Lynne Sampson, Oracle’s managing editor of The Modern Finance Leader, wrote a blog about Oracle CEO Mark Hurd’s thoughts on the benefits of leveraging blockchain within Finance.
Lynne explained that as an enterprise scales from local to national to global operations, it has to work within structures that are created by increasingly complex rules, regulations, and systems that govern the way money and material moves from place to place. This is both costly and time-consuming, and it can be difficult to maintain control over the large volumes of data that a modern enterprise generates every day.
However, Oracle CEO Mark Hurd might have a solution to this problem.
Blockchain: A Solution for Finance
Blockchain has the potential to solve the issue of costly, time-consuming attempts of controlling large volumes of data. Hurd explained that blockchain can help bring sets of data from different variable applications and make it secure.
Security is a major concern for finance departments and leaders. A breach of financial data could be catastrophic. Adding a cloud-based financial management solution like Oracle ERP Cloud can help reduce security risks, but Hurd said that adding blockchain allows finance departments to take advantage of the technology’s fundamental cryptographic security and immutable recordkeeping as well. Cloud solutions could still expose finance departments to the risk of data-entry errors or maliciously modified accounting entries if that proper controls are not in place. However, blockchains maintain a full record of every transaction, so organizations have the ability to trace errors and attempted attacks back to the source.
Blockchains also provide finance departments with tools that help expedite and lower the costs of transactions, especially international transactions. International wire transfers typically cost around $50 or more per transactions, and they can take five business days to arrive in a recipient’s account. However, with blockchain, a transaction can be completed in seconds or minutes at a fraction of the cost. Many companies are already leveraging Oracle Blockchain to expedite and simplify the wire transfer process.
Blockchain in Other Lines of Business
In addition to finance, blockchain can benefit other lines of business as well. A supply chain is a great example of an area that could benefit greatly from blockchain. Hurd explained that blockchains could not only help maintain secure unalterable records and improve cross-border transaction speeds at lower costs, but they can also provide far more efficient tracking of goods as they move throughout a supply chain.
Reducing the need for manual tracking provides a clear benefit in terms of the time and cost that organizations must devote to such tasks. Having a blockchain-based automated tracking system could potentially save organizations thousands of work hours per year and result in millions of dollars in cost savings. This would free up supply chain professionals and allow them to tackle more complex, value-adding projects.
Hurd also mentioned the benefit that blockchain could bring to monitoring the “cold chain” for perishable-goods businesses. This would allow these companies to know whether a heat-sensitive shipment reached or exceeded a certain temperature level that could put their product at risk.
Additionally, the recordkeeping that blockchain provides would allow drug manufacturers to track their products from production to delivery—helping itself and its consumers guard against counterfeit drugs or allowing the quick recovery of a contaminated batch if necessary.
There are many benefits that blockchain could bring to several lines of business within an organization. Blockchains provide better records, faster transactions, more accurate product tracking, and easier product verification.
How to Determine If You Need Blockchain
Companies shouldn’t simply use blockchain because they want to leverage the latest technology. The decision to leverage blockchain should be a strategic one. Blockchain is a solution that can solve business problems, so you need to first identify the problems that you wish to solve. Don’t implement blockchain and then search for problems that it could only possibly solve. Sarabjeet (Jay) Chugh, a Senior Director of Emerging Technology Products at Oracle, laid out a list of questions to ask yourself when deciding if your company could benefit from and needs blockchain:
- Do multiple parties need to access and make changes to the shared, single source of truth data?
- Do you lack a single, always-on, trusted third-party who can mediate information disputes?
- Are there parties on the blockchain who aren’t completely trusted?
- Do you want to limit who can access the blockchain?
- Is the problem significant enough that a fix will result in a better bottom line?
If your answers to the questions are yes, then blockchain could be a great solution for you and your company.
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