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Beware These Common BPM and Blockchain Fallacies

Blockchain technology is a hype topic, not only enchanting script kiddies and risk-seeking investors, but also attracting the attention of well-established organizations who view it as a potential game-changer. In particular, information technology and business leaders around the world are viewing blockchain or decentralized ledger technology as a key tool to transform their businesses from slow-moving, innovation-resisting organizations into agile, highly automated entities.

However, when taking a critical look at blockchain technology from a business transformation perspective, it becomes clear that decentralized process execution “on the blockchain” won’t be a silver bullet to solve the key challenges businesses face in today’s rapidly evolving economy.

Common BPM and blockchain fallacies

Because blockchain technology promises to facilitate transparent, cross-organizational data management without the need to rely on a central trusted authority, it is a highly relevant technology for business process management. To take just one example, a solution that allows enterprises to transparently track supply chains and autonomously issue new invitations for tenders can speed up global operations across industries. However, if your organization is considering the benefits of BPM and blockchain, it is important to avoid these three common misconceptions.

1) Blockchain-based BPM requires a cryptocurrency-based solution.

In the world of enterprise systems, the term blockchain doesn’t always mean cryptocurrencies, initial coins offerings (ICOs), or proof-of-whatever. With high operational transaction cost and performance issues, clichéd blockchain implementations like Ethereum or IOTA are typically not feasible for decentralized business process execution. Enterprise blockchain solutions also employ a decentralized database that makes use of hash trees and requires distributed consensus for transactions to be confirmed. However, they typically require organizations to be registered as an eligible user to be able to participate in the network. Because of their smaller and therefore easier-to-manage size, as well as the commitment of the participants to provide a resource for consensus-finding, such networks are much cheaper to operate, faster, and more reliable.

2) Blockchain-based BPM is a silver bullet for cross-organizational interoperability challenges.

With some software vendors aggressively marketing blockchain-labelled solutions as tools that primarily help integrate data for seamless interchange between the IT systems of different enterprises, some people think that blockchain will magically break down cross-organizational data silos.

In fact, blockchain technology faces the same mundane problem other IT systems do: Cross-organizational interoperability is an absolute necessity for blockchain-based solutions to work at all. If challenges with data integration exist, these need to be solved before a blockchain-based system can be introduced. In many cases, the interoperability and system integration issues are at the heart of the problem the organization is trying to solve. In these cases, a blockchain-based solution is simply not (yet) necessary.

3) Blockchain will solve the human factor challenge of business process management.

In any business transformation initiative, technology is only one part of the equation. Management and culture are, as usual, also critical considerations. The enterprise systems of the future, which might use blockchain, and will almost certainly employ artificially intelligent technology like machine learning toolkits, enable the transition to tomorrow’s smart enterprise.

However, they will interface with legacy systems (for the foreseeable future) and need to be tailored to the requirements of your organization and the needs of your customers (always). Because of the inter-organizational environment in which blockchain technologies are deployed, the introduction is even more cumbersome than the introduction of centralized enterprise solutions. Hence, it is important to rely on well-established process management best practices and platforms when introducing blockchain-based solutions.

Successful implementation of BPM and blockchain

While blockchain or decentralized ledger technology has—at least conceptually—the potential to help transform businesses into increasingly agile and autonomous enterprises, it is important to be aware that the technology is not a silver bullet for achieving this transformation; it is just one of many contributing factors. If not used carefully, BPM and blockchain could even lead to significant undesirable outcomes: bloated IT systems, exploding budgets, and frustrated users.

The successful requires adoption of blockchain-based business process execution technology requires, in particular:

  • A clear perspective on what blockchain can and cannot do for organizations;

  • A mature decentralized business process execution solution that seamlessly integrates with existing centralized execution systems, as well as with business transformation technology; and

  • A process thinking culture and continuous improvement mindset adopted by all organizational stakeholders.

Building this culture and mindset, as well as planning effectively, requires a collaborative business transformation solution that empowers bright and engaged employees to play an active role in driving change and ultimately champion transformation into an increasingly agile, automated, and autonomous organization.