Smart Processes to Smart Businesses

Why append the adjective “smart” to a process? Interestingly in the UK “smart” would suggest a very stylish process! Whereas in the US to speak of a “smart” process is to speak of an intelligent process. Since all processes are stylish by design, we only question the secondary use of “smart”, when appended to the term process.

  • Replacing humans by robots, and implementing machine learning algorithms to perform activities previously performed by humans, is not a valid enough reason for the adjective “smart”. What adjective would then be adequate for a process without assist from robots and machine learning algorithms? After all a classification scheme for processes should cover all classes.
  • Perhaps it is an application of the “differentiate or die” principle from some marketing wags.

There is a more valid reason for distinguishing a process by the adjective “smart”, it has less to do to do with what it is, and everything to do with how and what it achieves for the business.

  1. A “smart” process is one that makes for a “smart” business. This is not a question of simply achieving some business gaol at the end of the process. It is more to do with orchestrating the business and its partners so as to benefit both parties.
  2. A “smart” process takes part in a three way relationship. A triumvirate which when running optimally increases business value, and hence makes for a “smart” business.
  3. The actions of the three parties are influenced by, and in turn influence the relationships.

* Changes in the internal structure, or business model of the business will impact its processes. Similarly external economic or regulatory changes will also force some modifications to its processes. The changes incurred by the processes will in turn alter the business practices with partners.
* New players in the market may be keen to become business partners. They may be in a better position to add value to the business, compared to existing partnerships.
* Process optimisation may also force redefining the relationship with the partners, the optimisation may also lead to structural changes within the business.

Adjectives should be used sparingly, lest their effectiveness comes up short when faced with a deserving case.

Having come this far, the real question is, how are we to make a business “smarter”. We need to make dynamic that which is static. This is achieved by a secure transparent market place, where businesses would do business via their processes. This would not require a fixed relationship with partner(s). The market place would provide any and all validation of the partner. This would make the relationship dynamic, and on a transaction by transaction basis.

An example of such a market place is the implementation of the ripple protocol for (mostly, and currently) cross-border money transfer. The ripple network provides security, transparency, reduced cost (through the removal of the middle party), and way faster turn around time. Of course, as this is money transfer it is easy to verify and validate the transaction, if instead of a service we have a product, then many more checks and balances are required. The ripple network also has issues that have to be smoothed out, legal, liquidity etc.

This is the blockchain enabled marketplace that is waiting to disrupt the process triumvirate.

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Smart Contracts, Property Management, and Blockchain

 

Property ownership is seen as providing economic security and social status in most societies. It is thus incumbent on every society to provide a legally secure process for property purchase and management. The processes enabling property purchase are an embedded part of the society via its history and culture, and are thus different country by country. In the case of populous countries like India, this process will even be different from state to state. Bringing uniformity to this process with a concomitant introduction of a single source (digitised) documentation of a property is no small matter. There are many hurdles on the way to achieving a solution to this problem.

Blockchain as a solution has been waiting in the wings for a problem, but in the case of property management, the solution and the problem are an excellent fit. Of course there is a caveat, property management is neither an easy problem nor blockchain an easy solution. It is a long haul from problem analysis, to proof-of-concept, to prototype, and finally to production. This particular problem impacts an entire society, and thus involves legal and many government bodies. Transparency and good governance will only achieved with their cooperation, input, and involvement.

  • A smart contract represents a Digital Autonomous Organisation (DAO). In the specific case we are considering a DAO can be mapped to a (or a group of) property registration office(s). But, more than that the smart contract represents the process of property purchase represented as a state machine. As such its design can be easily compromised by deficient understanding of the process behind property purchase.
  • From a technical perspective a smart contract is an executable piece of code. It looks very similar to a class definition. Below is a a very rudimentary example, only for the purpose of illustrating some of its features.
contract Flatowners {
Flatowner[] public flatowners;
struct Flatowner {
bytes32 firstName;
bytes32 lastName;
uint aadhar;
}

function addFlatowner(bytes32 _firstName, bytes32 _lastName, uint _aadhar) returns (bool success) {

Flatowner memory newFlatowner;
newFlatowner.firstName = _firstName;
newFlatowner.lastName = _lastName;
newFlatowner.aadhar = _aadhar;
flatowners.push(newFlatowner);
return true;
}

function getFlatowners() constant returns (bytes32[], bytes32[], uint[]) {

uint length = flatowners.length;
bytes32[] memory firstNames = new bytes32[](length);
bytes32[] memory lastNames = new bytes32[](length);
uint[] memory aadhars = new uint[](length);

for (uint i = 0; i < flatowners.length; i++) {
Flatowner memory currentFlatowner;
currentFlatowner = flatowners[i];
firstNames[i] = currentFlatowner.firstName;
lastNames[i] = currentFlatowner.lastName;
aadhars[i] = currentFlatowner.aadhar;
}

return (firstNames, lastNames, aadhars);
}
}
  • All methods that change the state of the underlying contract will expend gas. This is the cost associated with the method execution. How this can be monetised is a issue that needs resolution.

Among the many other issues that need to be resolved before embarking on this are the following,

  • Much of the initial thinking for this was based on Ethereum and their implementation of smart contract using solidity. Ethereums vision would suggest that they wish to rule the world, fencing your blockchain from the rest of the Ethereum network may be necessary.
  • Who bears the compute cost? If the execution model is one of public and private partnership, the answer may be obvious, for a purely public enterprise the compute cost impact has to be evaluated. This is the equivalent of the bitcoin miner.
  • There has to be a guaranteed benefit to the public. No multiple sales of the same property, that is, all property sales have to be through this system. The system should provide a list of all prior owners of a property. The system will be the single source of all documentation regarding any property.
  • There has to be the same legal empowerment of the digital documents as there is with the current physical documents of a property.

Conclusion

These are some early thoughts following preliminary discussions focused solely on the Indian property market. There are many more challenges of varying degrees of difficulty that have to be addressed. The scale of the task for implementation is extremely onerous, considering the government bodies that have to use and manage the system for the public. But, for all the negatives the longterm benefits of smart document and blockchain are unquestionable.

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