRISE
Achal Kataria Vice President & Global Head of Technology
Written by
June 21, 2018
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Blockchain is a type of system that maintains an entity state in a string of distributed blocks that are chained together in a sequential order using a cryptographic hash signature. This enables blockchain to act as a shared ledger with participants who have legitimate permission for inputs and corroboration. Distributed ledgers spread across various sites, countries and organizations constitute an entity record. It differs from a traditional system of records in that it resides on distributed cloud networks.
The potential impact of blockchain can be significant across enterprise business processes. It can increase efficiency through eliminating intermediaries, resulting in simplified operations by reducing the cost and time related to reconciliations. It also has the potential to enable collaboration with partners and clients.
Enterprise blockchain programs are of two types:
• Private: Managed by one single organization. The network participants are internal business units or divisions.
• Consortium: This blockchain network is managed by multiple trusted organizations. Any new participants who wants to join will require a consensus from several other participants.
Challenges in Enterprise Business Processes
Handling and sharing enterprise data in a transparent yet secure still presents a challenge for many organizations.
Need to deliver business results efficiently and at speed
Blockchain can potentially be used when businesses must provide, accurate on-time information to enterprise stakeholders, regulators and shareholders.
In order to speed up business processes and information flows, the ability to share and update distributed ledgers across relevant parties can be a significant accelerator. The shared ledger is at the core of these solutions which each party can access at once. All copies of the ledger are updated simultaneously and synchronized, thus reducing cycle time in a business process.
Processes across internal and external organizational boundaries, thus creating bottlenecks
Systems that enable multi-party interaction and tracking of inventories, location, and financial status, as well as cross-functional and organizational record keeping are essential for efficient functioning of a business in today’s collaborative environment. Applying blockchain in such processes can help reshape the way an enterprise works with its partners and clients.
Blockchain is one of the most fascinating digital disruptors impacting today’s business landscape. Though still in its discovery stage, early suitable applications focused around financial systems, banking, payments and record keeping show that blockchain promises to revolutionize enterprise operations.
BLOCKCHAIN FOR ENTERPRISE
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Using Blockchain to Reimagine
Process Solutions
Finance Process Simplification
Blockchain can potentially enhance productivity in finance operations. At the center of a finance solution is the shared ledger, which each participant accesses simultaneously. This could impact:
Management reporting
Inaccurate, slow data reporting can result in constraints during decision making, increasing the cost of delivery and resulting in inaccurate capital spend. Blockchain can be applied to publish financial performance data accessible by all stakeholders in real time, thereby removing the dependency of data visibility through standard reporting cycles. This applies for regulatory and management reporting.
Transaction reconciliation
Reconciling differences in ledgers often requires many hours of effort for finance functions. A shared ledger approach can be beneficial by allowing all parties
Answering the following questions can determine if blockchain is appropriate for an identified business scenario:
• Do multiple internal or external entities share data?
• Do multiple internal or external entities update data?
• Is there a requirement for information verification?
• Can intermediaries be removed?
Impact of siloed data and systems
Systems operated by suppliers, logistics partners and customers seldom talk to each other, thus creating challenges for tracking assets or information as business process items move from one state to another. This is further complicated by exception handling scenarios, such as assets getting damaged in transit, incorrect items shipped as part of an order, getting all the systems to agree on the actual state of an item. With each system focusing on a particular function like planning, logistics, finance, and operations, systems and data are siloed. Resolving these issues is costly and creates delays that impact customer satisfaction and revenue recognition.
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Capturing this information using blockchain gives the organization and its supply chain partners a single source of truth when referencing core asset information. That alone provides value, since stakeholders then have one system they can use to get any information they need about an asset.
Tracking can begin from when asset is ordered until the end of its lifecycle. The asset management team could also perform software-related activities, including license tracking, compliance, and optimization. All of this can be automated and tracked effectively through the chain of events in the asset lifecycle.
Regulatory Risk and Compliance Management
Compliance is one of the most practical use cases for blockchain due to the immutability of data stored in the chain.
Regulators can verify compliance through audit trails created via recording actions and their resultant outputs. Providing read-only, real time access to private organizational blockchain allows them to proactively analyze information. They thus become participants in, rather than consumers of the process.
Such an approach could significantly reduce the effort, time and cost that companies spend on compliance reporting, while also improving the quality of the process.
Facility Capacity Management
Facility management gain from blockchain in processes such as property title and transfer verification on public networks, asset management on a private business network, cubicle management across facilities, information sharing with technology, HR and other internal functions. Changes to blockchain occur in real time and in plain view of all participants, improving transparency and security.
involved to verify a specific transaction at the source, with simultaneous data publishing, thus reducing the number of reconciliations.
Intercompany transparency
By providing one version of purchase and invoicing information across various partner organizations, blockchain would allow intercompany transparency for simultaneous settlement. This would allow the finance function to focus on more strategic activities, thus creating value for the organization by supporting wider business decisions.
Accuracy of financial data
Blockchain can simplify tracking transactions, ensuring that financial data is secure and simple to analyze. The accuracy of all transactions and accounting entities are maintained in the identified ledgers, thus helping in preventing fraud and data corruption.
Enterprise Asset Management
An asset management solution could be implemented to capture information about enterprise assets as they move from party to party, and as the state of asset is modified.
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transactions, and events affecting the tracked entity can be maintained using blockchain.
Integration & Interface: A blockchain could subscribe to external transactions and events to trigger state change based upon inputs from other applications.
Conclusion
Like any other emerging technology, blockchain has its evolution cycle. It will continue to evolve with more innovative ways of usage. The examples of potential enterprise processes above are only a few such applicable areas.
It is important to know what this can achieve for businesses, and when it is applicable. If an organization has the need to share and record information with multiple entities and ascertain the identities of participants in a transactional workflow, there are frequent exchanges with others that can be automated and preprogramed. By freeing up valuable time and resources, applying blockchain can bring in value.
Supply Chain Management
Blockchain can revolutionize supply chain automation due to the inherent nature of its processes-crossing organizational boundaries. A typical problem in this process is that suppliers, service vendors and clients interact with each other via certain third party entities instead of directly with each other. Contracts have to be managed by lawyers and bankers, often causing additional costs and potential delays. Another potential problem is that products and parts are sometimes difficult to trace back to suppliers. The power of a distributed ledger can be utilized effectively to track payments, in-transit status, location, dates and deliveries.
Key Elements of Blockchain Solutions
An implementation analysis of blockchain reveals how each significant element in an application design scenario would play out, and what’s in it for each stakeholder.
Blockchain as a single source of truth: Blockchain will act as system of record for an entity in a business process, automatically tracking every change to its lifecycle. This makes the process more auditable, trustworthy, and transparent.
Secure: The cross-process participants such as logistics, finance, suppliers and the customers can be known and permissioned onto the blockchain network.
Shared data model: A solution-specific data model for participating organizations can be maintained on the blockchain.
Business rules and smart contracts: Business rules governing the relationship between personas,
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