Blockchain Business Process Management | 4 mins read

How Blockchain Business Process Management is Changing

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Mary Kate Morrow

By Mary Kate Morrow

The Relationship Between Blockchain and Business Process Management

Blockchain technology is a digital ledger that holds a record of all transactions happening in a peer to peer network. Each entry added to the ledger is called a block. Data transferred through the blockchain is encrypted. Each new transaction or event will again encrypt everything that happened before it. Therefore, each time a block is added to the ledger, the entire ledger is more secure than before. Blockchain based conversations are often centered around cryptocurrency like bitcoin in mainstream media. In fact, studies estimate that by 2027, 10% of the GDP will be stored on the blockchain!

Blockchain technology applied to business processes is rapidly developing. As blockchain technology becomes more widespread, business leaders are examining the possibilities that blockchain holds for business process management. In fact, many businesses have already started utilizing blockchain as a business process management system component. One way blockchain improves business process management is through the supply chain. Blockchain based tracking of raw materials and finished products supplies tracking information to third parties within the supply chain.

Blockchain not only supports a digital ledger for supply chain auditing and tracking capabilities. Blockchain can also decrease fraudulent activities, counterfeit products, or compromised goods. Blockchain technology also makes it easy to trace where an offense happened within the supply chain when required.

Another blockchain feature businesses utilize is the smart contract. The smart contract executes automatically when predetermined conditions and terms are met. The use of a smart contract avoids the need for any third party interference. The smart contract copy is not able to be altered by either a buyer or seller. Additional ways blockchain can improve businesses processes and business process management overall include-

1. Bolstered Security

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Blockchain technology is an excellent security feature that can be implemented into existing business process management systems. Although BPM software has privacy and security features built in, a BPM blockchain adds an extra tier of protection. As blocks are added to the blockchain, more encryption occurs, continually enhancing security.

Advocates for BPM blockchain integration use cases of internal business fraud to champion blockchain implementation. Blockchain encryption techniques can restrict accessible information for specific participants. For those internal business fraud cases, enforced transaction management rules could have avoided fraudulent activity altogether.

As society becomes more familiarized with blockchain based security features, businesses can advertise blockchain technology used. As such, blockchain technology can be utilized as an incentive to acquire and retain new customers. Blockchain based security can supply organizations with a competitive advantage in this way.

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2. Better Collaboration

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Different organizations or departments may struggle to work together effectively and efficiently on the same business process. In fact, communication management challenges are quite commonplace. Whether due to communication gaps or a lack of trust, business process management acknowledges the complexities of collaboration.

Both smart contracts and easily audited distributed ledgers supplied via blockchain technology address communication management challenges and concerns. As such, this blockchain technology can improve the efficiency of third parties working collaboratively within the same business process. Blockchain also provides excellent visibility and accessibility for all approved participants. Using blockchain visibility and accessibility makes it much easier to share important information and documentation in real time.

A BPM process improvement solution commonly utilized is employing a trusted third party to mediate a business interaction. However, factoring in another party to an interaction may result in unnecessary labor costs and other issues. BPM blockchain solution for collaboration management challenges is the decentralized power of accessibility blockchain naturally contains. Decentralized accessibility allows businesses e to work together on a business process simultaneously. This avoids needing to involve a third party or requesting updated information from the other participant.

Blockchain allows process monitoring capabilities for many third party participants. This avoids the need for each participant to use their own separate BPM software programs. This blockchain technology is especially useful when different companies need to collaborate within the same regulations. Additionally, this blockchain technology functions as a real time auditing system.

3. Optimized Payments

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Some people may only recognize the cryptocurrency bitcoin when discussing blockchain financial transaction management. However, there are many cryptocurrency options available. Blockchains assist financial transaction management by allowing payments to be completed automatically or even held in escrow.

Businesses that can particularly benefit from blockchain technology integration are those using over the counter transactions off exchange. In other words, transactions where a party is directly working with another party sans a third party intermediary. Common examples of over the counter, also known as OTC, transactions range from loans to bank guarantees.

There may be customers or employees who feel reluctant about blockchain based payments. Business management professionals can use cases of companies to change their perspectives. Companies referenced should have previously integrated blockchain into their financial transaction management processes successfully.

Key Takeaways for Blockchain Business Process Management

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  • Blockchain technology is a digital ledger that contains all transactions occurring in a peer to peer network.
  • Blockchain technology can bolster security, streamline payments, and enhance collaboration processes.

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