Towards Blockchain Support for Business

Processes

Jan Mendling(B)

Wirtschaftsuniversität Wien, Welthandelsplatz 1, 1020 Vienna, Austria

jan.mendling@wu.ac.at

Abstract. Blockchain technology bears the potential to support the

execution of inter-organizational business processes in an efficient way.
Furthermore, it addresses various notorious problems of collaboratively
designing choreographies and overcoming lack of trust. In this paper,
we discuss this potential in more detail and highlight several research
challenges that future research has to address towards generic blockchain
support for inter-organizational business processes in various application
scenarios.

Keywords: Business process management · Blockchains

Smart contracts · Inter-organizational business processes

1 Introduction
Business processes are collections of inter-related events, activities, and decision
that collectively create value for a customer [1]. Many business processes involve
several parties, which makes it difficult to manage them from the holistic per-
spective of an overarching choreography [5]. Classical approaches to business
process management (BPM) are mainly concerned with the discovery, analysis,
implementation and monitoring of intra-organizational processes. Yet, for inter -
organizational processes, challenges of collaborative design and a lack of trust
have limited the uptake of BPM techniques.
Emerging blockchain technology has the potential to provide substantial
improvements for inter-organizational business processes. Originally, blockchains
belong to a specific category of distributed database technology that builds on
tamper-proof lists of timestamped transaction records. They are best known for
being used for cryptocurrencies such as Bitcoin [8]. Blockchains offer a way to
execute processes in a trustworthy manner even if partners do not have mutual
trust in each other. Thanks to their capabilities, blockchains have the potential
to enable inter-organizational process support in completely new ways.
This paper describes opportunities and challenges of blockchains for BPM.
Section 2 discusses the specific benefits that blockchain technology provides for
process execution. Section 3 discusses challenges of executing processes on the
blockchain along the different phases of the BPM lifecycle phases [1]. Finally,
Sect. 4 summarizes the discussion and highlights directions for future research.
c Springer International Publishing AG, part of Springer Nature 2018
B. Shishkov (Ed.): BMSD 2018, LNBIP 319, pp. 243–248, 2018.
https://doi.org/10.1007/978-3-319-94214-8_15
244 J. Mendling

2 Potential of Blockchains for Executing Processes

A key idea of business process management is that new information technol-
ogy can be used to make the execution of business processes more efficient and
effective. The utilization of new information technology can have three types
of impact on a given business process: automational, informational or transfor-
mational [7]. Automational effects emerge when a new technology is used to
automate tasks that have been previously done manually or with partial sys-
tem support. Informational effects materialize from better tracking, monitor-
ing, and analytical insights. Transformational effects relate to the changes in
the mechanisms of coordination, including disintermediation, outsourcing or off-
shoring. For blockchain technology, transformational effects are most relevant,
because blockchains provide a fundamentally different way of coordination for
business processes [4], which could lead to fully new ways of organizing inter-
organizational business processes.
Blockchain is a distributed ledger technology that maintains a tamper-proof
list of timestamped transaction records. It is used, for instance, for cryptocur-
rencies like Bitcoin [8]. Since it is tamper-proof, it allows parties to transact
with others they do not trust on a network in which nobody is trusted. To pro-
vide this feature, blockchains build on peer-to-peer networks, consensus-making,
cryptography, and market mechanisms as underlying technologies.
The potential of blockchains to transform inter-organizational processes
builds on the concept of smart contracts [10]. Consider the example of a buyer
ordering 200 items from the vendor. A failure of the vendor to deliver on time
might entitle the buyer to receive a compensation. Such conditional logic can
be expressed using smart contracts, which only use information that is stored
on the blockchain. When a smart contract is deployed to the blockchain, it is
immutable.
The support for smart contracts can also be used to implement more com-
plex logic as required for executing business processes. Model-driven approaches
that take a BPMN specification as an input and automatically generate the
corresponding blockchain artifacts as an output are described in [2,11]. Also a
business process management system called caterpillar has been developed that
fully runs on the blockchain [3].
To illustrate this aspects, consider the BPMN process model from Fig. 1. It
shows a simplified supply chain scenario, where a bulk buyer orders goods from
a manufacturer. The manufacturer, in turn, orders supplies through a middle-
man, which are sent from the supplier to the manufacturer via a special carrier.
The different modeling elements that are used for the specification of this inter-
organizational business process can be translated into Solidity smart contract
code as defined in [11]. The central idea is to store relevant status information
on the blockchain and to represent all information exchange as transactions on
the blockchain. Resulting from this idea is a pattern-based transformation of dif-
ferent BPMN primitives such as gateways, control sequence, and different types
of tasks to smart contract code.
 Towards Blockchain Support for Business Processes 245

Fig. 1. Supply chain scenario from [11]

This manufacturing scenario underlines the potential of blockchains to have

a transformational effect on the way inter-organizational business processes are
implemented and executed [4]. Up until now, the implementation of such inter-
organizational processes required the collaborative design of choreographies [5].
The scenario shown in Fig. 1 is simple, but involves already five participants [11].
The complications of a collaborative design explain why choreographies have seen
hardly a broader uptake in practice. Regarding execution, the situation is even
more complicated. Inter-organizational processes can become subject to conflicts.
For instance, the manufacturer might receive the materials three days later than
agreed. In such a case, the manufacturer will likely trust more what is stored in
his own information systems and less what the supplier or the middleman might
have recorded. Having the transactional data in the blockchain is a reliable way
to store process-related data and provide a single point of truth over that no
single party has exclusive control.
This example illustrates that business processes provide a useful anchor for
discussing the potential benefits of blockchain technology. In this context, several
phases of the BPM lifecycle are of specific importance [1]:

– In the redesign phase, blockchains provide the potential to design to-be pro-
cess models of inter-organizational processes in such a way as if they were
usual intra-organizational processes using the standard BPMN notation.
– In the implementation phase, transformation techniques like [11] and systems
like caterpillar [3] offer an efficient implementation of blockchain-supported
business processes in a model-driven way.
246 J. Mendling

– During monitoring, blockchains provide a single point of truth for tracing the
progress of a process instance. There is no need for message exchange and
there are no messages that can be lost or corrupted.

Some of these potential benefits have been demonstrated by prototypical imple-

mentations. Still, there are several challenges along the way towards making
blockchain-based execution of business processes an everyday approach in cor-
porate information technology.

3 Challenges for Blockchain-Based Process Support

Though there is great potential of blockchain technology for executing busi-
ness processes, there are also challenges. First, there are generic challenges of
blockchain technologies. These include problems of throughput, latency, band-
width, security, usability, wasted resources and handling of hard forks [9]. Many
of these challenges are subject of current research.
Second, there are more specific challenges regarding the way how business
processes can be supported with blockchains. A recent research commentary
identifies seven challenges for blockchain-based execution of business processes
[6]. These include the following:

1. Execution and monitoring systems: Currently, there is limited support avail-

able in terms of execution and monitoring systems for blockchains. A specific
challenge will be fragmentation and encryption of execution data. For effec-
tive monitoring, data on the blockchain likely has to be integrated with local
off-chain data. Design science and algorithm engineering are required here in
order to provide novel insights and better tooling.
2. Methods for analysis and engineering: Up until now, there are only few meth-
ods for analysis and engineering for the specification of business processes on
blockchain technology. Transaction data on the blockchain contain potentially
valuable data for process analysis. However, how easily the data can be trans-
lated into a format that permits process analysis? Design science and soft-
ware engineering is required towards providing easier deployment and formal
analysis.
3. Redesigning processes: While there are first insights how business processes
can run on the blockchain, it is hardly understood how business processes
can be best innovated using the potentials of blockchains. Research on pro-
cess improvement has identified various process redesign heuristics, and likely
there are specific heuristics for adopting blockchains for specific types of pro-
cesses. Both design science and management science provide to foundations
to arrive at substantial insights in this context.
4. Evolution and adaptation: The definition of appropriate methods for evolution
and adaptation is an important challenge. For instance, it might be a desirable
scenario to adapt blockchain processes in a predefined way. Formal concepts
are needed in order to provide important guarantees, building on insights
from theoretical computer science and verification.
 Towards Blockchain Support for Business Processes 247

5. Adoption: Up until now, it is not clear in which circumstances business pro-

cesses shall be best put on the blockchain and to which extent this will prove
valuable. Different process stakeholders might be risk-averse and less willing
to use a novel technology that potentially reduces their control of specific
processes. Empirical research is needed to investigate which characteristics of
blockchain as a technology best meet requirements of specific processes.
6. Strategy and governance: Blockchains will likely enable new governance mod-
els with an overall impact on business strategy. It is an open question if
blockchain-related activities should best be allocated to a separate business
unit and how promising prototypes can be handed over into production.
Empirical research is required to investigate this topic building on insights
from organizational science.
7. Corporate culture: Blockchain technology will likely bring a culture shift
towards openness in the management and execution of business processes.
Blockchains will likely promote an organizational culture that emphasizes
flexibility and is outward-looking. Research in this area will have to inves-
tigate how corporate culture changes with the introduction of blockchains,
building on empirical research methods.

The spectrum of these challenges is broad. While many of them relate to

design and engineering questions, it is clear that blockchains also have to be
understood as part of larger socio-technical systems that are open and worldwide.
This fact poses various challenges that require an empirical research agenda that
integrates perspectives of the social sciences.

4 Conclusions
This paper has briefly summarized important potentials of blockchain technol-
ogy to support the execution of business processes. Potential benefits are effi-
cient design of inter-organizational business processes in a model-driven way, in
which the blockchain is a single point of truth for tracing the process execu-
tion. Furthermore, we presented a digest of seven challenges including execution
and monitoring systems, analysis and engineering techniques, redesign meth-
ods, evoluation and adaptation concepts, adoption in practice, and corporate
culture. Interdisciplinary research is required building on formal, empirical and
engineering methods in order to address these challenges.

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