Blockchain Technology in Document Management Systems

In one organisation, hundreds of documents are being processed daily by employees, whether in digital or paper format. From invoices, contracts and payrolls to financial reports, all of these documents are challenging to catalogue. After all, document management is one of the most frustrating and time-consuming aspects of the business, and even something simple as searching for a certain document, without a proper system, can take hours and hours.

With a lack of organisation and documenting systems in place, it’s inevitable to produce chaos that leads to bigger problems than just a loss of one paper. In situations such as the loss of an important contract, doing the double document work and not having a clear overview of the document processes, organisations are encountering consequences that cost time, money and energy.

That’s why many companies are implementing document management solutions to automate the major part of their work processes and avoid all of the potential problems. One of the recommended innovations on the market when it comes to ways to securely document sensitive information is blockchain technology.

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What is a DMS System?

As every organisation manages an incredible amount of documents, it’s vital to have a document management system in place. So, if you were wondering what is a DMS system, simply put, it’s a system that allows organisations to manage their paperwork in the most efficient way possible. Everything that has been created within a document needs to be stored and organised in a logical order so that other employees of the organisation can easily find it and use it when necessary.

Blockchain and Document Management

Blockchain technology will inevitably change the way we manage documents, and for bigger organisations, it has definitely been a game-changer. Nowadays, these chains of blocks are the perfect solution for any environment where it’s needed to transmit sensitive information in the most secure and private way. For instance, blockchain is already being used in financial, transport, food and logistic environments, and other industries are not falling behind either.

When it comes to document flows in organisations, blockchain workflow principles offer an improved version that changes so much more than just document management. The use of these distributed networks of equipment is to verify and validate all documents within the organisation.

Blockchain Benefits

Within a file system on the blockchain, organisations are able to immediately verify the location of each document, the name of the person who created it and when it was last modified. This decreases the possibility to manipulate such documents as all information is very transparent. With a unique fingerprint for each element introduced in the chain, it’s possible to identify and track each file. The above-mentioned information is also accessible to anybody with authorisation, not just to the owner of the document.

Another benefit of using blockchain technology in document management is avoiding the issue of duplicating the same file or using different versions of it. With blockchain, as soon as the file has been modified, the system will automatically register it to avoid any potential misunderstanding.

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Smart Contract

Blockchain technology doesn’t only improve storing and organisation of documents, but it also brings new aspects which are quite attractive to many companies. One of such innovations for the business world is the smart contract, a digital contract that compiles all the linear actions where each one enables the one that follows. In other words, there is no need for a third party to be involved in the process, such as a notary, to verify the compliance with the commitments between two parties.

With smart contracts, the system will prevent any of the parties involved from altering the documenting in any way. The same can be applied to the Public Administration. Taking into consideration all of this, there’s no surprise that numerous companies with over 10,000 employees are considering implementing blockchain technology in one or more aspects of their business.

Concerns

There is no approach or innovative technology that will perform flawlessly in dealing with issues that today’s organisations are facing, and you can expect the same with blockchain. There are still plenty of concerns remaining to be discussed when it comes to using blockchain technology in enterprise document management.

One of the most common concerns organisations are having is the fear that their sensitive information will not be protected well enough and go public which would cause unimaginable losses for them. That’s why it’s vital to choose private or licensed networks instead of public ones. Not to forget that blockchain technology is still in its development phase and there are plenty of scenarios remaining to happen so that we all can understand better how blockchain technology changes the business environment and what aspects of it need to adapt in order to make the most of it.