Blockchain technology, through its innate promise of transparency, immutability, and advanced security, is augmenting the potential of ERPs through system integration.
ERP or Enterprise Resource Planning is probably one of the significantly transformational technologies that have managed to streamline the operations of modern business. It contributes to the seamless functioning of enterprises, connecting business processes across industries in a standardized manner.
Organization of varied stature uses ERPs for the management of business activities and supply chain operations, risk management, and regulatory compliances along with project management. Its ability to process a bulk load of data has made ERP the backbone of an enterprise. That being said, the gravity of the role played by these technologically advanced systems also calls for attributes like reliability and transparency, which can be guaranteed by blockchain integration.
ERP pools two aspects of doing business, which is, transactional data involving inventory levels, purchases, and sales and business process. The technology has proven to be immensely beneficial in executing core operations such as automatized supplies when inventory is running low, minus any human or manual interference. As impressive as it sounds and the precision with which it performs, ERPs have their share of issues, concerning security and transparency, which blockchain can fix.
Blockchain has proven time and again its ultimate capability to maintain immutable records of data across servers to prevent a single point of failure. The technology has its foundation in leveraging a decentralized ledger that is shared across a group of computers (nodes), which registers the transactions in blocks of data securely creating a chain of blocks and hence the name blockchain.
Besides that, the ability of blockchain to record immutable data provides a secure, reliable, and transparent source to register sensitive and relevant business information. These records include business data, like the structure of the organization, supply chain traceability, invoices, and accounting entries as well.
Blockchain has lot to offer to the present ERP systems enhancing the overall digital ambience of enterprises.
Blockchain can create smart contracts, which are computer protocols with the ability to verify as well as automatically enforce the contracts by using digital codes without the intervention of third-party intermediaries. This improves the transparency of the process and makes each auditable.
Blockchain can validate transactions and generate an immutable record of the same followed by sharing it among multiple nodes. If any changes are made it becomes visible and traceable. This is significant in ERP management as any unauthorized alteration can lead to audit issues. Blockchain is also used for identity verification and authentication, increasing security personnel’s access to sensitive data. ERP’s blockchain integration can prevent data breaches through the detection of suspicious activities in real time.
Blockchain integration comes with optimized operations and business processes, including internal data control.
Blockchain allows enterprises to record varied types of data within the same network, granting easy access to the same to the stakeholders. It offers real-time traceability of the operations across the network.
The advent of blockchain technology has ensured the era of decentralization. Integration with ERP enables interoperability across multiple businesses, allowing them to share data, thus automating and digitizing the world of commerce. Even a couple of years back digitization usually came to a halt at a few reformations. Within the enterprise, which with the help of blockchain can augment complete modernization, generating a scalable and futuristic system.
ERP systems are essential as they allow companies to improve their operating scale. Businesses with end-to-end integration can negotiate seamlessly with suppliers and distributors. It streamlines the entire supply chain management with credibility. As blockchain-powered ERP systems will be able to block sourcing from any unauthorized supplier. It is a significant issue that has been plaguing the industry since before digital systems were introduced. ERPs also tend to minimize inventory and shipping costs. Tracking the inventory levels becomes easy, including planning replenishment operations every day.
So far, the advantages of these blockchain-backed systems have been traditionally limited to major corporations, as those usually have their very own digital collaboration hub. If there is a supplier they want to trade with a big retailer, then the latter has to join the supply network. Each of these integrations brings forth efficiency, not to mention long-term cost commitments.
Blockchain has shown the potential to transform the system integration dynamics. For instance, instead of the suppliers integrating with the system in large corporations. The former can interact and engage with decentralized apps and use tokens on the public blockchain instead. One can utilize in this scenario, the DeOps Apps (Decentralized Operations Applications).
DeOps will take the two prime aspects of ERP systems, that share facts and business logic. It will enable them to interoperate across enterprises and enterprise boundaries. This modification will enable true end-to-end digital supply chains. That too without the scope or risk of being spied on by centralized entities. It also minimizes the chance of monetized data flowing between enterprises.
Industries and companies are transforming through ERP implementation. Therefore, ccombine the same with blockchain, and you get a robust architecture that improves the core fundamentals of business. The impact of these decentralized operations has been huge and keeps magnifying and reforming the legacy systems in its wake. Most large enterprises have an ERP system at the base of their infrastructure. Thereafter, the use of DeOps applications is yet to become mainstream and we are at the threshold of that transformation.