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Smart Contracts: Blockchain technology changes the DNA of purchasing

CAMELOT study predicts the sustainable transformation of purchasing using blockchain, smart contracts and trusted computing appliances

Mannheim, 11/23/2017 According to the latest procurement study of the consulting specialist CAMELOT Management Consultants, more than two thirds of procurement executives in European companies do not have any or only very little knowledge of blockchains. In contrast, however, there are very high expectations in the newly burgeoning technology. In the future, a key module in procurement will be “smart contracts” on a blockchain basis. They enable clearly simplified ordering and approval processes as well as automated payment processing and have the potential to drastically change the DNA of purchasing organizations. What will be essential for the application of blockchains in procurement are “trusted computing appliances” – integrated software and hardware components which provide additional data protection as a supplement to blockchains. Procurement executives at European companies of various size categories and the most important sectors were surveyed online as part of the study in October 2017.
In the course of the current hype about bitcoin and cryptocurrencies, the current interest in blockchain technologies now includes established company processes. In particular in procurement and logistics, both functions which have many cross-company interfaces, big potential is seen for blockchain technology. More than 80% of the participants in the survey agree that significant process improvements can be achieved through the use of blockchains. According to the CAMELOT study, this largely affects the purchase-to-pay process which will become nearly superfluous in the future, thanks to virtually full automation. “We assume that the classic procurement model will be turned upside down in the near future. Currently, the greatest resources are bound up in operational processes. These will be reduced to a minimum in the future, so that procurement can focus more on strategic issues”, says Dr. Josef Packowski, Managing Partner at CAMELOT, commenting on the results of the study.

Smart Contracts: disruptive change in procurement
For the procurement managers surveyed, “smart contracts” based on blockchain are one of the highly promising elements of future procurement. Smart contracts are contracts which are programmed into the blockchain and automatically ensure they are adhered to. “The use of smart contracts enables companies to utilize the full potential of blockchain technology. For procurement, this means revolutionary improvements”, according to Ferhat Eryurt, study author and Head of Procurement at CAMELOT.

However, the participants in the study still see challenges in the implementation of blockchain technology: in addition to copyright and compliance issues and currently missing standards, the lack of knowledge of blockchain internally within a company is the main obstacle for the immediate implementation of the technology. A general query in connection with blockchain technology is how data classified as secret or private can be additionally protected in an environment where data are shared and are visible to all participants. The solution are “trusted computing appliances”, in other words extensions to the current blockchain concept through integrated software and hardware components. The use of trusted computing appliances will give an additional boost to blockchain technology, especially in procurement.

As a consulting specialist for value chain management, CAMELOT is heavily involved in the impacts of new technologies on value chains. To offer client-oriented services in the jungle of digital possibilities, CAMELOT has developed Digital EXPERIENCE² as an approach that combines management consulting methods favoring innovation with a “digital workbench.” This refers to configurable software modules and templates based on new technologies like blockchain, artificial intelligence, digital voice, IoT connectivity and cloud technology with which companies can develop and validate specific, innovative applications as a prototype using these technologies within four weeks. Recently, innovative trusted computing appliances from CAMELOT’s own innovation labs (Camelot ITLab) and their development partners are being implemented for this.

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