It’s no secret that the Spend Matters team has been geekily excited about the procurement implications of blockchain for years — seemingly right on the heels of the Dark Web, TOR and Silk Road becoming a thing.
What is far more important to the world of procurement — and for that matter, the world of broader supply chains and global trade — is that blockchain brings the potential to become as important to our technology lives as the spreadsheet, ERP/MRP systems and source-to-pay technology suites that we use every day, as Spend Matters Founder Jason Busch puts it.
Busch is leading the Spend Matters analyst team in groundbreaking research behind blockchain implications in procurement, which we plan to publish in March 2017.
In an article to be published by ISM, Busch writes, “In short, the ‘system of record’ — what allows us to close the books every month and know how to assign costs and revenue to different geographies, P&Ls and cost centers — is at a breaking point. What is needed is something new. Something we at Spend Matters like to refer to ‘systems of agreement’ between technology systems, business functions and trading partners.
“And this is why blockchain — or an architecture like it — will become indispensable to the future of procurement technology,” Busch writes.
What Is Blockchain Again? Here’s the Quick 101
According to a rundown on Recode, with a visual co-produced by Vox Creative and PwC,
“Blockchain is, quite simply, a digital, decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network. The major innovation is that the technology allows market participants to transfer assets across the Internet without the need for a centralized third party.”
See the full, high-resolution visual on Recode.
How Blockchain Fits into Spend Matters’ 2017 Trends and Predictions
When it comes to the 2017 trends and predictions for the sourcing, contracting, and supplier management and analytics spaces, blockchain factors into several areas.
Here are a few of them, according to Busch.
On Spend/Supply Analytics:
- PREDICTION: Advanced networks and blockchain (systems of agreement) ultimately will make the role of classification and cleansing less important — but the real question is, when?
On Supplier Management:
- TECH TREND: Architectures, generally speaking, remain conservative. There is little use of networks and platform-as-a-service (PaaS) models, let alone blockchain. Why?
- PREDICTION: Blockchain revolutionizes supplier management for initiative-based support and traceability — but likely only in siloes for the next five years.
On Contract Management:
- TREND: “Smart contracts” and blockchain architectures bring the potential for embedding rules, standards and pre-programmed outcomes contract and trading partner arrangements. As to smart contracts, “they programmatically represent a contract,” Mark Smith, CEO of Symbiont and co-chair of the Smart Contract Council, is quoted as telling Knowledge@Wharton. According to the piece, for example, “a smart contract on an auto loan could be linked in real time to payments made by the car buyer. If he misses payments, the contract gets wind of the violation and starts the repossession process. In Delaware, Smith’s company is working with the state to create ‘smart’ records of its public archives to do such things as being able to sunset themselves.”
- PREDICTION: ...All of the above could prove truly revolutionary.
For more clarity on some of these tech trends and predictions, and how blockchain relates (think tuna) — register to listen to Jason Busch’s recent webinar on 2017 sourcing, contracting, and supplier management and analytics tech trends and predictions.