SAP drives blockchain use cases in standard applications

SAP drives blockchain use cases in standard applications

PAC recently caught up with SAP on its initiatives in the blockchain area. The company‘s endeavors are aimed at complementing its SAP Leonardo portfolio with Distributed Ledger Technologies (DLT) in order to increase both the efficiency and transparency of transaction processes in networks made up of multiple different business partners.

The solutions and use cases we discussed with SAP mainly focus on the demands of industrial customers. In terms of technology and protocols, SAP currently focuses on Hyperledger and MultiChain.

SAP aims to use blockchain technology to validate and authenticate transactions in closed ecosystems, in which multiple business partners are involved and transaction transparency and security are crucial. The company does, however, not focus on blockchain as a security solution that validates 1:1 transactions between two business partners, for example.

In our talk with SAP we discussed above all the various use cases and project examples we see in the market, and SAP shared some key reference projects with us. Among others, these can be found in the fields of:

  • Document of title transfer – Blockchain can be used to eliminate the manual paper work needed to handle the bill of lading for containers along the entire shipping process (during which multiple carriers are involved). SAP has invested in a prototype solution here; the challenge is not the technology, however, but to get all the relevant stakeholders on board, for example, the multiple (partly competing) carriers and their agents.
  • Serial number validation – Together with customers from the pharmaceutical industry, SAP is working on a solution to enable serial number validation. To this end, SAP has developed the so-called ‘Information Collaboration Hub’, which is used by various players in the pharmaceutical industry to exchange serialization codes. This cloud-based platform will be extended with blockchain technology to ensure the authenticity of the serial numbers on product blisters and is planned to be launched by early 2019 at the latest.
  • Identity management – Together with the autonomous Province of South Tyrol, SAP has been working on a solution to speed up the process of creating a digital signature in public administration. This should be completed in the citizen’s presence, who owns the original document. Italy has legally recognized e-signatures since 2005. The common practice to generate a digital signature in public administration is a well-defined process, but it requires multiple manual steps. SAP and the autonomous Province of South Tyrol have demonstrated that Blockchain can shorten this process and at the same time secure the authenticity of the electronic copy. The solution developed as a PoC has shown the technical feasibility; the remaining challenge is the necessary adaptation of the legal framework to replace the current practice.
  • Additive manufacturing – In this field, SAP has been working with a manufacturer of high-performance airplane parts. In the aviation industry, there are very strict documentation and proof obligations to be fulfilled, as requested by several authorities (e.g. the Federal Aviation Administration, FAA). First tests have been carried out in the area of additive manufacturing technologies, where 3D printers have to be able to print parts with a unique serial number, which can then be tracked and traced to their final location in the aircraft. Another challenge relates to the protection of IP when electronically transmitting a CAD file to a decentralized 3D production facility or if a spare part is printed on the customer’s site. Due to the stringent requirements in terms of documentation and proof obligations, however, this use case is currently only at PoC stage and SAP is not pursuing any plans to offer it as a standard solution.

From PAC’s point of view, SAP is doing the right thing, i.e. embedding validation and authentication features in existing business processes, specifically in a B2B context, using blockchain technology. Most noteworthy is the fact that SAP is working on integrating blockchain in its standard products as part of the SAP Leonardo solution portfolio, on-premises or cloud-based (e.g. serialization solution for the pharmaceutical industry). The cloud option is intended to pave the way for SME companies to run blockchain environments without setting up their own DLT nodes.

SAP’s current focus – a good choice in our view – is on the open-source blockchain protocols Hyperledger Fabric and MultiChain. Both protocols are designed for B2B requirements and already provide decent performance in transaction processing.

Nevertheless, SAP would be well-advised to also watch out how the other DLT protocols are developing. For instance, the Ethereum technology is already quite advanced in terms of technology and might soon catch up as regards its capabilities for use in B2B transactions. The IOTA protocol, too, might become a serious blockchain alternative in the IoT market.

By the way: PAC will be covering blockchain and its use in the area of business applications in a special SITSI® report, planned to be published in October 2018.