Advisory Note

The Impact of Blockchains on Business Process Management and Optimisation

Distributed and decentralised ledger technology with Smart Contracts and the Internet of Things (IoT) can enhance BPM (Business Process Management) and BPO (Business Process Optimisation) processes significantly. This report examines the role that blockchain-based technologies and IoT can play in streamlining and managing BPM/BPO.

Bruce Hughes

bh@kuppingercole.com

1 Management Summary

Business Process Management (BPM) and Business Process Optimisation (BPO) are the long standing and efficient ways to manage processes with continual effectiveness in monitoring and improvement. There are generally three streams of steering and management areas: Operational, Tactical and Strategic. They can be further improved by blockchain technology and the Internet of Things (IoT).

Blockchain, which started as the technology underlying Bitcoin, is a decentralized online ledger system without a centralized governance mechanism that has huge potential in the future also beyond mere cryptocurrencies. Among the most promising developments, products and applications for the near future are BPM and BPO.

Distributed and decentralised systems such as blockchains can holistically manage steps and relationships where participants will share the same data source, such as financial relationships and transactions connected to each step. Security and accountability are built in, so is compliance with government regulations and internal rules and processes. The result: consistency, reductions in costs and time delays, improved quality, and reduced risks.

By integrating the Internet of Things (IoT) with decentralised, distributed blockchain technology that incorporates Smart Contracts, BPM and BPO will enter a world where just about anything can be connected and communicate intelligently. Enterprises that embrace this phenomenon will be able to provide a better user experience and value-added services, as well as gain competitive advantage and differentiation. However, this new technology will come with challenges that need to be addressed.

This report highlights four use cases that show how future BPM/BPO processes might look like in practice and how enterprises benefit from them as well as avoid traditional pitfalls. The examples stem from manufacturing, finance and insurance. The number of industries that can profit from blockchained processes is however next to unlimited. It is nevertheless important to see blockchain not as panacea, but more as a network standard such as TCP (Transmission Control Protocol). Therefore, always decide based on your individual business demands, not on a global hype. In other words: Don’t ask what your business can do for the blockchain, but what a blockchain, there are several different kinds, each with their own pros and cons, can actually do for your business.

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