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Blockchain and BPM: what's the connection?

By Marilyn de Villiers
Johannesburg, 09 Mar 2018

Mention the term "blockchain" and for many people, their first thought is of Bitcoin and other crypto-currencies.

But blockchain technology also has an extremely important role to play in any business, particularly in areas that are exposed to risk - including non-financial risk.

That's the view of Jay Smith, chief marketing officer at the Austin, US-based, blockchain as-a-service technology company, Factom.

Smith points out that any organisation makes a range of decisions every day - decisions that could potentially expose the organisation to risk of legal action or even non-compliance with regulations.

"A single misstep can ruin a company's reputation and cost millions in fines, legal expenses or settlements. Not only can these missteps cripple your business, they may negatively affect real people when, for example, they involve decisions to repossess a house or a vehicle, deny a claim, or deny credit."

Because most organisations recognise that they may have to defend their decision at a later date, many invest in systems that they hope will enable them to do so.

Business process management (BPM) is such a system. There are many BPA tools in the market that make it easier to design, model, execute, track, and optimise business processes. However, apart from this productivity enhancement, BPM is also about implementing methodologies with rules and regulations that support decisions made within the organisation.

Smith points out that as most decisions follow a repetitive cycle of information gathering, concluding, executing, and refinement to achieve better results they ultimately enable the automation of the entire decision-making process.

"These processes get stored on databases which need constant auditing and verification to ensure their legitimacy and for ensuring that the process responsible for churning out decisions is backed by evidential data," he explains.

So far, so good. But, Smith warns, while these tools are very convenient, they are not secure. The problem is that even though every part of a decision may be written to a database or BPM solution, "databases are dangerously malleable. All it takes is the right credentials to change history of the decision," he adds.

"Vulnerabilities like SQL injections, extensive user privileges, broken configuration management, or even DOS attacks pose a serious threat to the data in the databases. Companies therefore spend millions every year on auditing and verifying the databases for any problems so as to be able to prove - if required - that the database wasn't changed at any given time."

Enter blockchain technology which can change this uncertain paradigm by solving the issue of what Smith calls the "unreliability of bits".

According to Smith, blockchain provides a foolproof, trustless system that is immutable, decentralised, and access-controlled, providing evidential proof that makes the process of verifying and auditing databases unnecessary.

The access-controlled ledger that contains blocks of data stacked one after the other, is distributed to everyone in the system. Blocks can hold any type of information or encrypted data including transaction data, a timestamp, and details of the previous block. None of this can be changed unless a consensus is reached.

"This means that when you combine the immutable public witness of blockchain technology with the existing BPA software, it creates a practical solution that can defend the basis of the organisation's decisions against later questions," he concludes.

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