Enterprise Software Leader SAP Taps Blockchain to Improve its Products

Journalist:
August 1, 2016

SAP, a multi-national enterprise resource planning software provider, is writing specialized software to allow customers to connect blockchains to its Hana Cloud Platform, which provides an online database for adding new functions to their SAP systems, according to Bloomberg.

Juergen Mueller, chief information officer for the Walldorf, Germany-based company, said the blockchain’s potential for disruption is huge. If SAP does not address it, it would be a huge threat, he said.

Around 50,000 businesses run SAP’s financial and operations planning software. Companies design accounting, financial and delivery practices around it. The software’s organizing principle is a central ledger of transactions. SAP customers in agriculture, energy, banking and auto manufacturing pay millions to run it.

SAP Taps Different Blockchains

SAP is working with various blockchain technologies, including Ethereum and the bitcoin blockchain.

In one instance, SAP is using blockchain software to allow patients to share electronic medical records with drug makers or doctors for a specific time period, during a study or medical care. In another instance, it is designing a system for farmers’ weather insurance that will access rainfall data from field sensors, then automatically advise insurers if a drought is pending that would result in a payout.

Cross-border money transfers is one of the key banking applications for blockchain technology. ATB Financial, a Canadian bank, and Ripple Labs transferred 1,000 Canadian dollars ($760 USD) to a German bank in 20 seconds rather than several days.

Blockchains Are Versatile Tools

Blockchains can be used under open-source agreements or licensed from an independent vendor. They speed up transactions and improve security, but also remove the need for centralized systems kept separately by companies. Companies can use them to establish smart contracts that automatically respond to events, saving time. The ledgers can also prevent hackers from taking over computers to gain access to networks.

Gil Luria, an analyst at Wedbush Securities Inc., said technology vendors like SAP, IBM and Microsoft have a big opportunity to allow enterprise customers deploy the next generation of database technology. He said it is not too late for such vendors to invest in the technology.

Microsoft has partnered with the R3 banking consortium to test money transfers and other capabilities.

IBM is working on the Hyperledger project to create blockchain standards for IT, manufacturing and finance.

Also read: The Hyperledger block chain project sees 7 new members

Established Players Use New Tools

Established IT suppliers typically manage new technologies by recognizing their customers want to use them, then make it safer and easier to do so from within their tools. Microsoft has taken this approach with Linux, and Oracle did so several years ago with Hadoop, the open-source database.

Josh Greenbaum, a software industry analyst at Enterprise Applications Consulting, compared blockchain technology to the connected car initiative. He said SAP will not build the internal electronics or the car itself, but it will enable the interconnections among cars, services and drivers.

Mueller of SAP estimated businesses are two to five years away from making widespread use of blockchain technology. But he wants SAP to get a handle on the e-ledgers fast. The company’s innovation center network develops new technology like blockchain applications, machine learning and personalized medicine in SAP’s tools, then provides it to customers.

It would be a mistake for a large company to just harvest existing customers and not look ahead, Mueller said. He pointed to Nokia and Blackerry of examples of companies that failed to look forward.

Featured image from Shutterstock.

Last modified (UTC): August 1, 2016 17:22

Tags: Gil LuriaSAP
Lester Coleman

Lester Coleman is a media relations consultant for the payments and automated retailing industries.