Blockchain for contracts
Harnessing new technology for digital contracting
Harnessing new technology for digital contracting
Blockchain has the potential to fundamentally change the way organizations do business, providing new infrastructure on which the next generation of streamlined business applications will be built.
But it is also a technology with much hype that is not well understood. One simple way to define it is: Blockchain is a new type of database system that maintains and records data in a way that allows multiple stakeholders to confidently and securely share access to the same data and information. The promise and implications of this technology are so profound, it could revolutionize business practices as we know them.
Financial institutions could settle securities in minutes instead of days. Manufacturers could track the origin and movements of inventory across a supply chain. Businesses could also manage commercial contracts, making them digital, shared and tamper-evident—a use case Accenture has developed and put into production, with a path toward further enabling smarter contracts.
Accenture and the companies it engages with go through extensive efforts in finalizing contracts for services and managing them over the contract lifetime. The situation is similar for many companies and organizations that transact with other parties. The process is one that involves many people, steps and revisions, and lends itself to blockchain for its enablement of full transparency—all parties to a transaction will share the same view of data and information that has been agreed and time-stamped as it is added to the ledger.
Curious about the potential of blockchain, our global IT organization developed the idea to take existing paper contracts between Accenture and our clients and put them on a shared blockchain database that every party can use to securely view contracts, revise and accept changes, all captured on a blockchain ledger. We worked with other Accenture specialists, including legal, to prove out the idea, develop the platform, test and ultimately deploy a new product—Accenture Blockchain for Contracts. Built on R3 Corda technology and hosted through Microsoft Azure, Accenture Blockchain for Contracts provides a new way to draft and sign contracts with low friction, high efficiency and encrypted data.
How it works
Accenture Blockchain for Contracts takes existing paper contracts and puts them on a shared blockchain database that every designated party can use to securely view contracts, revise and accept changes, all captured on the blockchain ledger. The blockchain is an incorruptible digital ledger that can be programmed to record virtually every transaction with shared transparency. Every step of the contracting process generates notifications and alerts to all parties involved and produces a shared ledger of all activity. The result is definitive contracts, stored electronically in one location accessible by only the parties with access, and with clearly recorded versions and activity.
We developed a leading-edge, front-end consumer-friendly experience for Blockchain for Contracts as well as the back-end technology and platform. Once parties using the product establish a connection through each hosting a network node, each party can manage their contract actions on the front-end and trust that they are all working off the same version. This is possible because blockchain technology supports the platform’s back end, which acts as a single source of truth.
High level of security
We designed the platform to provide a high level of security through encryption and restricted data sharing while allowing for complete transparency. The solution enables every party to always have access to a live contract and every revision of the contract is recorded, creating a tamper-evident audit trail. This is accomplished by capturing and storing unique hash codes of the documents and transactions on the blockchain. Hash codes are the unique sequences of characters that identify one contract version from another.
Our solution approach enables contracts to be proposed, revised and executed all within the platform. The tools and capabilities were developed to be included within the web application. Contract drafting, rule-based agreements, digital signatures, software entitlements and automatic remittance can all be executed via the blockchain platform. Moreover, two or more parties can share and collaborate on a contract in real time and see each other’s edits as they are being made in that one document, even if they are countries apart. The process is seamless, connected, experience focused, and provides a single version of the truth for both parties to share. The peer-to-peer implementation of the platform makes sure that changes will only be committed if all contracting parties agree to them.
Unique to Accenture Blockchain for Contracts is that it provides a true, tamper-evident, shared version of a contract, from beginning to end, all in one place. The technology generates a systematic, untampered audit trail of the history of any action taking place in a document, which can be viewed in a history tree, providing a more superior history and audit trail than anything else that currently exists.
Accenture Blockchain for Contracts is the next generation of contract management technology. The digitization of paper-based contracts onto the blockchain holds the potential to revolutionize the way contracts are prepared, transacted, amended, stored and complied with. It is offered as a software-as-a-service (SaaS)-like service and supports a wide range of business-to-business contract management needs.
Blockchain for Contracts holds the potential to create value for organizations by having a single repository for contracts that indisputably houses latest, agreed-upon versions. This repository may:
Improve speed and efficiency
Puts the contracting process in one place, seamlessly
Places contracts on a shared blockchain database that every designated party can securely view, revise and accept changes
Work with single source of data
Enables multiple parties to share access to the same data with an extremely high level of confidence and security
Eliminate reconciliation efforts and disputes
Designees of a contract agree and sign the same version of a document in a “vault” that cannot be altered.
Reduce environmental waste
Eliminates the need for physical storage space by being digital
Global Metaverse Co-Lead and Technology Incubation Group Lead
Managing Director – Global IT, Client & Market Technology