Blockchain will do for business transactions what the internet did for information. That’s what some of the boldest innovators believe about this architecture that promises to streamline commerce with built-in trust and transparency. Hailed as the foundation for the next generation of transactional software, blockchain has been associated mainly with BitCoin. The basis of the BitCoin network is a distributed peer-to-peer network with the ability to securely store Bitcoin transactions. The technology underneath that network is named blockchain since data is stored in a chain of blocks. To date, blockchain has captured attention primarily from the financial industry. However, blockchain could disintermediate third parties like eBay, PayPal and Airbnb by automatically building in secure verification for commerce in any industry. I reached out to my colleague, raimund.gross, for his thoughts on what could propel blockchain to full-fledged, viable disruptor status beyond the financial sector. Gross leads SAP’s cross-industry blockchain activities.
1. Make the business case
To break out of the financial industry, a lot more people need to become aware of blockchain’s potential, and how it could benefit their industries. It’s no small feat for any innovation.
“Blockchain technology has the potential to establish trust among trading parties, thereby reducing cost and trade inefficiencies. Yet it faces the classic innovator’s dilemma” said Gross. “Blockchain needs use cases but people cannot fully understand the impact of new technological concepts. It’s like asking someone in 2002 to envision Facebook.”
Gross said technologists need to translate the blockchain technology concept into specific business value messages spelling out the advantages and benefits for departments by process and by industry. “It will take off only when the business owners comprehend why they should care about it. There are undoubtedly benefits to industries beyond finance. Speed and accuracy are the currencies of the digital economy, and blockchain’s ability to quickly validate trusted partners and facilitate accurate recordkeeping and trade is applicable to companies in every industry.”
2. Make the technology accessible
Developers need easier access to usable development tools, as well as supportive communities where they can exchange ideas and solutions, gaining valuable experience with the technology. For example, SAP Financial Services is working with multiple customers on the topic, exploring blockchain technology to support numerous processes including shared ledger payments and trading capabilities.
“Blockchain‘s distributed ledger approach will set the foundation for multi-party networks handling digital assets,” said Gross. “It perfectly complements SAP‘s path of digitizing the value chain, fueling the collaborative economy together with our partners and customers to make the world run better and simpler. With an intimate understanding and expertise in 25 industries, SAP is actively participating in exploring blockchain so our customers can use the SAP HANA Cloud Platform as an innovation vehicle.”
3. Prove the technology works
Now is the time for other industries to pay close attention and position themselves to benefit from the experiences of the financial sector. Blockchain could transform business models for companies that typically use processes across multiple parties. Consider supply chain processes around letters of credit, which currently rely on different parties — buyer, seller, bank, insurer, logistics provider — accessing the same information but lacking a shared repository with updated status and other important data. Another example is the music industry, which is exploring options to share royalties real-time, literally in sync with live streamed or downloaded songs. While there are more questions than answers swirling around blockchain today, the biggest one might be: which forward-thinking companies will differentiate and lead to become the next Google or Facebook of the transaction universe?
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Related content:
The blockchain voyage - from the Bitcoin network to Blockchain-as-a-Service
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