Blockchain technology has quickly become a prominent part of the business realm. And there is no surprise that -blockchain ledger creates trust, and streamlines payment processes, while also ensuring data immutability and decentralization – qualities most businesses are looking for today.
However, there is still a fair question – how to seamlessly integrate blockchain into the business while ensuring the software complies with all regulations and would benefit the business. And it especially concerns big enterprises that interact with myriad apps, such as legacy systems containing sensitive data.
Growing a compound annual growth rate of 56.3%, the blockchain technology market is suggested to reach $163.83 billion by the end of 2029. The spending on the blockchain ledger by businesses is suggested to reach $19 billion by 2024.
We created this guide to describe the blockchain integration process with benefits and challenges organizations have to consider during the process. Let’s get to the point.
Benefits of Integrating Blockchain into Enterprise Systems
Higher Data Security
One of the key blockchain integration benefits is its ability to track user data and anyone who makes changes. The technology uses digital signatures based on public-key cryptography while the owner keeps the secret key, so the access is always verified and authorized. Organizations integrating blockchain have been shown to boost customer loyalty and earn more thanks to data safety.
Blockchain is able to validate transactions and create an immutable record of data. Therefore, any changes made to the registry, data records, and contracts can be easily viewed by any authorized party and can be traceable. This is especially vital when the business is managing ERP systems since data loss or broken and untraceable records can cause financial losses and reporting issues.
Integrating enterprise resource planning (ERP) powered by blockchain allows companies to identify suspicious unauthorized access attempts and cybersecurity threats in real-time. Blockchain technology resolves this issue by offering encryption, validation, and decentralization. Since all records are stored in a central location, it is almost impossible to hack the technology.
Smart contracts refer to blockchain-encoded protocols that organize automated processes occurring on the blockchain. The smart contract is a code that self-executes when a specific set of rules is met.
You can think of automatic card payments. Users don’t need to log in on websites or confirmation for this. The same happens with smart contracts – they make transactions automated and occur when rules described in them are followed, offering twice as faster and easier than before business processes. The best thing about smart contracts is that organizations can use them to automate many time-consuming and manual processes.
For example, your company can automate the initiation of the shipment by using smart contracts. Once the payment is recovered, the transaction is automatically recorded on the ledger and closed.
Reducing Payment Risk
One of the key benefits of blockchain is that it ensures the security of payments, which is why it is globally used in financial transactions. That means transactions occurring on the blockchain are risk-free. Integrating blockchain guarantees that all B2B purchases and payments are safe and automatic.
Blockchain streamlines payments offering a peer-to-peer transaction platform facilitating the exchange of money in a completely safe and transparent environment. Hackers also find it extremely hard to penetrate this environment to steal money since blockchain is decentralized in its nature.
Identify Users Identity
The blockchain’s ability to verify identity is one of the key blockchain applications in ERP. That is why it is used in financial sectors in spheres like insurance and the financial company claims to process. Organizations have to always verify clients’ identities as part of the financial process. That is where blockchain can make the process easier and faster.
Transparency and Clear Reporting
As we already mentioned, blockchain offers transparency and clear reporting. That is why it changed the rules of how companies and their subsidiaries perform intercompany transfers. Studies show that almost 50% of companies plan to use blockchain technology as their key intercompany transaction management system, also boosting the transparency of supply chain operations.
Challenges of Integrating Blockchain into Enterprise Systems
Lack of Adoption
Blockchain ledger works optimally and more effectively when used within a wide network of users. For example, the blockchain ecosystem will require both users and suppliers to join the network. Researchers, on the other hand, found that only 29% of companies are experimenting with or fully using blockchain. Lack of adoption is still a big challenge for blockchain implementation.
Rising Cost of Blockchain Implementation
Blockchain isn’t a cheap solution for organizations. Even if most solutions available, today are free; companies will need to invest a lot when they hire freelancers or outsource blockchain development teams. In addition, some companies have to pay licensing fees in case of switching to a chargeable software version while covering costs associated with administration. The rising cost of blockchain is becoming one of the key blockchain implementation challenges.
Scalability is also a big concern. Even though transaction networks handle numerous transactions per second without issues, Bitcoin can process only 3-7 transactions per second and Ethereum 15-20 transactions, while the processing process is usually slow, making these ledgers unviable for large-scale apps.
Although blockchain is known for its decentralization and reduced need in an intermediate party, the lack of regulations in this domain is the next area where businesses may face difficulties. It may cause market manipulation and scammers, triggering a global economic collapse.
One of the main blockchain integration challenges that most organizations face is blockchain interoperability, which is also one of the primary reasons for some businesses being hesitant to embrace blockchain technology. Most blockchain ledgers operate in isolation, so they cannot communicate with other networks and transmit data from a different system.
Steps for Successful Integration of Blockchain into Enterprise Systems
Step 1: Identify the Use Case
The first step in blockchain implementation is identifying the needs. First of all, you have to learn what problems you want to solve by implementing the technology and confirm whether implementing it will solve them. We also recommend you begin with a pilot project to check the idea and analyze the results. The following questions can be useful before implementing blockchain on a larger scale:
- How will blockchain help your business?
- Do you know what will be the key purpose of blockchain within your organization?
- How will blockchain implementation reduce cost or improve customer service?
- Do you consider a 3-5-year plan for blockchain?
Step 2: Select the Consensus Mechanism
The consensus mechanism is the base of the blockchain. The consensus mechanism is an algorithm helping peers agree on the validity of a new block every time it aids the ledger.
The thing here is that there won’t be any perfect consensus algorithm. Therefore, you can choose another option based on your specific case analyzing factors like decentralization, security, and transparency levels. However, there are still some popular options like Proof of Work (PoW), Proof of Stake (PoS), Proof of Authority (PoA), and Delegated Proof of Stake (DPoS).
Step 3: Select Your Blockchain Platform and Tech Stack
The next step is choosing the platform based on the identified consensus mechanism. It is best to conduct research in the previous step to find out what platforms are suitable for your preferred algorithms. Considering the number of blockchain options you can use today, this step may be time-consuming and more challenging than most expect. Once the platform is chosen, you must also identify the tech stack according to the choice.
Step 4: Build Proof of Concept (PoC)
After the technology stack has been confirmed, it’s time to chart out a developmental strategy. Proof of Concepts highlights the viability and feasibility of the use case. Mostly, a PoC only demonstrates the idea. In this step, many unforeseen obstacles are identified and dealt with. A PoC can be used to bring more business by selling it to prospective clients.
Step 6: Research Legal/Regulatory Requirements
Since some countries are still very skeptical about blockchain application integration, it is best to research rules and regulations in your location before integrating blockchain into the business. In addition, blockchain is still a trendy technology that has to go a long way to be fully adopted. That is why laws are constantly changing, and businesses must stay aware of the latest regulations in the market, especially regarding Healthcare.
Step 7: Hiring Staff
Once all steps are done, you are ready to hire specialists to help you realize the project. Recruiting the right team is an essential step that will make a difference in the long term. That is why you should explore several options available today, including freelance, in-house team, outsourcing, and staff augmentation.
Explore how the company operates, whether it has successful blockchain implementation cases or not, what tech stack the team offers, and how it resonates with your business needs. Choose a cost-effective yet quality option checking the costs and backgrounds of the specialists.
Examples of Successful Blockchain Integration into Enterprise Systems
Solstice is a service used by therapeutic organizations (pharmaceutical companies, biotechs, etc.) to gather patient data, like genome analyses, X-ray pictures, health records, etc. Since health data is sensitive and organizations should ensure the safety of their patients, the product was powered by blockchain.
This allowed for data to be encrypted and converted from a readable format into an encoded format. In addition, blockchain’s decentralization offers patients ownership over their health data, while medical organizations can now accelerate their innovation through comprehensive, longitudinal health data.
With the popularity of the Metaverse among celebrities, brands, and users, there is also a growing need for a stable, secure, yet fast way for users to enter this space. NFT Ticketing is a web platform allowing users to buy tickets to Metaverse concerts in the form of non-fungible tokens (NFTs). Blockchain makes the process seamless and secure, allowing users to store their tickets in their wallets.
How Can Interexy Help?
Interexy is on the list of Top Blockchain Development Companies in London, Miami, and Dubai, according to Clutch. We are known as trusted staff augmentation and outsourcing blockchain partners with the largest staff of blockchain developers on the market.
We offer blockchain development services, from consulting to developing complex blockchain-based solutions. As experts in smart contracts, NFT launches, and blockchain-based mHealth solutions, we can help you through the entire development lifecycle.
You can outsource the entire process to our team, hire specialists to expand your in-house team or perform specific tasks or get the entire dedicated team of blockchain developers on board within 10 business days.
Organizations spend millions on improving their business, yet not all solutions deliver the expected results. While blockchain is also a perfect solution for everyone, it has been shown to greatly help businesses reach a new level providing transparency, speed, and reduced costs when properly implemented. Book a quick call with our experts to check whether your business can benefit from blockchain implementation.