Digitalization and automation of business processes offer great benefits in terms of productivity and cost reduction. Organizations struggle to tap into these benefits for interorganizational processes, partly due to a lack of trust. Bitcoin has proven how blockchain can use distribution and cryptography to provide a system that does not rely on trust. LTO builds upon this foundation with a decentralized workflow engine employed for ad-hoc collaboration. Information is shared between parties using per-process private event chains and hashed on a public blockchain. This hybrid approach allows organizations to meet any data protection regulations and prevents scalability issues that are typically associated with blockchain projects.
The digital revolution has resulted in many changes that make our lives more efficient. This wave of progress has taken place primarily in consumer-facing and internal business processes. When it comes to inter-organizational processes we have to acknowledge that the changes are less drastic. Faxing has largely been replaced by e-mail, and the typewriter is replaced by a word processor, but beyond these superficial changes, execution of the underlying processes have hardly changed.
The first reason that automation has been absent is the reluctance of corporations to rely on external systems operated by a counterparty, as the distribution of information plays an important role in the outcome of a relationship. Where there is a natural power imbalance, one party may take control, forcing all others to use its centrally managed system. We see this when dealing with the government and to some extent with corporations. In a situation where no single party can claim control, automation simply doesn’t happen. To achieve automation for inter-organizational processes, for over two decades people have experimented with decentralized workflows. In these studies and experiments, a high level of trust and fair play is assumed, focusing primarily on solving technological challenges. In reality, this is a false assumption as a lack of trust prevents successful pilots from making it to production.
A second reason for the absence of automation is the correlation between efficiency and corruption. Traditionally large corporations and government bodies require a large number of people to execute a process. A fair amount of bureaucracy is required to coordinate such processes. This increases the costs of bribery, reducing the incentive to automate. Increasing efficiency negates this effect. This paper shows how both problems may be solved using blockchain, providing a solution where all parties can be on equal footing