March 3, 2023 • 27 mins
SAP's Benjamin Stoeckhert reveals the most common types of blockchain applications, explains SAP product offerings and gives tips on how to get started.
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Dave Essex (00:03):
It's the ERP confab. I'm David Essex industry editor
at search ERP. Blockchaincontinues to make news not all
of it good with the collapse ofthe FTX cryptocurrency exchange
and accusations of fraud, alongwith high profile blockchain
hacks, but it's clear thatenterprises still have
(00:23):
blockchain on their radars. Whatare the most promising use
cases? And what do the latestblockchain trends mean for the
metaverse and web 3.0? Today'sguest Benjamin stuckart, SAP
Senior Business DevelopmentManager provides some answers
and explains saps current andemerging blockchain products.
And an article on the SCPwebsite you were quoted as
(00:45):
describing blockchain in a waythat almost makes it sound like
an internal workflow or documentmanagement tool, but one that
could also support decentralizedcollaboration with organizations
outside of the mainorganizations such as suppliers
and subcontractors, you werequoted as saying, quote,
Blockchain is used to createtrust verifiability and
(01:05):
compliance in decentralizedcross company processes. I'm
wondering if you can go intomore detail about why do you
think this is a good use ofblockchain?
Unknown (01:15):
Sure, yeah. Thank you. That's a great question. So
obviously, right in today'sglobalized economy, companies
typically work with many otherorganizations, companies,
institutions, from all over theglobe, across many, many
different system, right, whichmakes collaboration difficult.
So when we talk aboutblockchain, we always talk about
(01:35):
decentralized scenarios in veryheterogeneous networks, where we
have different organizations,different kinds of companies
with different systemscollaborating, where they need
to work together without reallyhaving a central system, right,
that provides verification ofdata between these parties for
really critical processes likecompliance checks, regulatory
(01:58):
checks and risk managementpractices. And what blockchain
basically brings to the table isa decentralized ledger, that
cryptographically records allthe different transactions that
are happening in thesedecentralized networks between
the different parties. And byusing cryptography making them
immutable. And with thatmaintaining common view and a
(02:21):
common understanding right ofthe current state of the
different collaborations andsystems between all these
parties, right? So you canreally think about blockchain
like an open protocol thatprovides a single source of
truth by connecting all thesedifferent systems and data
sources without a centralplatform in the middle. And this
(02:42):
is super helpful to improvecollaboration, reduce the risks
of dispute fraud, and reallyalso increases efficiency
reduces costs, right and, butblockchain also provides a so
called smart contracts. Sothey're not really smart, and
they are not contracts in alegal sense. They're more like
if else and relationships andterms through mutually agreed on
(03:04):
business rules that areregistered on the blockchain.
And that can ensure an objectiveand really technology and forced
execution of mutually agreed onterms like for example, payment
terms, and if they are verifiedon the blockchain, a payment
could be automatically triggeredin a very transparent and
verifiable way. So there'sreally a big potential
(03:25):
blockchain technology and how itcan really significantly improve
and transform the way businessescollaborate. We see this already
today, that use cases in manyindustries can benefit from
blockchain. Blockchain isalready used today also with SAP
solutions to support missioncritical collaboration processes
in in heterogeneous networksbetween different companies.
Dave Essex (03:49):
What are some of the more complete blockchain
applications that you're seeingfrom SAP customers?
Unknown (03:55):
Basically, a first wave of implementations that we saw
with the beginning of 2016 andthat are still very popular, are
really supply chain use caseswhere safety and compliance is
extremely important. Andsometimes the driver for these
use cases are regulatoryrequirements. So for example, we
have the drug supply chainsecurity act in the US, right
(04:16):
where in the supply chainbetween different companies like
manufacturers orpharmaceuticals, resellers and
retailers, a lot ofverifications need to happen to
make the supply chain moresecure, right. So for example,
verifying returns when theyreturn from pharmacies or
retailer back to the resellerbefore the reason that puts them
back on the shelf. They need toverify the identity and the
(04:38):
history of the specific packagesright to make the whole supply
chain more secure. The sameapplies for products like food
where when you would go to thegrocery store, and you want to
buy some seafood and there aresome labels on it like organic
or Fairtrade. You want to beable to trust this label if
you're even if you have a verycomplex, decentralized sub light
(05:00):
chain and similar use cases canbe found in, in sustainability,
right. And so this is really, Ithink, a kind of first wave of
use cases we saw, and what wesee much, much more recently,
more complex collaborationscenarios and workflows between
very different participants. Forexample, in the construction
(05:22):
industry,
Dave Essex (05:23):
I understand that SAP recently piloted the use of
blockchain to support thebuilding of HS two, which I
think is a it's a high speedrailway in Britain. Can you talk
about that pilot and the rolethat blockchain plays and also,
maybe talk a bit about the SAPproducts that are involved,
Unknown (05:41):
I really like to use the construction industry as an
example, we have been workingwith several groups here. And I
think most people can somehowrelate to the patterns and
construction. If you build yourown home, right, you might work
with five or 10 companies to getthis done. But if you build a
big infrastructure, project,similar patterns but but a
bigger scale, right, with dozensor hundreds of companies being
(06:01):
involved in HS two is basicallya high speed railway network
under construction. And you canthink about such a big
infrastructure project actually,as a program, right consisting
of many projects. And you canimagine one project is the
construction of a train station,there are different parties
involved. Of course, they arecontractors, they have
subcontractors, constructioncompanies, suppliers, service
(06:24):
providers, also entities that doinspection, technical
inspections, and certifications,and so on. And today, you will
have also hear situation that isreally a heterogeneous network,
there are different companies ofdifferent sizes, different
information systems, and there'sno central system in the middle,
that can really help to digitizethe collaboration. So it's
(06:45):
really decentralized. And at thesame time, there are a lot of
requirements to verifyinformation and to orchestrate
processes based on thisinformation between the parties.
So you could imagine, if you areresponsible as a contractor for
the construction of such a trainstation, you have to verify that
deliveries are on time andbudget. So if it's an
(07:06):
international trade, you have tocollect a lot of logistics
document, you have to work withyour subcontractors to get
warehouse receipts that are alsovery often paper based, and for
complex, and deliveries orproducts that are being
delivered. Like for example,fire protection systems or
technical products, they need tobe a technical inspection
certification from externalsource providers. And there, you
(07:27):
also have to collect inspectioncertificates that are typically
paper based to really verifythat the progress of the project
is going as planned, and thereare no roadblocks or delays. But
also to have verification, thatproduct was delivered as agreed
on the in the specifications forthe project, and it can be paid
right. And then on the otherside, of course, you have the
(07:48):
supplier who wants to be paid.And these paper based and very
manual processes, that alsobased sometimes on spreadsheets
and tools like that have a lotof problems like undetected
risks, for example, right? It'stoo late when you detect, maybe
the inspection failed, becauseit takes days or weeks until you
get the paper certificate. It'serror prone and costly. And it's
(08:09):
prone to disputes. Becausethere's no transparency, right,
there's an imbalance ofinformation and the supplier
might wait for their payment,and they don't understand why
it's not coming. And this manualprocesses and collaboration can
be digitized with a blockchainwhere transactions are recorded
in an immutable way. Andtransparent state wide is given
to all the differentparticipants involved in a
(08:31):
verifiable state. And theninformation like inspections, if
they were approved or not, orconfirmed by inspection service
provider. This can be all donedigitally checked and seen in
near real time. But to realizethe scenario, and this is why
it's a good really good questionwhat other products are
involved, it's not just aboutblockchain, what is required is
(08:52):
an integration into businessprocesses that are happening
inside the company. So you needa robust integration, also into
into workflow tools. And alsoanalytics, right? If you think
about, what we are doing isreally digitizing these
processes very often for thefirst time. And then you have
real time data that you canreally use to track for example,
(09:12):
the progress of the project toidentify potential delays and
risks, and that you can thenmitigate based on real time
information, and for that, anintegration into and what we did
is the SAP analytics cloud andfor that we use the business
technology platform, from SAPthat we have our blockchain
business connector, that isreally, really building the
(09:33):
bridge between all thistransactional systems and
analytical systems to enablethis kind of end to end use
cases from an SAP perspective.
Dave Essex (09:41):
Can you tell me where it stands as a pilot? Is
it just going to be a pilot ordo you think they're going to go
ahead with it?
Unknown (09:48):
Yeah, it's, it's still a pilot and yeah, it's, it's
under discussion how this willgo ahead. But it went very
successful and shouldertraumatic potential to improve
business also so right on theone side, we have this
productive use cases in thesupply chain. And these are the
newer use cases that we arecurrently evaluating, for
(10:09):
example, in construction.
Dave Essex (10:11):
So SAP media relations, and one of its other
articles mentioned a partnershipwith Sartorius, which makes
equipment for the pharmaceuticalindustry. And that was going to
be using Blockchain to ensurethat it is free from harmful
microorganisms. Can you say moreabout the specifics of that,
including the various SAPproducts that are involved?
Unknown (10:32):
Here, it's also a scenario right where you have
the manufacturer of equipmentfor the pharmaceutical
industries, they have regulatoryrequirements to get their
equipment sterilized before theysell it to the manufacturers of
pharmaceuticals. And there is aprocess where this is
orchestrated by a specializedexternal service providers. And
(10:53):
today, they have to provide alot of paperwork right, that is
done forwarded from Satorious tothe to the pharma companies or
manufacturers ofpharmaceuticals, but also to
regulators for check. It'sdecentralized in the sense that
it's very global. This ishappening in different countries
in different shapes and formaccording to the regulatory
requirements. And here again,right you have a use case where
(11:16):
you have different partiesinvolved, no central system
today, and significantinformation flow between these
parties and the need to verifythe state or right in this case,
for regulatory reasons. And thisis where blockchain is applied.
Also a pilot use case contrary,
Dave Essex (11:32):
you mentioned that there was some early success
stories, some early types of usecases. And then it seems like
there's this latest batch, Ithink you refer to what are
these more recent ones? Or eventhe early ones, I guess, what do
they all have in common, ifanything, in terms of new types
of business processes, and Ithink you've addressed this a
little bit already, were thetypes of industries that they
serve,
Unknown (11:52):
what we see a lot is that it is very often related to
regulated industries, wherereligious verification of data
is extremely important for goodreasons why because it affects
our health, likepharmaceuticals, or, or foods,
and where you have reallydifferent companies involved and
different systems. This isreally important. And we were
(12:14):
very clear about this. Alwayswere right, because it's the
unique capability of have thisreally decentralized ecosystem,
where you have kind of adigitization gap between these
companies on this has alwaysbeen the case. Also the
scenarios that we've implementedso far.
Dave Essex (12:31):
You mentioned some sap products earlier, what are
the various blockchain tools andplatforms and maybe applications
that SAP already has for sale,
Unknown (12:39):
what we currently have for sale is, for example, in our
business network portfolio, wehave a material traceability
solution that supports usecases, like I mentioned earlier,
with the tracking of the foodsupply chain, we have product in
sustainability area called Queentoken by ACP, that is focusing
(12:59):
more on sustainability data insupply chains, and also product
in the life science industry toverify this pharmaceutical
information that I mentionedearlier.
Dave Essex (13:14):
Can you talk at all about the areas that SAP is
looking at going forward forproduct development? Or they may
it may be a bit different orjust more of the same kind of
thing?
Unknown (13:23):
Yes. So we're doing a lot of work on the SAP Business
Technology Platform to reallyenable customers and partners to
extend their business systems,their business processes with
Blockchain capabilities, andconnect them to blockchain
networks, wherever it makessense. And the same is true also
(13:44):
for the technology, the othertechnologies that are on the
business technology platform,right. So for example, we have
we are developing the ACPblockchain business connector,
which extends our integrationsuite and support all also our
integration framework for eventdriven integrations. And if you
(14:04):
have listened to earlier right,I talked about transactions on a
blockchain. So you can thinkabout and like events also
related to to smart contracts,and enables basically any SAP
applications to in a verytargeted way to subscribe to
these events and consume themand use them in business
processes, right to triggerbusiness processes, based on on
(14:26):
blockchain events and the otherway around, but also to provide
an integration into otherpowerful technologies on the
business technology platform,such as the SAP analytics cloud.
I talked earlier that is can bea big value driver to digitize
decentralized processes withBlockchain. And then using this
(14:47):
insights basically, and veryoften in a kind of private few
from one country on the rightthey can consume the data from
the blockchain, combine it withtheir ERP data if needed, and
then get really great insightsinto does cross company
collaborations and then makedecisions based on this insight
is very often a great valuedriver. And other thing is also
(15:07):
true about when we think aboutprocess automation tools. I
think in one of your earlierpodcasts discussed, also SAP
build. So when we think about akind of workflow or process
automation, right, for abusiness user, also also a
developer. Actually, it doesn'tmake that much different, right?
If you would define an internalworkflow, or, or let's call it a
(15:32):
centralized workflow, and aworkflow that can talk and
interact with decentralizedtechnologies like blockchain,
right. And this is also aninnovation we are developing
currently, it's called crosscompany workflow that extends
all these great capabilitiesthat we have here, but then also
builds a bridge as an extensionto this blockchain based
collaboration scenario. So forexample, you can, for example,
(15:55):
request a kind of confirmationfrom an external service
provider, like a certificationwrite of a technical condition,
and then get this approval onthe blockchain in a verifiable
way. So this is also verypowerful to achieve this kind of
end to end optimization also,right and use the technology
(16:16):
really for in a way that itcreates business outcome, right.
And this is always our goal,right to use blockchain as a
tool to create sustainablebusiness outcome. And for that,
also combine it with businessprocesses and other
technologies, where it isbeneficial.
Dave Essex (16:32):
I see you mentioned a blockchain connector a couple
of times. Is that productalready available?
Unknown (16:38):
No, it's not yet available, but it will be
available soon.
Dave Essex (16:41):
Now, when I first started looking more closely at
blockchain applications a coupleof years ago, it seemed like a
lot of the more seriousenterprise level applications.
Were using private permissionedblockchain. But as I understand
it, many of the biggest longterm benefits that people are
talking about for blockchainrequire a public permissionless
blockchain. So I guess myquestion is, why use blockchain
(17:05):
if it's just going to be inside,you know, part of some kind of
private network that presumablyuses its own traditional
security and permissions? Whatis blockchain adding in that
kind of situation?
Unknown (17:17):
Yes, that's a good question. I mean, first of all,
one observation from my side isthat it's also important to
appreciate really whatpermissioned blockchain have
really done right. So theyreally drove this conversation
around blockchain for years. Andthey helped a lot of companies
to really go into this kind ofsolution space of also thinking
about automating decentralizedprocesses. And one of the quotes
(17:41):
that I got from my customersthat he said, I really loved his
conversations around blockchain,not because of the technology,
but because this kind ofperspective it brings to the
table and to also think aboutthis cross company scenarios and
decentralized scenarios, andreally cool long time
permissioned blockchain where welive the kind of tool to go here
in the enterprise space. At thesame time, we see that a chase
(18:02):
and technologies have developedquite significantly over the
last year is one trend that weare seeing, and that also
analysts see a lot as a kind ofalternative to permissioned
blockchains, or lecturedatabases, right, which are
really centralized databaseswith Blockchain inspires
capabilities. And these arereally great tools for closed
(18:23):
scenarios, right, where you havea very defined set of
participants and a closedenterprise scenario, right. And
on the other side, you see alsotremendous progress and public
blockchain at work. So I didn'tknow more and more considered
for enterprise scenarios. Andthis makes a lot of sense if you
think about network effects thatyou want to read, and also
having an easy way to onboardnew members into the network
(18:45):
that you cannot reallyanticipate to have in the
network when you started. And mytake is always start with the
business value, right? There aredifferent tools to achieve this
business value. There aredifferent alternatives are
available, and this is great anduse the right tool for the kind
of network you want to build.And I think on a high level
there are these three optionsavailable, and they make all
(19:06):
sense in their very specificscenarios.
Dave Essex (19:09):
So blockchain, especially cryptocurrency has
received a bunch of negativepublicity recently, including
some cybersecurity hacks, andespecially with the recent
arrest of Sam Backman freed theCEO of the FTX cryptocurrency
Exchange, which went bankruptand I think lost a lot of people
a lot of money. What are youWhat are you telling SAP
(19:30):
customers to reassure them thatblockchain is a safe and secure
technology for them to invest infor their enterprise use?
Unknown (19:37):
Our customers have been using Blockchain solutions of
saps for years permitted missioncritical processes. And in
general, there's a lot of trustfor blockchain and a lot of
curiosity. What else can we dowith that in the future, and we
are really laser focused to useblockchain as a tool to create
sustainable business value. Andwhen you think about Audit, it's
(20:00):
decentralized and reallytransparent nature can also help
to even boost right? This isactually one of the key use
cases to boost compliance andsafety, right? Why providing
these new capabilities andopportunities to shape
collaboration in this in thesenetworks? I think it's also
worth noting that a lot of thesecurity challenges that are
(20:22):
sometimes associated withBlockchain are not actually
happening on the technologyitself. It's much more that
certain companies like maybecentralized exchanges on top
crypto exchanges, for example,are a little bit like a
honeypot. Right for attackers,but it's really on top of the
technology with specificcompanies, and not on the
(20:43):
technology itself. And I thinkin the end, it's like with any
tool or any technology, focus onon the on the value, not so much
on the hype, and use it for theright scenarios, right and work
with reputable serviceproviders.
Dave Essex (20:57):
So I know you also are involved in web 3.0.
Blockchain, according to mostauthorities, there's some
disagreement on this is the mostimportant part besides the
Semantic Web of the foundationof web 3.0, which many people
feel is going to be the nextgeneration of the internet?
What's your best guess orprediction about when web 3.0
(21:20):
will have arrived in full? And Imean, the vision of the
decentralized web that puts morecontrol over the data back into
the hands of us? Yeah.
Unknown (21:29):
I mean, for someone like me, who's working in this
field, on the one side, you havethis bold vision of the web
three? And I think therefore,it's a very good question, think
about, okay, when will thisreally be the case? Now, on the
other side, I think for someonethat that works in the field,
it's important to think abouttimelines, right, and to put
things in perspective, and tohave also kind of Northstar that
(21:51):
you use to progress and worktowards this vision. And for us,
this is business where you so weare quite practically working
with customers to use Web Suitetechnology to create great
business value, right. And thenwe shape these technologies as
needed based on businessrequirements, right. And then it
is a kind of progression thathappens in the whole industry
(22:14):
along this timeline. And what Ireally see at the moment is we
are in a stage where blockchainis not just this bold vision,
it's really a great tool toimprove business processes to
save costs, and to boostcompliance in this decentralized
processes. And what I could seein the midterm, maybe if you
would ask me for for a timeline,a guess would be maybe one five
(22:37):
years, three to five years,something like that, we really
see that we re envision businessprocesses more and more thinking
about how can business processesbe done in a totally different
way, based on web three, becausewe have this new tools available
now compared to the past. And Iwould think this big Wishon,
where there is a lot ofempowerment, to do new business
(23:00):
models to think howorganizational structures work,
how value is created andcaptured. I think this is part
of the long term vision thatwill take some time to go there.
This is what we are working on.Right. And we are approaching
and how we are approaching this.This big vision.
Dave Essex (23:15):
What would you say for the web point three, vision,
and there's some standard piecesof it that most people seem to
agree on? Which pieces do youthink are the least mature and
need the most work to be donebefore web 3.0 will really get
here?
Unknown (23:30):
Yeah, I would say let's start what I really didn't put
my opinion the important pieces.So one thing are decentralized
identities. So in adecentralized web, you need to
be able to identifyorganizations and individuals
via corresponding technology.The other things are
interoperability, right. So forexample, what we are seeing here
are smart contractsstandardizations for tokens,
(23:53):
what is also very important arereally scalable, cheap
blockchain technologies andother technologies in the web's
we areas and easy access for thean easy integration into
business processes, but also, ofcourse, for private persons,
right for individuals. And thelater part is something we are
also focusing very much on. ButI think what I can say is that
(24:15):
already has great progresshappen in all these areas,
especially in the last fewyears. But there's still work to
be done in all these areas. AndI think over time, new
requirements will come up asthese technologies become more
mature, and more and moreapplied over time.
Dave Essex (24:29):
Where do you put the metaverse in all of this? You
know, they're very closelyrelated. And I as I understand,
I think the metaverse really isgoing to depend on a lot of
these web 3.0 elements to be inplace for it to really be
viable, how realistic or howsoon do you see Metaverse really
becoming a mainstream thing andwhat what does SCP have going on
(24:51):
in that area?
Unknown (24:52):
I will say right, the metaverse is an even bolder
version than the web three. Andthe more concerning
comprehensive vision I mean Andthen the web three. And here
what we are doing right in thisweb three area, which is
considered a part of the of thisMetaverse is really developing
services, business outcomefocused services on the ASAP
(25:16):
business technology platform. Sowe have technologies I already
mentioned. Right? Right, theblockchain business connector,
the cross company workflow.There's also a service for
decentralized identity. So thisis something where we work with
customers in a very tangible wayand provide services on the on
the BTP. And I'm not a thisother area on the metaverse is
(25:38):
around this immersivetechnologies like we are, for
example, one particular expertin this area. But here we are
also doing work in innovationsense. And also, again, very
focused on business value andoutcome. Like for example,
hybrid, hybrid businesssteering, collaborating on
business planning with we are,but also employee experience,
(26:01):
like onboarding, for example. Ithink both these technologies
have their own cross part. Butonce both technology spaces are
mature enough, we might see aconfluence to what something
that is currently described anddiscussed as the metaverse.
Dave Essex (26:19):
What's your advice to enterprise? So we're talking
enterprise business and ITleaders about the best way to
get started with the blockchainand begin to test the waters.
Unknown (26:29):
So yeah, really be prepared for the future, right?
Start now to familiarizeyourself with technology, and
learn about its potentials. Andespecially I think about the
conceptual part, we had to useit to create business value. And
this is the second aspect,right? Really the business
value, start with the businessvalue, how this maps your
(26:51):
strategy, the business goals youwant to achieve in the shorter
term, but also in the longerterm, right? And use this, this
kind of mapping to identify themost relevant scenarios, and
then start with a reasonablescope. And this is something we
do a lot of our customers,right. So SAP customers and
(27:11):
partners, my choice, ourcustomer engagement initiatives
we have around these topics widevery, really in a very focused
and business outcome orientedway. And discuss this use cases
explore these use cases andimplement them right with
customers. So if you'reinterested in that you can reach
me at blockchain at sa p.comblockchain at sa p.com. This is
(27:33):
our email address. And there weare happy to have this kind of
conversations and also provideguidance from from our side.
Dave Essex (27:40):
On Benjamin. I think that's a good spot to end a very
interesting discussion. I reallythank you for your time today.
Unknown (27:46):
Thank you very much.
It's the ERP confab. I'm David Essex industry editor
at search ERP. Blockchaincontinues to make news not all
of it good with the collapse ofthe FTX cryptocurrency exchange
and accusations of fraud, alongwith high profile blockchain
hacks, but it's clear thatenterprises still have
(00:23):
blockchain on their radars. Whatare the most promising use
cases? And what do the latestblockchain trends mean for the
metaverse and web 3.0? Today'sguest Benjamin stuckart, SAP
Senior Business DevelopmentManager provides some answers
and explains saps current andemerging blockchain products.
And an article on the SCPwebsite you were quoted as
(00:45):
describing blockchain in a waythat almost makes it sound like
an internal workflow or documentmanagement tool, but one that
could also support decentralizedcollaboration with organizations
outside of the mainorganizations such as suppliers
and subcontractors, you werequoted as saying, quote,
Blockchain is used to createtrust verifiability and
(01:05):
compliance in decentralizedcross company processes. I'm
wondering if you can go intomore detail about why do you
think this is a good use ofblockchain?
Unknown (01:15):
Sure, yeah. Thank you. That's a great question. So
obviously, right in today'sglobalized economy, companies
typically work with many otherorganizations, companies,
institutions, from all over theglobe, across many, many
different system, right, whichmakes collaboration difficult.
So when we talk aboutblockchain, we always talk about
(01:35):
decentralized scenarios in veryheterogeneous networks, where we
have different organizations,different kinds of companies
with different systemscollaborating, where they need
to work together without reallyhaving a central system, right,
that provides verification ofdata between these parties for
really critical processes likecompliance checks, regulatory
(01:58):
checks and risk managementpractices. And what blockchain
basically brings to the table isa decentralized ledger, that
cryptographically records allthe different transactions that
are happening in thesedecentralized networks between
the different parties. And byusing cryptography making them
immutable. And with thatmaintaining common view and a
(02:21):
common understanding right ofthe current state of the
different collaborations andsystems between all these
parties, right? So you canreally think about blockchain
like an open protocol thatprovides a single source of
truth by connecting all thesedifferent systems and data
sources without a centralplatform in the middle. And this
(02:42):
is super helpful to improvecollaboration, reduce the risks
of dispute fraud, and reallyalso increases efficiency
reduces costs, right and, butblockchain also provides a so
called smart contracts. Sothey're not really smart, and
they are not contracts in alegal sense. They're more like
if else and relationships andterms through mutually agreed on
(03:04):
business rules that areregistered on the blockchain.
And that can ensure an objectiveand really technology and forced
execution of mutually agreed onterms like for example, payment
terms, and if they are verifiedon the blockchain, a payment
could be automatically triggeredin a very transparent and
verifiable way. So there'sreally a big potential
(03:25):
blockchain technology and how itcan really significantly improve
and transform the way businessescollaborate. We see this already
today, that use cases in manyindustries can benefit from
blockchain. Blockchain isalready used today also with SAP
solutions to support missioncritical collaboration processes
in in heterogeneous networksbetween different companies.
Dave Essex (03:49):
What are some of the more complete blockchain
applications that you're seeingfrom SAP customers?
Unknown (03:55):
Basically, a first wave of implementations that we saw
with the beginning of 2016 andthat are still very popular, are
really supply chain use caseswhere safety and compliance is
extremely important. Andsometimes the driver for these
use cases are regulatoryrequirements. So for example, we
have the drug supply chainsecurity act in the US, right
(04:16):
where in the supply chainbetween different companies like
manufacturers orpharmaceuticals, resellers and
retailers, a lot ofverifications need to happen to
make the supply chain moresecure, right. So for example,
verifying returns when theyreturn from pharmacies or
retailer back to the resellerbefore the reason that puts them
back on the shelf. They need toverify the identity and the
(04:38):
history of the specific packagesright to make the whole supply
chain more secure. The sameapplies for products like food
where when you would go to thegrocery store, and you want to
buy some seafood and there aresome labels on it like organic
or Fairtrade. You want to beable to trust this label if
you're even if you have a verycomplex, decentralized sub light
(05:00):
chain and similar use cases canbe found in, in sustainability,
right. And so this is really, Ithink, a kind of first wave of
use cases we saw, and what wesee much, much more recently,
more complex collaborationscenarios and workflows between
very different participants. Forexample, in the construction
(05:22):
industry,
Dave Essex (05:23):
I understand that SAP recently piloted the use of
blockchain to support thebuilding of HS two, which I
think is a it's a high speedrailway in Britain. Can you talk
about that pilot and the rolethat blockchain plays and also,
maybe talk a bit about the SAPproducts that are involved,
Unknown (05:41):
I really like to use the construction industry as an
example, we have been workingwith several groups here. And I
think most people can somehowrelate to the patterns and
construction. If you build yourown home, right, you might work
with five or 10 companies to getthis done. But if you build a
big infrastructure, project,similar patterns but but a
bigger scale, right, with dozensor hundreds of companies being
(06:01):
involved in HS two is basicallya high speed railway network
under construction. And you canthink about such a big
infrastructure project actually,as a program, right consisting
of many projects. And you canimagine one project is the
construction of a train station,there are different parties
involved. Of course, they arecontractors, they have
subcontractors, constructioncompanies, suppliers, service
(06:24):
providers, also entities that doinspection, technical
inspections, and certifications,and so on. And today, you will
have also hear situation that isreally a heterogeneous network,
there are different companies ofdifferent sizes, different
information systems, and there'sno central system in the middle,
that can really help to digitizethe collaboration. So it's
(06:45):
really decentralized. And at thesame time, there are a lot of
requirements to verifyinformation and to orchestrate
processes based on thisinformation between the parties.
So you could imagine, if you areresponsible as a contractor for
the construction of such a trainstation, you have to verify that
deliveries are on time andbudget. So if it's an
(07:06):
international trade, you have tocollect a lot of logistics
document, you have to work withyour subcontractors to get
warehouse receipts that are alsovery often paper based, and for
complex, and deliveries orproducts that are being
delivered. Like for example,fire protection systems or
technical products, they need tobe a technical inspection
certification from externalsource providers. And there, you
(07:27):
also have to collect inspectioncertificates that are typically
paper based to really verifythat the progress of the project
is going as planned, and thereare no roadblocks or delays. But
also to have verification, thatproduct was delivered as agreed
on the in the specifications forthe project, and it can be paid
right. And then on the otherside, of course, you have the
(07:48):
supplier who wants to be paid.And these paper based and very
manual processes, that alsobased sometimes on spreadsheets
and tools like that have a lotof problems like undetected
risks, for example, right? It'stoo late when you detect, maybe
the inspection failed, becauseit takes days or weeks until you
get the paper certificate. It'serror prone and costly. And it's
(08:09):
prone to disputes. Becausethere's no transparency, right,
there's an imbalance ofinformation and the supplier
might wait for their payment,and they don't understand why
it's not coming. And this manualprocesses and collaboration can
be digitized with a blockchainwhere transactions are recorded
in an immutable way. Andtransparent state wide is given
to all the differentparticipants involved in a
(08:31):
verifiable state. And theninformation like inspections, if
they were approved or not, orconfirmed by inspection service
provider. This can be all donedigitally checked and seen in
near real time. But to realizethe scenario, and this is why
it's a good really good questionwhat other products are
involved, it's not just aboutblockchain, what is required is
(08:52):
an integration into businessprocesses that are happening
inside the company. So you needa robust integration, also into
into workflow tools. And alsoanalytics, right? If you think
about, what we are doing isreally digitizing these
processes very often for thefirst time. And then you have
real time data that you canreally use to track for example,
(09:12):
the progress of the project toidentify potential delays and
risks, and that you can thenmitigate based on real time
information, and for that, anintegration into and what we did
is the SAP analytics cloud andfor that we use the business
technology platform, from SAPthat we have our blockchain
business connector, that isreally, really building the
(09:33):
bridge between all thistransactional systems and
analytical systems to enablethis kind of end to end use
cases from an SAP perspective.
Dave Essex (09:41):
Can you tell me where it stands as a pilot? Is
it just going to be a pilot ordo you think they're going to go
ahead with it?
Unknown (09:48):
Yeah, it's, it's still a pilot and yeah, it's, it's
under discussion how this willgo ahead. But it went very
successful and shouldertraumatic potential to improve
business also so right on theone side, we have this
productive use cases in thesupply chain. And these are the
newer use cases that we arecurrently evaluating, for
(10:09):
example, in construction.
Dave Essex (10:11):
So SAP media relations, and one of its other
articles mentioned a partnershipwith Sartorius, which makes
equipment for the pharmaceuticalindustry. And that was going to
be using Blockchain to ensurethat it is free from harmful
microorganisms. Can you say moreabout the specifics of that,
including the various SAPproducts that are involved?
Unknown (10:32):
Here, it's also a scenario right where you have
the manufacturer of equipmentfor the pharmaceutical
industries, they have regulatoryrequirements to get their
equipment sterilized before theysell it to the manufacturers of
pharmaceuticals. And there is aprocess where this is
orchestrated by a specializedexternal service providers. And
(10:53):
today, they have to provide alot of paperwork right, that is
done forwarded from Satorious tothe to the pharma companies or
manufacturers ofpharmaceuticals, but also to
regulators for check. It'sdecentralized in the sense that
it's very global. This ishappening in different countries
in different shapes and formaccording to the regulatory
requirements. And here again,right you have a use case where
(11:16):
you have different partiesinvolved, no central system
today, and significantinformation flow between these
parties and the need to verifythe state or right in this case,
for regulatory reasons. And thisis where blockchain is applied.
Also a pilot use case contrary,
Dave Essex (11:32):
you mentioned that there was some early success
stories, some early types of usecases. And then it seems like
there's this latest batch, Ithink you refer to what are
these more recent ones? Or eventhe early ones, I guess, what do
they all have in common, ifanything, in terms of new types
of business processes, and Ithink you've addressed this a
little bit already, were thetypes of industries that they
serve,
Unknown (11:52):
what we see a lot is that it is very often related to
regulated industries, wherereligious verification of data
is extremely important for goodreasons why because it affects
our health, likepharmaceuticals, or, or foods,
and where you have reallydifferent companies involved and
different systems. This isreally important. And we were
(12:14):
very clear about this. Alwayswere right, because it's the
unique capability of have thisreally decentralized ecosystem,
where you have kind of adigitization gap between these
companies on this has alwaysbeen the case. Also the
scenarios that we've implementedso far.
Dave Essex (12:31):
You mentioned some sap products earlier, what are
the various blockchain tools andplatforms and maybe applications
that SAP already has for sale,
Unknown (12:39):
what we currently have for sale is, for example, in our
business network portfolio, wehave a material traceability
solution that supports usecases, like I mentioned earlier,
with the tracking of the foodsupply chain, we have product in
sustainability area called Queentoken by ACP, that is focusing
(12:59):
more on sustainability data insupply chains, and also product
in the life science industry toverify this pharmaceutical
information that I mentionedearlier.
Dave Essex (13:14):
Can you talk at all about the areas that SAP is
looking at going forward forproduct development? Or they may
it may be a bit different orjust more of the same kind of
thing?
Unknown (13:23):
Yes. So we're doing a lot of work on the SAP Business
Technology Platform to reallyenable customers and partners to
extend their business systems,their business processes with
Blockchain capabilities, andconnect them to blockchain
networks, wherever it makessense. And the same is true also
(13:44):
for the technology, the othertechnologies that are on the
business technology platform,right. So for example, we have
we are developing the ACPblockchain business connector,
which extends our integrationsuite and support all also our
integration framework for eventdriven integrations. And if you
(14:04):
have listened to earlier right,I talked about transactions on a
blockchain. So you can thinkabout and like events also
related to to smart contracts,and enables basically any SAP
applications to in a verytargeted way to subscribe to
these events and consume themand use them in business
processes, right to triggerbusiness processes, based on on
(14:26):
blockchain events and the otherway around, but also to provide
an integration into otherpowerful technologies on the
business technology platform,such as the SAP analytics cloud.
I talked earlier that is can bea big value driver to digitize
decentralized processes withBlockchain. And then using this
(14:47):
insights basically, and veryoften in a kind of private few
from one country on the rightthey can consume the data from
the blockchain, combine it withtheir ERP data if needed, and
then get really great insightsinto does cross company
collaborations and then makedecisions based on this insight
is very often a great valuedriver. And other thing is also
(15:07):
true about when we think aboutprocess automation tools. I
think in one of your earlierpodcasts discussed, also SAP
build. So when we think about akind of workflow or process
automation, right, for abusiness user, also also a
developer. Actually, it doesn'tmake that much different, right?
If you would define an internalworkflow, or, or let's call it a
(15:32):
centralized workflow, and aworkflow that can talk and
interact with decentralizedtechnologies like blockchain,
right. And this is also aninnovation we are developing
currently, it's called crosscompany workflow that extends
all these great capabilitiesthat we have here, but then also
builds a bridge as an extensionto this blockchain based
collaboration scenario. So forexample, you can, for example,
(15:55):
request a kind of confirmationfrom an external service
provider, like a certificationwrite of a technical condition,
and then get this approval onthe blockchain in a verifiable
way. So this is also verypowerful to achieve this kind of
end to end optimization also,right and use the technology
(16:16):
really for in a way that itcreates business outcome, right.
And this is always our goal,right to use blockchain as a
tool to create sustainablebusiness outcome. And for that,
also combine it with businessprocesses and other
technologies, where it isbeneficial.
Dave Essex (16:32):
I see you mentioned a blockchain connector a couple
of times. Is that productalready available?
Unknown (16:38):
No, it's not yet available, but it will be
available soon.
Dave Essex (16:41):
Now, when I first started looking more closely at
blockchain applications a coupleof years ago, it seemed like a
lot of the more seriousenterprise level applications.
Were using private permissionedblockchain. But as I understand
it, many of the biggest longterm benefits that people are
talking about for blockchainrequire a public permissionless
blockchain. So I guess myquestion is, why use blockchain
(17:05):
if it's just going to be inside,you know, part of some kind of
private network that presumablyuses its own traditional
security and permissions? Whatis blockchain adding in that
kind of situation?
Unknown (17:17):
Yes, that's a good question. I mean, first of all,
one observation from my side isthat it's also important to
appreciate really whatpermissioned blockchain have
really done right. So theyreally drove this conversation
around blockchain for years. Andthey helped a lot of companies
to really go into this kind ofsolution space of also thinking
about automating decentralizedprocesses. And one of the quotes
(17:41):
that I got from my customersthat he said, I really loved his
conversations around blockchain,not because of the technology,
but because this kind ofperspective it brings to the
table and to also think aboutthis cross company scenarios and
decentralized scenarios, andreally cool long time
permissioned blockchain where welive the kind of tool to go here
in the enterprise space. At thesame time, we see that a chase
(18:02):
and technologies have developedquite significantly over the
last year is one trend that weare seeing, and that also
analysts see a lot as a kind ofalternative to permissioned
blockchains, or lecturedatabases, right, which are
really centralized databaseswith Blockchain inspires
capabilities. And these arereally great tools for closed
(18:23):
scenarios, right, where you havea very defined set of
participants and a closedenterprise scenario, right. And
on the other side, you see alsotremendous progress and public
blockchain at work. So I didn'tknow more and more considered
for enterprise scenarios. Andthis makes a lot of sense if you
think about network effects thatyou want to read, and also
having an easy way to onboardnew members into the network
(18:45):
that you cannot reallyanticipate to have in the
network when you started. And mytake is always start with the
business value, right? There aredifferent tools to achieve this
business value. There aredifferent alternatives are
available, and this is great anduse the right tool for the kind
of network you want to build.And I think on a high level
there are these three optionsavailable, and they make all
(19:06):
sense in their very specificscenarios.
Dave Essex (19:09):
So blockchain, especially cryptocurrency has
received a bunch of negativepublicity recently, including
some cybersecurity hacks, andespecially with the recent
arrest of Sam Backman freed theCEO of the FTX cryptocurrency
Exchange, which went bankruptand I think lost a lot of people
a lot of money. What are youWhat are you telling SAP
(19:30):
customers to reassure them thatblockchain is a safe and secure
technology for them to invest infor their enterprise use?
Unknown (19:37):
Our customers have been using Blockchain solutions of
saps for years permitted missioncritical processes. And in
general, there's a lot of trustfor blockchain and a lot of
curiosity. What else can we dowith that in the future, and we
are really laser focused to useblockchain as a tool to create
sustainable business value. Andwhen you think about Audit, it's
(20:00):
decentralized and reallytransparent nature can also help
to even boost right? This isactually one of the key use
cases to boost compliance andsafety, right? Why providing
these new capabilities andopportunities to shape
collaboration in this in thesenetworks? I think it's also
worth noting that a lot of thesecurity challenges that are
(20:22):
sometimes associated withBlockchain are not actually
happening on the technologyitself. It's much more that
certain companies like maybecentralized exchanges on top
crypto exchanges, for example,are a little bit like a
honeypot. Right for attackers,but it's really on top of the
technology with specificcompanies, and not on the
(20:43):
technology itself. And I thinkin the end, it's like with any
tool or any technology, focus onon the on the value, not so much
on the hype, and use it for theright scenarios, right and work
with reputable serviceproviders.
Dave Essex (20:57):
So I know you also are involved in web 3.0.
Blockchain, according to mostauthorities, there's some
disagreement on this is the mostimportant part besides the
Semantic Web of the foundationof web 3.0, which many people
feel is going to be the nextgeneration of the internet?
What's your best guess orprediction about when web 3.0
(21:20):
will have arrived in full? And Imean, the vision of the
decentralized web that puts morecontrol over the data back into
the hands of us? Yeah.
Unknown (21:29):
I mean, for someone like me, who's working in this
field, on the one side, you havethis bold vision of the web
three? And I think therefore,it's a very good question, think
about, okay, when will thisreally be the case? Now, on the
other side, I think for someonethat that works in the field,
it's important to think abouttimelines, right, and to put
things in perspective, and tohave also kind of Northstar that
(21:51):
you use to progress and worktowards this vision. And for us,
this is business where you so weare quite practically working
with customers to use Web Suitetechnology to create great
business value, right. And thenwe shape these technologies as
needed based on businessrequirements, right. And then it
is a kind of progression thathappens in the whole industry
(22:14):
along this timeline. And what Ireally see at the moment is we
are in a stage where blockchainis not just this bold vision,
it's really a great tool toimprove business processes to
save costs, and to boostcompliance in this decentralized
processes. And what I could seein the midterm, maybe if you
would ask me for for a timeline,a guess would be maybe one five
(22:37):
years, three to five years,something like that, we really
see that we re envision businessprocesses more and more thinking
about how can business processesbe done in a totally different
way, based on web three, becausewe have this new tools available
now compared to the past. And Iwould think this big Wishon,
where there is a lot ofempowerment, to do new business
(23:00):
models to think howorganizational structures work,
how value is created andcaptured. I think this is part
of the long term vision thatwill take some time to go there.
This is what we are working on.Right. And we are approaching
and how we are approaching this.This big vision.
Dave Essex (23:15):
What would you say for the web point three, vision,
and there's some standard piecesof it that most people seem to
agree on? Which pieces do youthink are the least mature and
need the most work to be donebefore web 3.0 will really get
here?
Unknown (23:30):
Yeah, I would say let's start what I really didn't put
my opinion the important pieces.So one thing are decentralized
identities. So in adecentralized web, you need to
be able to identifyorganizations and individuals
via corresponding technology.The other things are
interoperability, right. So forexample, what we are seeing here
are smart contractsstandardizations for tokens,
(23:53):
what is also very important arereally scalable, cheap
blockchain technologies andother technologies in the web's
we areas and easy access for thean easy integration into
business processes, but also, ofcourse, for private persons,
right for individuals. And thelater part is something we are
also focusing very much on. ButI think what I can say is that
(24:15):
already has great progresshappen in all these areas,
especially in the last fewyears. But there's still work to
be done in all these areas. AndI think over time, new
requirements will come up asthese technologies become more
mature, and more and moreapplied over time.
Dave Essex (24:29):
Where do you put the metaverse in all of this? You
know, they're very closelyrelated. And I as I understand,
I think the metaverse really isgoing to depend on a lot of
these web 3.0 elements to be inplace for it to really be
viable, how realistic or howsoon do you see Metaverse really
becoming a mainstream thing andwhat what does SCP have going on
(24:51):
in that area?
Unknown (24:52):
I will say right, the metaverse is an even bolder
version than the web three. Andthe more concerning
comprehensive vision I mean Andthen the web three. And here
what we are doing right in thisweb three area, which is
considered a part of the of thisMetaverse is really developing
services, business outcomefocused services on the ASAP
(25:16):
business technology platform. Sowe have technologies I already
mentioned. Right? Right, theblockchain business connector,
the cross company workflow.There's also a service for
decentralized identity. So thisis something where we work with
customers in a very tangible wayand provide services on the on
the BTP. And I'm not a thisother area on the metaverse is
(25:38):
around this immersivetechnologies like we are, for
example, one particular expertin this area. But here we are
also doing work in innovationsense. And also, again, very
focused on business value andoutcome. Like for example,
hybrid, hybrid businesssteering, collaborating on
business planning with we are,but also employee experience,
(26:01):
like onboarding, for example. Ithink both these technologies
have their own cross part. Butonce both technology spaces are
mature enough, we might see aconfluence to what something
that is currently described anddiscussed as the metaverse.
Dave Essex (26:19):
What's your advice to enterprise? So we're talking
enterprise business and ITleaders about the best way to
get started with the blockchainand begin to test the waters.
Unknown (26:29):
So yeah, really be prepared for the future, right?
Start now to familiarizeyourself with technology, and
learn about its potentials. Andespecially I think about the
conceptual part, we had to useit to create business value. And
this is the second aspect,right? Really the business
value, start with the businessvalue, how this maps your
(26:51):
strategy, the business goals youwant to achieve in the shorter
term, but also in the longerterm, right? And use this, this
kind of mapping to identify themost relevant scenarios, and
then start with a reasonablescope. And this is something we
do a lot of our customers,right. So SAP customers and
(27:11):
partners, my choice, ourcustomer engagement initiatives
we have around these topics widevery, really in a very focused
and business outcome orientedway. And discuss this use cases
explore these use cases andimplement them right with
customers. So if you'reinterested in that you can reach
me at blockchain at sa p.comblockchain at sa p.com. This is
(27:33):
our email address. And there weare happy to have this kind of
conversations and also provideguidance from from our side.
Dave Essex (27:40):
On Benjamin. I think that's a good spot to end a very
interesting discussion. I reallythank you for your time today.
Unknown (27:46):
Thank you very much.
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