Integration of blockchain technology into ERP

An Enterprise Resource Planning (ERP) system is software used by organizations to manage their activities such as accounting, procurement, project management, risk management, compliance, and supply chain operations.

ERP systems are deeply rooted in all areas of business, not only highly developed, but also developing economies. In many cutting-edge companies, ERP is the backbone of all business processes, as it processes huge amounts of data reliably and transparently. Blockchain technology is the most compelling option for storing all this data. A blockchain consists of an immutable data record that acts as a decentralized ledger shared by a cluster of computers or “nodes” that securely records transactions (data transfers between network participants) in “blocks” of data.

Moreover, blockchain’s ability to store immutable blocks of data can become a safe, transparent and reliable source for recording relevant business information.

These records can include various business data such as organizational structure, invoices, supply chain traceability, and ledger entries.

Blockchain was originally developed as an open source platform that anyone can connect to. However, a private blockchain can be integrated into the local digital systems of any company, which creates a platform for registering the organization’s data, protected from manipulation and interference from outside.

However, there are some potential hurdles when integrating ERP systems into the blockchain. For example, there are many different ERP systems on the market. In addition, there is the possibility that several of these systems could coexist in the digital environment of the same company. Successfully connecting and integrating all of these systems can be very challenging.

Blockchain technology has a lot to offer ERP systems and the entire digital environment. Here are some of the benefits that blockchain can provide to ERP:

• Blockchain adds transparency and the ability to audit business processes:

One of the benefits of blockchain is the ability to create smart contracts. Smart contracts are software protocols that can automatically verify and enforce contracts without the involvement of a third party. Smart contracts add transparency and immutability to transactions, thus making it easier to automate processes such as internal transfers. According to some reports, in the very near future, about 45% of companies leading in various industries in developed countries will use blockchain as the main technology for managing internal transactions. As an example, internal transactions can take place between parent and subsidiary companies, as well as between any related organizations.

In addition, blockchain can significantly improve supply chain management by adding trust and transparency to the process. Given that there are people in the supply chain who need to trust each other, blockchain technology can solve the problem of trust between companies.

• Improves the security of data records:

The blockchain can validate transactions and create an immutable data record that is shared by different nodes. If someone changes anything in the registry or any contract, it will become visible and trackable. This is especially true when managing ERP systems, as broken records can lead to audit or accounting issues.

In addition, blockchain can be used for identity verification and authentication. By authenticating personnel, a company can improve security by limiting unauthorized access to confidential information. Blockchain-based authentication systems use digital signatures based on public key cryptography and automatic validation of the private key, which means that anyone who has access to the private key is the owner

By integrating ERP systems with the blockchain, you can also prevent data leaks, detect suspicious unauthorized access attempts and other security threats in real time. These tasks are easily accomplished as the technology offers encryption, verification, and decentralization. The blockchain is almost impossible to hack because the records are not stored in one place, which can reveal a point of failure.

• Blockchain allows you to optimize and speed up business processes:

Once the blockchain is integrated into an organization’s ERP system, it can optimize its operations, internal data control and business processes. For example, smart contracts can help to automatically verify transactions between companies. If even one of the terms of the contract is violated, the blockchain will simply reject the transaction.

With the correct integration of the blockchain into the ERP system, the company’s staff should not experience any problems with this. This is achieved by minimizing disruption to business processes in place at the time of transition.

• Blockchain increases the transparency and traceability of the system:

Blockchain gives companies the ability to have different types of information on the same chain, which provides easy access to highly specialized information for all interested parties. For example, manufacturing requires that stakeholders in the supply chain process can easily track the entire journey of products, right through to their delivery to customers. Integration with the blockchain will provide real-time product tracking.

What if your company already uses an ERP system, but no blockchain. It’s time to think about integrating them. This service can be ordered from AVADA-MEDIA. After all, this will allow not only to improve the management of business processes, but also to use resources more efficiently.