Is Blockchain nothing but a Glorified ERP system?
Enterprise Resource Planning or ERP has, for a long time, been helping global MNCs in the management of resources, operations and customer relations within the company, between the company and its suppliers as well as between the company and its buyers.
When ERP was introduced, it replaced the next best thing — an excel sheet linked to a database. The enhancement in user interface was like a generation leap. Though, at a very deep level, it was vastly a robust database with integration of various departmental data and secured intercompany processes and data flow. It promised to and did deliver a one-stop interface for business management.
However, in the recent past, with the advancements in distributed and decentralized technologies like SaaS, Cloud computing etc., ERP tools started to become rather outdated. Most important questions raised were related to high cost of implementation of an in-house, highly customized, private solution in an era of payment using standardized models with very low maintenance fees and almost zero requirement to maintain an in-house team of experts. The current model involves a larger amount of proprietary development, long deployment times thereby making the cost of implementation and running the system exorbitantly very high, making it out of the reach for many SME sized corporates.
The fact that there is not much of competition in the ERP space especially for smaller corporates discouraged many of them to not implement an ERP system at all or implement one which is a collection of different blocks that are stitched together. However, it is often very difficult to manage and keep up to date because of the high number of vendors involved and frequently occurring compatibility issues.
Blockchain intends to solve this by making the system more cost-efficient. Its public implementation brings standardization and helps it to be more inclusive i.e numerous micro, small and medium-sized enterprises too can easily deploy it. In other words, its affordability offers a cheaper yet robust, highly secured option for many who did not have such a choice before. In fact, many market studies have revealed that the most important attributes of enterprise blockchain in order of priority are — transparency in the value chain, trustworthy shared data and industry standardization.
Through standardization, Blockchain provides unified, end-to-end tracking, monitoring and reporting of objects and business processes across supply chain networks. It also makes tracking information immutable and tamper-proof thereby building trust for a fully automated cross-company payment and settlement process — something that current ERP systems are not able to achieve. In fact, most users of BlockChain view it as an opportunity and see it as a tool to improve on various business challenges like improving corporate compliance, becoming the system of trust and replacing operational supply chain contracts entirely in the next 5–10 years. The industry that global managers feel will benefit the most include supply chain, legal and regulatory and sustainability –bringing standardized business management tools to new industries of legal, tracking etc.
Blockchain, in many ways, is like an ERP system which was, in its early years, likened to a glorified and expensive replacement to an excel spreadsheet and/or an underlying database. However, the core technology, the standardization (and hence, the cost-effectiveness), the inclusion and collaboration among all the value players across a supply chain irrespective of the size of their operations, from both within and external to an organization, makes blockchain much more than just a glorified version of the ERP system. Instead, it can be considered the next step in business management- how operations and processes are thought of and eventually implemented upon.
