The trend in business processes is undeniable – abandoning slow and manual methods in favor of greater automation and decentralization. Automating your processes brings numerous benefits: faster task completion, increased visibility, standardized outcomes, reduced errors, and cost savings, to name just a few.
While automation has greatly helped businesses become more efficient and productive, there are further changes on the horizon. Specifically, automating workflow chains can assist companies heavily reliant on document-based processes and transactions to take the next step in their digital transformation.
What is Blockchain Technology?
Originally created for digital currency Bitcoin, blockchain technology has since found application in a variety of other uses. The key concept of blockchain is a shared database distributed across multiple computers.
Transactions are represented as “blocks,” and anyone within the blockchain network can view the complete record of transactions in the database. Other network members must approve a transaction before it can be added to the database.
The Advantages of Blockchain Technology
- Enhanced Security: Blockchain is both distributed across multiple systems and immutable, meaning no one can modify it single-handedly.
- Increased Data Integrity: Blockchain networks are self-verifying, as the network verifies data every ten minutes. All parties are immediately informed of changes and can access the data history.
- Greater Transparency and Accessibility: All blockchain documents are shared and accessible to the public across all network nodes.
- Enhanced Compliance: Since blockchain records cannot be altered once saved, regulators can easily use this audit trail to verify compliance.
- Fraud Elimination: Blockchain blocks are interconnected and secured through cryptography, making them almost impossible to falsify.
- Significant Transaction Cost Reduction: By bypassing the need for third-party intermediaries to process transactions, blockchain usage saves overhead costs.
BPM and the Future of Blockchain Technology
The concept connecting Business Process Management (BPM) and blockchain technology is the smart contract. Think of a smart contract as an automated intermediary or legal representative in a transaction between two entities. A good analogy for a smart contract is a vending machine. Instead of buying a drink in a store or directly from the manufacturer, the machine acts as an intermediary. It accepts your money, verifies that you have provided the correct amount, and then dispenses the chosen beverage.
Similarly, smart contracts are software protocols that help people exchange money, goods, or any other valuable item. Smart contracts are “self-executing,” meaning that the contract terms are hard-coded into the program. If the first party fulfills the agreed-upon funds, the contract can automatically release the item.
Smart contracts are closely tied to supply chain technology: contracts can be approved or rejected based on user identification information verified by the supply chain. Not only can smart contracts facilitate business and legal transactions, but they can also be used for applications such as crowd funding and voting.
How Can Smart Contracts Work with Workflow Automation Software to Accelerate Digital Transformation?
Workflow automation software can partner with smart contracts to fully leverage their capabilities and integrate them into existing business processes. For example, process maps can be used to represent and visualize the desired flow of smart contracts at key touchpoints. Users can also identify bottlenecks where the smart contract deviated from the norm and optimize the flow.
Workflows can send email notifications to alert users of expiring contracts and initiate the creation of a new smart contract. Information from smart contracts can be extracted and used in other processes, such as filling out related documents or triggering an event. Additionally, you can introduce data from other processes into the smart contract.
What Does Blockchain Mean for BPM Software?
Thanks to supply chain technology and smart contracts, intermediaries are no longer needed to enforce contracts, verify transactions, or conduct background checks. This means that BPM software can more fully automate business processes and manage new technologies integrated into the process.
BPM software should be considered the most fitting technology to naturally complement smart contracts. A smart contract is almost always part of a larger, more complex business process that can be handled with BPM software.
Establishing a Chain of Control to Encapsulate BPM Audit Trail
Fundamentally, the blockchain aims to increase trust among network members. By increasing trust, the friction and inefficiency of multiple layers of intermediaries are reduced.
BPM creates a digital transaction trail. This digital trail can be stored as an almost tamper-proof blockchain, making audits much easier. Auditing and compliance processes will become faster and more efficient, transferring the benefits of blockchain technology to the customer.
Blockchain technology is just one way in which automation and business process management promise to evolve in the near future. To learn how your company can use BPM software to optimize your processes, check out our free trial of Ratingperson Enterprise Edition.