{"id":3993,"date":"2017-05-26T06:20:00","date_gmt":"2017-05-26T06:20:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/blockchain-potential-overturn-way-we-operate-backoffice_051617\/"},"modified":"2017-05-26T06:20:00","modified_gmt":"2017-05-26T06:20:00","slug":"blockchain-potential-overturn-way-we-operate-backoffice_051617","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/blockchain-potential-overturn-way-we-operate-backoffice_051617\/","title":{"rendered":"Blockchain\u2019s Potential To Overturn The Way We Operate The BackOffice"},"content":{"rendered":"<p>My colleague Steve Goldberg recently wrote about <a href=\"http:\/\/www.horsesforsources.com\/blog\/steve-goldberg\/Another-SRO-Crowd-AI-Presentation-But-at-a-Payroll-Conference_052517\" target=\"_blank\" rel=\"noopener\">artificial intelligence finally getting incorporated into payroll processes<\/a>. And I recently spoke with IBM about how they&rsquo;re working to reinvent finance processes using blockchain. Intra-company processes present an interesting use case for blockchain, although they don&rsquo;t actually have many of the common characteristics of the most popular use cases. Why?<\/p>\n<p><img decoding=\"async\" src=\"\/storage\/app\/media\/CFR\/Blockchain Potential.png\" \/><\/p>\n<p>Typically, we talk about blockchain being best for processes and operations where there is:<\/p>\n<ul>\n<li>Low trust among participants<\/li>\n<li>Lower existing technology investments<\/li>\n<li>Low transparency or visibility into the process<\/li>\n<li>Long cycle times in completing transactions<\/li>\n<\/ul>\n<p>In contrast, finance and HR tend to be:<\/p>\n<ul>\n<li>Medium to high trust (business partners tend to be known and therefore trusted by finance, for example, and certainly employees are known and vetted by the employer)<\/li>\n<li>Relatively strong on investment in technology (although worse for HR than finance)<\/li>\n<li>Decent transparency for internal aspects of the processes, but still poor for the parts of the process that interconnect with third parties &ndash; such as purchase orders, confirmation of delivery of products\/services, etc. Transparency of data is less in HR, where the data starts at the individual level and then rolls up to the divisional and corporate levels.<\/li>\n<li>Respectable cycle times for transactions. Understanding that companies always want to close the books faster, etc., cycle times aren&rsquo;t as bad for internal processes as for multi-party processes.<\/li>\n<\/ul>\n<p>So, if finance and HR don&rsquo;t meet the general criteria for blockchain use, why would companies consider it as a viable option? We recently heard from IBM and Infosys about blockchain&rsquo;s potential in finance, and our other research also shows the following likely benefits:<\/p>\n<ul>\n<li><strong>Security.<\/strong> A blockchain-based application tends to be more secure. Currently, it&rsquo;s considered impossible to hack the data in a block, although it&rsquo;s possible to hack at the edges, such as someone&rsquo;s access point. However, the security for blockchain transactions and recording are much better than many of the systems companies use today. Consider the risks of letting employee or applicant data being hacked and blockchain becomes more attractive.<\/li>\n<li><strong>Immutability.<\/strong> When transactions happen quickly and permanently, then companies reduce the likelihood of duplicate payments for the same invoice and double spending (using the same money twice because it looks like it&rsquo;s still available for a period of time after it&rsquo;s actually been spent.) It also helps with employee data such as payroll information and benefits distribution.<\/li>\n<li><strong>Smart contracts.<\/strong> The business logic of transactions can be encoded into a blockchain app so that the rules get implemented automatically, taking out human error and increasing the accuracy of the transactions. For example, a contract between a client and a materials vendor can be coded into a blockchain, then the payment of the invoice gets made automatically after data about the materials&rsquo; quality, timeliness of delivery, and other terms of the agreement are incorporated.<\/li>\n<li><strong>Speed.<\/strong> While finance processes are ok today, any increase in speed helps the company. For example, if international payment transactions can be shortened, it improves the company&rsquo;s operating margins by getting revenue quicker. The speed improvements will be particularly noticeable in processes that touch third parties.<\/li>\n<li><strong>Auditing and compliance.<\/strong> When the data are in a blockchain, there is complete transparency of that data. As a result, searching for records and validating data in order to audit and prove compliance becomes a faster and more accurate effort. Many believe that the reduction in cost and time of auditing and compliance are enough to justify the investment in blockchain for the back office.<\/li>\n<\/ul>\n<p>Also, it&rsquo;s important to note that we&rsquo;re not advocating replacing ERP and other systems right away &ndash; you can record data on blockchain without doing the transaction on the chain. So in the interim blockchain can supplement rather than replace.<\/p>\n<p><span style=\"font-size: 14pt; font-weight: bold; color: #ff6600;\"><strong>Bottom Line: Back-office processes may not be as world-changing as other blockchain use cases, but there is still significant potential for finance and HR to get reinvented with the technology. <\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>My colleague Steve Goldberg recently wrote about artificial intelligence finally getting incorporated into payroll processes. And I recently spoke with&#8230;<\/p>\n","protected":false},"author":1,"featured_media":3994,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[855],"tags":[151],"ppma_author":[896],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Blockchain\u2019s Potential To Overturn The Way We Operate The BackOffice - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/blockchain-potential-overturn-way-we-operate-backoffice_051617\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Blockchain\u2019s Potential To Overturn The Way We Operate The BackOffice - Horses for Sources | No Boundaries\" \/>\n<meta property=\"og:description\" content=\"My colleague Steve Goldberg recently wrote about artificial intelligence finally getting incorporated into payroll processes. 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