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Blockchain and ERP: Will the Marriage Work?

Written by Jyotsana Nigam, Content & Digital Marketing Associate, Appinventiv

In today’s digital age, blockchain has been expanding beyond what we call as cryptocurrencies. The technology, with its traits of immutability, decentralization, and transparency, is entering different business verticals and processes and overhauling the whole. One such area where the technology is making a difference is ERP software. How, and why do ERP systems need to consider blockchain? Let’s find out the answers to all these questions in this blog – beginning with what exactly blockchain is.

What is Blockchain?

Blockchain, in layman’s terms, is defined as a chain of blocks containing information along with the hash address of the preceding block. This concept prevents intruders to make any change in the information stored in block while keeping the hash address constant and thus, avoid the fragility at a block level, maintain transparency, and more. On the business side, it’s an exchange network for transferring value from peer to peer. It is a mechanism that authorized a transaction and makes it valid from the legal perspective, without involving middlemen. So, what does this have to do with ERP software?

4 Common Challenges Faced by ERP Systems

Improper requirement analysis

The foremost challenge faced by the enterprises is to keep a real-time record of non-availability of particular resources. They find it tough to remain updated with which resource is unavailable or about to become extinct, which eventually affects the operations and reduces the productivity level.

Hassle of Identity Verification

Various enterprises go with BYOD (bring-your-own-device) and cloud storage options. This empowers users to enter into the ERP ecosystem from their own devices and enterprises’ management team struggling with figuring out which device is associated with an authorized member, further resulting in higher risk in terms of identity verification.

Data Breach Risks

As you can depict from the last pointer, the unauthorized access can increase the risk of data breaches even when the best of security tools and practices are introduced into the ERP system.

Lack of Communication

Last but not least, various parties work independently in an ERP environment. They do not interact with each other, which many times, make them end up working for the same cause individually rather than utilizing that time and effort into something more productive. And in the worst case scenario, face disputes and litigation.

Blockchain and Its Synergy with ERP System

Blockchain, when integrating into ERP platforms, offers a plethora of benefits to organizations. A few of the advantages of blockchain integrated ERP systems are:

Automated Process

Blockchain, in the form of Smart Contracts, enable businesses to automate a major fraction of their tasks. For example, you can introduce a smart contract to set up an automatic payment for any purchase. On a particular day of every month, the protocol will withdraw the amount from your bank account and pay off the bill. You won’t have to add any sort of effort into the process. In this way, blockchain can help you to sustain your ERP process in a hassle-free and time-saving manner.

Less Disputes

In the case of blockchain, a single database is created which is accessible to all the associated people. This helps everyone to remain on the same page and thus, circumvent disputes regarding invoices, shipment, returns, and more.

Lower Investment

By eliminating the third party intermediaries into the process, blockchain technology shorten the supply chain cycle. This, on one side, quickens the process, while on the other side, cut down the cost associated – allowing organizations gain higher outcomes with lower investment

Better Escape from Frauds

Blockchain adds the property of immutability to data, which makes it nearly impossible for anyone to make changes into the data without consent of the data holders. A ripple effect of which is that the frauds associated with data and cost gets minimal.

Higher Trustability

Blockchain not merely solves the issue of data accessibility and heavy investment, it also caters to the needs of trust. The technology facilitates you, the business, with an opportunity to manage your information and grant access to only those whom you wish to and in the way you want to. This builds confidence at your end, and encourages you to put the best efforts into flourishing your business. While this is from business front, the technology also helps to build trustability from the customer end by maintaining transparency during the whole process – enabling the users to see what happened at any point of time.

Enhanced Planning

Above all, blockchain empowers organizations to remain updated with the current status of resources and process, which make it easier for them to plan for the future in an effective manner. While blockchain has not been able to solve all the issues prevailing in the market, the technology is proving to be good enough to overlook. It is proving to be the source of ripe opportunities in the market, implying the businesses should take a minute or two to look into discussing about the convergence of blockchain and ERP systems.


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