If you have followed our Blockchain series, you have a better understanding of DLT or blockchain. When applied to HR and payroll, it significantly increases security, manages your personal data and improves recruitment.
Features of blockchain make it able to build a faster and more effective generation of work-related technology platforms. So, when will blockchain be part of existing HR solutions and will you see the first applications come to market?
The first article explained the concept of Distributed Ledger Technology (DLT). As analyst firm Forrester describes it as a technology concept or architectural principle that can be realized in different ways. Many companies are experimenting with DLT and there is no single application of blockchain. That means your careful evaluation of the market is required to understand the potential of various applications.
Is blockchain is a bit of a hype? As read in Wired: “In this moment, few business trends can compete with the magic of blockchain technology” (187 Things Blockchain is supposed to fix). Adding the word ‘blockchain’ to a company name showed immediate stock price gains. For example, the announcement of a KodakOne blockchain network more than doubled the EastmanKodak share price.
We aren’t suggesting that all blockchain is hyped, but advise caution when it comes to results. We don’t understand or apply the technology well enough to fully grasp its implications and benefits. The World Economic Forum has published a white paper called Blockchain Beyond the Hype. It includes a practical framework as well as a Decision tree. Use it as a guide to determine whether blockchain is the correct approach for a business problem or not.
And then there is the energy consumption question that needs to be solved. Blockchain transactions are verified using extremely complex algorithms. This provides us with increased security, but also comes at an energy cost.
The early blockchain networks, like Bitcoin, require no permissions meaning that anyone can join in on the algorithm. However, the trade-off is that as the process becomes increasingly complex, the network requires large amounts of computing power and more energy.
Not all applications require the same kind of security as a cryptocurrency network. As new DLT’s come to market, companies are changing the platform characteristics so that security is maintained with less energy consumption. Despite these alternatives, blockchains remain computationally intense when compared with traditional databases.
At the moment, regulation efforts are focused on cryptocurrencies, but expect governments to closely monitor blockchain activity related to identities (of companies and people) and payments.
The European Parliament hosted a ‘Spotlight on Blockchain’ session in May 2018 to explore when and how should governments intervene? Some U.S states are moving forward with blockchain regulation and implementation, e.g. Arizona (recognition of smart contracts) and Vermont (blockchain as evidence).
During an April meeting of ASEAN (Association of Southeast Asian Nations) there was a focus on DLT for cheap and secure transactions to promote financial inclusion for underserved and underbanked segments.
There isn’t an exact roadmap of how blockchain technology will evolve in coming years. But certainly, it is becoming more mainstream. Vendors, including NGA HR, are working to bring DLT-based applications to market. Try not to confuse blockchain with bitcoin. Any speculation around cryptocurrencies is separate from the benefits of blockchain applications in business environments.
As you have read in this series, DLT-based applications offer important benefits when it comes to transactions that involve personal and payment data. This technology delivers increased security, faster transactions and limited data disclosure for a predetermined purpose.
Blockchain and DLT development moves quickly. There are many experiments as well as real-world applications. Stay informed about which projects go well and which go bust. Then apply that knowledge to the HR and payroll space.
All main technology vendors explore use cases for DLT in their solutions. It could be equally interesting to follow what niche vendors are doing, as they are typically not bound to a segment or industry, more agile and will quickly shift into other applications.
Use cases outside of the HR domain provide the perfect inspiration and encourage you to stretch your thinking beyond the obvious.
Reach out to your HR and payroll vendors and ask which use cases they are currently pursuing. NGA HR is happy to talk to you about our blockchain innovations and keep you posted as we bring HR and Payroll applications to market.