Blockchain based distributed ledgers have been used to enable collaboration in a number of environments ranging from diamond trading to securities settlement. Systems ability to execute defined scripts in the form of smart contracts along with blockchain Distributed Ledger Technology makes it capable of managing inter-organizational processes. Blockchain platforms that support both DLT and smart contracts should be capable of not only hosting business data but also the rules for managing the data. Smart contracts execute code directly on the blockchain network as a series of process steps, based on an algorithm programmed to the rules of the contract and the blockchain.
Multi-party Collaboration
Smart contracts can be used to implement business collaborations both within and external to the organization. A blockchain-based real estate registry would allow banks, government agencies, buyers, and sellers to collaborate and track the progress of a process in real-time. Specific aspects of inter-organizational business processes can be compiled into rules based smart contracts to ensure that processes are correctly executed. Smart contracts can independently monitor processes, so that only valid messages are accepted and are sent only from registered process participants. Security and accountability can be factored in the contract, as well as compliance with government regulations and internal rules and processes.
Blockchain and smart Business Process Management
Even though smart contracts are self-executing, they can play a role in business process improvement. For example, in the case of supply chains, information from blockchain-based tracking of goods and materials can be used to develop algorithms that would prevent counterfeit products or lower quality materials from entering the chain. By combining process information gathered by the smart contract, with visualized process, lean and six sigma techniques, improvements can be made to the rules governing smart contracts.
