While enterprise resource planning (ERPs) are applications used by businesses to manage and integrate the essential and crucial parts of their structures to streamline processes, blockchain on the other hand, is a technology used for creating cryptographic encryption, validating, and distributing valuable and unalterable records or data through a digital ledger. Here, data is stored together to form a chain, which grows as more blocks are added.
This digital ledger is distributed or shared amongst the node members, who have a duplicate copy of the ledger, and which acts as a system of record for all transactions across the enterprise network. While blockchain and ERP have much in common, in that they both control a single system of data, the former promotes the existing privileges of ERP systems to a new level.
Blockchain uses the permissions concept to define participation and access to data through unique identity for participants, which can be used to regulate the access to ERP systems integrated with the blockchain, by also creating consensus for executing and validating transactions within the system. While the data is accessible by each member node, none can alter it without an agreement, therefore acting as a trusted data source.
With blockchain, ERPs can incorporate intelligent contracts, a set of legal or business terms governing a transaction, which are embedded into a transaction and executed automatically. These contracts aim to automate business processes by executing agreements and transactions without the need for a legal or central authority. This integration of ERP and blockchain results in enormous benefits.
Speeding up transaction processes
The intelligent contract aspect makes it easy to verify transactions with other partners and optimize internal data control, business process flow, and company-wide transactions. Since the process is automated, meeting the pre-set rules automatically initiates the contract and processes the transaction in real-time. The smart contracts also provide a new way of collaborating and exchanging value through peer-to-peer networks.
The integration allows authorized parties to access real-time information and updates, therefore offering high-level visibility of processes, which frequently are long and segmented. With real-time reporting, processes can be tracked to know the current state, production stage, or even quality, therefore solving the issues of supply chain. There is also transparency in intercompany transactions, in that a parent company can openly manage the dealings with its subsidiaries.
Securing data
Blockchain uses specific identifiers for users, which provides for a multi-factor authentication process, therefore eliminating the risk of outsider presence in the network. It is also easy to track any users performing any data alteration or unauthorized activity through the cryptography technology, which preserves the ability to establish the owner of the unique identifier to which an action is emanating from.
With multi-factor authentication, data is not only secured against alteration but also protected against cyberattacks, which in the recent past have been on a rapid rise. The technology also helps detect data leakage and security loopholes and threats in real-time, providing for swift action to neutralize any threat.
This way, enterprises can ensure the integrity of their data, which is crucial in drawing insights for maximizing efficiency, revenues, and streamlining processes.
While ERPs are capable of executing digital transactions, they may need more protection in the digital landscape, therefore threatening the successful execution of transactions. Security vulnerabilities of legacy ERP systems may act as weak links for cyber-criminals to infiltrate the system or transaction.
With blockchain, advanced security protocols are guaranteed for peer-to-peer transactions processing, the risk of access by hackers. There is also a decentralized environment in blockchain, which makes it difficult for outsiders to track down a user and compromise a transaction. These transactions also conform to the law, as the systems provide automatic pre-set legal requirements to a transaction.
Providing a competitive edge
While the coupling of ERPs and blockchain is not a new concept, only a few enterprises have embraced this frontier. Striving in the highly competitive and ever-changing business environment calls for creativity and innovation and keeping up with new technologies.
The intertwining of ERPs with blockchain is proving to be the future of the marketplace and adopting this technology can offer an upper hand to a firm over its competitors since it offers superior tech with a wide range of features that can amplify a business brand, therefore maximizing revenue while propelling the entity to the top.
Enhancing efficiency
Although ERPs have an inherent ability to streamline operations and processes, these processes may become complex with time, beyond the capabilities of legacy systems, thus resulting in errors, which can be costly.
Embedding ERPs in blockchain drives up automation, which not only eliminates human error and redundancy of tasks but also reduces or eliminates unnecessary complex tasks. This, in turn, saves time, therefore increasing productivity since the workload for employees is reduced and can be executed with relative ease. Automation also ensures real-time data flow, making it possible to prevent disruptions that can result in loss of revenue and downtime-related expenses.
The benefits of integrating ERPs with blockchain can be far-reaching beyond the above discussed. It can be viewed as an offset to the shortcomings or issues with ERPs and supply chains. As businesses forge into the future, these technologies will be fundamental in staying afloat.