On January 10, 2018, Geoprise Technologies Corporation, the maker of GM-X ERP, announced that it has partnered with Coin Sciences Ltd, maker of the MultiChain blockchain platform, to launch an ERP application leveraging blockchain technology to enable secure business-to-business collaboration and others are quickly following suit. Let’s take a step back to understand what blockchain is and where it originated.
Bitcoin and Blockchain
Launched in 2009, Bitcoin is the first decentralized digital currency that is unregulated by a single administrator. It has allowed transactions between individuals and organizations to take place directly without an intermediary. In 2017, Bitcoin’s value grew exponentially from $1,000 per coin to nearly $20,000. What made it possible for a digital currency to flourish without any regulation or administration by a central bank or government? The answer is blockchain.
Blockchain is a distributed ledger that captures transactions across a peer-to-peer network, which may be private or public. The network is comprised of nodes (computers or servers) that are connected in a distributed manner. This means there is not a need for a centralized authority to validate a transaction. Transactions are validated based on consensus mechanisms, which allow for a specific majority of nodes to decide on the validity of the transaction. After a transaction is validated, it is grouped together with other transactions that have occurred around the same time, creating a “block.” This block is added to the blockchain in chronological order and linked to previous blocks. Since there is not a centralized database, the blockchain is distributed and continually reconciled across each node of the network.
ERP and Blockchain
GM-X ERP is a web-based application that includes enterprise and supply chain management, Salesforce automation, and project management. It was designed to foster real-time collaboration across multiple platforms (e.g., desktops, tablets, and phones) between employees, customers, and suppliers. The main difficulties with business-to-business collaboration are data integrity and security.
- ERP systems are often centered on individual enterprises or business units, each with its own database and record schema. Distrust and data discrepancies prevent organizations and even business units from successfully collaborating. Blockchain has the ability to process any type of data that is utilized at a node because its use of consensus mechanisms. It is difficult to push through any invalid or unauthorized change from a disparate party. This allow users to collaborate without worrying about data integrity.
- Rampant data breaches have forced data security to be one of the top concerns of many organizations. Data security is especially challenging for organizations that depend on business-to-business collaboration. Most conventional collaboration tools such as web portals are based on centralized databases and are prone to data attacks. Blockchain is nearly impossible to hack due to its distributed structure. A blockchain’s distributed structure can vary in the number of ledgers and the number of nodes required for consensus. The blockchain structure and algorithm that the ERP product is based on will determine the data architecture and how secure the data is.
GM-X ERP is just the start of blockchain technology revolutionizing ERP applications and business processes. Below are two other ways organizations have transformed their processes with blockchain:
- Self-executing contracts, also known as “smart contracts,” have the ability to transform organizations’ contract management. Smart contracts use blockchain to capture terms and conditions between organizations and uses data captured across the nodes to determine when conditions have been met and when payment has been made. This allows for instantaneous execution of contracts thereby speeding up the flow of business processes. Smart contracts can also verify and execute manual contracts when utilized on contract clauses and terms.
- Payments and wire transactions between organizations are often administered by financial institutions, take several days to clear, and are assessed a fee. Veem, a payment platform start-up that leverages blockchain technology, provides its customers the ability to send and receive money without a financial intermediary, reducing time and cost. Veem also has an integration with the accounting platform Intuit Quickbooks. RippleNet is also revolutionizing global payments. It is a blockchain platform that facilitates global financial transactions between banks, payment provides, digital currency exchanges, and organizations in any currency and in seconds.
Blockchain may be a buzzword hyped up by Bitcoin and other cryptocurrencies, but it has the ability to transform the way organizations think about their ERP applications and business processes.