As an enterprise scales from local to national to global operations, it has to work within structures created by increasingly complex rules, regulations, and systems governing the way money and material moves from place to place. Working within these structures can involve enormous time and expense—particularly when dealing with international law—while maintaining strict control over the large volumes of data a modern enterprise can generate every day.
Oracle CEO Mark Hurd has often touted blockchain as a solution to these issues. In 2016, he told an audience in Mexico City, “Blockchain’s promise is the fact that it can help bring sets of data from different variable applications and [make] it secure.” He expanded on this thought at Oracle OpenWorld 2018, saying, “65 percent of [supply chain] managers spend their time manually tracking the shipment of goods... when you think about the implementation of Blockchain... I think Blockchain [will be] a feature of virtually all applications... for the exchange of secure information.”
Security is a critical issue for enterprise finance departments. Hurd has spoken extensively on the importance of data security for finance leaders, pointing out that the risk of a data breach has become a “boardroom conversation” in the wake of high-profile hacks on Experian and Equifax—two of the three dominant credit-rating agencies in the United States—and many others.
Adopting a cloud-based financial management solution such as Oracle ERP Cloud can help mitigate this risk, but adding blockchain to the mix can allow finance departments to take advantage of the technology’s fundamental cryptographic security and immutable recordkeeping. Without the proper controls in place, cloud solutions might still expose finance departments to the risk of data-entry errors or maliciously modified accounting entries. Blockchains maintain a full record of every transaction, preserving the ability to trace errors and attempted attacks back to their source.
Blockchains can also provide finance departments with tools to expedite and lower the costs of those transactions, particularly for international transactions. International wire transfers can cost $50 or more per transaction and may take five business days to arrive in a recipient’s account. On the other hand, a blockchain-based transaction can be completed in seconds or minutes at a fraction of the cost. Oracle Blockchain is already helping power the international payments platform created by financial technology startup SDK.finance, which is used by banks and other financial technology companies. Earlier this year, SDK.finance CTO Pavlo Sidelov told Oracle Blockchain Blog, “We are removing these [cross-border payments] pain points by providing a platform that drives highly secure, affordable, and fast transactions. Oracle's enterprise-grade blockchain cloud platform is critical to helping us achieve these goals.”
Not only can blockchains help maintain secure unalterable records and improve cross-border transaction speeds at lower costs, but they can also provide for far more efficient tracking of goods as they move through an organization’s supply chain. This benefit doesn’t touch on a finance department’s core job functions, but reducing the need for manual tracking provides a clear benefit in terms of the time and cost organizations must devote to such tasks. Blockchain-based automated tracking systems can potentially save large organizations many thousands of work-hours per year. This would result in millions of dollars in cost savings, as supply chain professionals are freed to tackle more complex projects.
Blockchain’s benefits for the supply chain don’t stop at streamlined workflows and more efficient supply chain managers. In a LinkedIn article published last December, Hurd highlighted opportunities for perishable-goods businesses to use blockchain to “monitor the ‘cold chain,’ to know whether a heat-sensitive shipment ever rose above a certain temperature level.” He also pointed out that blockchain’s immutable recordkeeping might allow a drug manufacturer to track their products from production to delivery, helping itself and its consumers guard against counterfeit drugs or, if necessary, quickly recovering every part of a contaminated batch.
Better records, faster transactions, more accurate product tracking, and easier product verification are benefits any product-focused business’ finance department would love to see in their software. With blockchain, these promises can be realized—not just for enterprise-scale companies, but for businesses of all sizes.