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Blockchain For ERP Applications: Explained in brief – BitsNBlocks, Blockchain Technology, Cryptocurrency, Bitcoins, ICO, Bitcoin, Blockchain Basics, Learning zone, Crypto Bank

Last Updated on May 25, 2021 by Neeraj Benjamin

Blockchain is in limelight for its various applications including ERP Applications. Let us discuss one more application today – blockchain for ERP applications or to be precise, blockchain ERP use cases. To make a prelude, I shall discuss the ERP and explain it briefly. Then we shall discuss the blockchain technology for ERP. We shall also discuss the blockchain ERP integration a bit. There are also some blockchain ERP use cases; I will like to mention.

Blockchain vs. ERP

There is a misnomer; will blockchain replace ERP? No, it cannot. Yes, there can be an ERP integration with blockchain. This is possible because of the intrinsic blockchain properties, which I shall discuss.

Blockchain integration turns ERP into a collaboration platform that is more secure, and transactions can be done with a flavor of non-repudiation.

Lately, Enterprise Resource Planning (ERP) is beginning to see a change from the on-premise to a cloud-based application. Blockchain innovation together with distributed ledger technology will innovate quite a few things in one of the most formidable applications of the business.

What is Enterprise Resource Planning and how does it work?

Enterprise Resource Planning (ERP) is a system, which integrates the information and procedures of an organization into a single system and a single database. The database functions as a central point for the flow of information for sharing and storing within different business functions of the organization.

Organizations embrace ERP systems to deal with huge volumes of information. ERP has become a focal point of the corporates for handling information like purchase orders, invoices, human resource-related information, supply chain, manufacturing information.

ERP is Integration of Modules

The ERP software package consists of various integrated modules, which can be customized for the requirements of the organization. These modules or packages are streamlined and integrated with each other. There are packages for material management, production and planning, quality management, Plant maintenance, human resource management, fixed asset management, process flow, financial accounting and controlling, inventory, etc.

The ERP system is an immense data system about the organization’s business operations. There can be numerous ways of using this data aggregation within the integration of the above modules. It can be checking costs, checking stock items, creating orders, oversee generation plans, the record of completed and in-process requests.

The finance division will use ERP to oversee account payables, account receivables, installment entries, produce monetary records, for book-keeping, etc. The human relations department will use the ERP for tracking all worker information like date of joining, division, compensation details, etc.

SAP ERP and Oracle ERP are the most popular ERP software packages. There are others like Salesforce, PeopleSoft, and J.D. Edwards (now part of the major ones mentioned). These are just a few examples. There are numerous ERP packages available in the market.

Types of ERP?

Presently, there are two types of ERP systems available in the market:

  1. On-Premise ERP System
  2. Cloud-Based ERP System

On-Premise ERP

On-premise ERP systems are the traditional type of system. IT is installed on the client location. Based on the enterprise’s requirements, these are customized. This type of solution is comparatively expensive. The implementation and training also take a long time. Typical implementation time can go up to 36 months.

On-premise ERP is deployed by large multi-national organizations. Also, due to the confidentiality of data, these organizations prefer on-premise ERP systems. On-premise ERP obviously can be controlled fully by the owner organization.

Cloud ERP

Cloud ERP is a web-based ERP system. It provides services to the enterprise as a SaaS – Software as a Service. It is comparatively cheap compared to the on-premise ERP. Cloud ERP runs on a remote server and can be accessed by any user with a click of a button. Intrinsically, it has all the pros and cons of the cloud architecture feature.

Advantages of the cloud ERP are lower upfront cost, lower operating cost, fast implementation, scalability and accessibility, mobility and usability, cost transparency, disaster recovery, etc.

However, there are certain disadvantages as well for the cloud ERP. These are subscription expenses, security risks, performance risks, customization and integration limitations, service level agreements, control of the cloud, etc.

Marriage of Blockchain for ERP Systems

The intrinsic features of blockchain make the perfect recipe for using blockchain in ERP system applications. Even now, blockchain has plentiful use cases for incorporation in ERP systems. Features like decentralization, security, managing data can help in ERP.

ERP systems utilize a database administration framework; blockchain too utilizes a real-time scalable database that encourages verification of ideas, stages, and applications.

Theoretically, Blockchain and ERP have a considerable portion in common. ERP works on a system of a single variant of data. Blockchain also manages a single table of data that is shared by millions of clients on the web.

In a blockchain, the information is available to every one of its member nodes, yet none can control or change the information without agreement. This characteristic of the distributed ledger innovation is told to be the most helpful point in incorporating ERP with Blockchain. This type of coordination can be instrumental in building up trust between different organizations.

The data in a blockchain is decentralized and can be accessed by different applicants. Thus blockchain help to be view applications that can make the sharing of data between various parties more consistent, by giving a protected channel.

As of today, almost all ERP vendors are working hard to integrate blockchain technology in their ERP systems because of the features provided by the technology.

Enterprises are toiling to track the supply chain and trace back their origin of the supply chain using the distributed ledger. The importance of integrating blockchain technology with ERP systems will not only help in storing new data in the distributed ledger but also storing the previous data and stored in the ledger.

Since, blockchain technology creates a distributed database in the form of blocks, wherein each transaction is stored in a block and each block is linked with the previous block. These blocks are non-destructible which means each block is connected to the previous block in a secure way using cryptography and hash techniques.

Drifting from blockchain once again, to ERP issues, let me write that most of the ERP systems are migrating from the traditional ERP to cloud ERP. In this, the ERP modules are available on-demand and can be used in a plug-n-play fashion. Issues of traceability and security come into the picture with this type of system.

Enterprises are working on common platforms like Hyperledger fabric to track the whole supply chain system on their ERP. Tracking of food products, shipment tracking is some of the live examples of this. Asset management and log verification is another area where blockchain has already been used together with ERP systems.

Usage of blockchain technology is helping to maintain a verifiable record in the ERP systems. Also, helping ERP to track the shipments.

The blockchain will not replace the present ERP system. But yes, it will improve the performance of the ERP systems in various domains.

Blockchain will give transparency in the transaction and the process involved in the ERP systems.

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Please also read:

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