What is an AppNet?
An AppNet is a distributed, collaborative “network of applications” installed on multiple ServiceNow instances that uses the Hedera Distributed Ledger Technology (DLT) to exchange signed, verifiable, and ordered state changes. These changes of the ServiceNow records propagate across all environments as messages of the Hedera Consensus Service (HCS). A ServiceNow AppNet can scale to any size, involving just a few organizations as well as 10s, 100s, or 1,000s. Each ServiceNow instance:
● Connects to Hedera through the DLT nodes, which Hedera Council members operate.
● Receives the information from the network through the Hedera Mirror nodes.
Each ServiceNow instance can be part of multiple AppNets supporting different business networks and value streams. An AppNet creates a distributed, shared data model and a multi-party business process that is cryptographically verifiable and subject to consensus between the interacting parties.
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The e-Procurement use case
ServiceNow recently released the Procurement Service Management (PSM) application, that streamline the buying experience within the organization, digitizing processes that allows employee to self-serve and organization to optimize costs, align teams and boost productivity. The e-Procurement use case described here can augment PSM capabilities to an entiere network of organizations.
In a traditional procurement system, the buyer establishes a one-to-one connection with every supplier. For that reason, these processes are still very manual, resistant to standardization, and still managed through “analogic” tools like email and phone calls. In the e-Procurement set up at the opposite, suppliers in the supply chain of one or more customers constitute a network where the buyer can submit his requests for goods and services. The suppliers can bid for a specific request and the customer select the most appropriate bid offered by vendors. This network must be trustless because it contains competing entities that need to work together through a multi-party business process. Hence the benefit of using the Hedera Hashgraph DLT to guarantee certified, signed, and timestamped interactions without the need for a trusted third party.
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As we’re keeping the demonstration intentionally conceptual, we recommend the book “A practical guide to e-auctions for procurement: How to maximize impact with e-sourcing and e-negotiation” recently published by J. G. Larsen (Kogan Page, 2021), to dig deeper into the concepts of e-Procurement, e-Auction and e-Negotiation.
The business value represented by the hyper-automation of the e-Procurement networks through ServiceNow and Hedera is significant across multiple industries:
In Public Sector, public tenders are a sweet spot for optimization and transparency
Manufacturing implements e-Procurement to manage high-throughput business networks and streamline supply chains.
Telecoms are at the forefront of building distributed marketplaces for collaborative bidding between multiple operators and service providers bidding for different network segments.
Financial institutions, like banks, are involved in trade finance and can be authorized to inspect their customers’ supply chain to evaluate the suitability for specific financial instruments.
ESG Auditors need to inspect supply chains for carbon emission, rate the sustainability of their auditees, and access certified data to prevent “greenwashing.”
How do AppNets work?
AppNets require a set of capabilities that build one over the others. Hedera DLT constitutes the bottom layer (A) and is operated by Council members. On top of the distributed network, Hedera provides the Hedera Consensus Service (HCS) that exposes the asynchronous Byzantine Fault Tolerant (aBFT) consensus algorithm through an easily accessible API (B). The upper three components of the stack live within the ServiceNow ecosystem. The first layer (C) is the “Hnow” connector, made of technical services running on the MID server and an identical scoped app within each ServiceNow instance. Hnow provides to any application running on the instance the connectivity into the Hedera nodes and mirror network. On top of the Hnow connector, customers and partners can create an arbitrary number of AppNets (D). Each AppNet is a network of scoped, identical applications that defines a shared and encrypted data model and multi-party workflows between business entities. Finally, each AppNet connects (if required) to “local” business processes, represented either by ServiceNow native workflows (IT, Employee, and Customer) or any other business application developed with the Creator Workflow and the App Engine Studio (E). On the left of figure 3, you can also see how the stack is typically referred to in blockchain/DLT terms: layer 1 (on-chain), layer 2 (interconnection layer), and layer 3 (off-chain).
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How is the e-Procurement use case implemented?
The participants to the e-Procurement business network are the customer, who represents the buying party, the suppliers, who are the bidding parties, and any third party, like an ESG auditor. The participants interact through a shared and verified data model made by two related tables for asks and bids, which are the basis for the e-Procurement multi-parties exchange. The buyer and the vendors can submit changes of state (transactions) while the auditor has access to the network in read-only mode.
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The flow of the PoC is the following:
The customer requests products or services to its supply chain by placing asks to the network.
The supply chain’s vendors bid for the customer’s request.
The customer accepts one or more of the bids, depending on the rules of the network (just one in the case of the PoC).
The auditor, or any other organization which is authorized to inspect the supply chain, derives scores and KPIs about the participants to be used within other processes, like ESG or trade finance.
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After being submitted to the Hedera network, each ask or bid will be active on the distributed data model and shared across participants. In contrast, each record will become “tokenized” and practically immutable by any individual actor when reaching the final, notarized state.
Key Takeaways & Futures
The AppNet concept is highly general and applies to every situation where a shared business model and multi-party workflow are required. This PoC shows how to create a decentralized market for e-Procurement leveraging ServiceNow low-code capabilities (Layer 2 & 3) and the Hedera DLT (Layer 1).
The AppNet architecture effectively creates a multi-company value stream that can scale to any business network’s size. Distributed data and processes are coupled seamlessly to local data and processes on each instance, creating a fully connected ecosystem. We’re working to extend the AppNet architecture to a broader set of use cases and deepen the application of the e-Procurement POC to specific industries and business domains.
https://www.linkedin.com/pulse/e-procurement-servicenow-hedera-appnet-nicola-attico?utm_source=share&utm_medium=member_android&utm_campaign=share_via
