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SAP promotes blockchain services, suggests IoT use cases

Blockchain use cases for business are still limited, but SAP believes the new SAP Leonardo Blockchain Co-innovation program will help foster adoption.

Is blockchain just the latest IT flavor of the month, or does it have real business uses? SAP is banking on the...

latter, and to illustrate this, it's beginning to offer blockchain services for internet-of-things-related manufacturing and digital supply chain applications.

The vendor announced the SAP Cloud Platform Blockchain Service at SAP TechEd 2017, where it also unveiled collaborations with several companies for creating real-life instances of blockchain services. The companies include Capgemini, Deloitte, GrainCorp, HCL Technologies, HERE Technologies, Moog Inc., Natura Cosmeticos, NetApp and PeerNova.

Blockchain is valuable because it provides an irrefutable record that belongs to only one owner and can't be altered, according to Gil Perez, SAP's senior vice president digital assets and internet of things.

Blockchain services are not appropriate for every application, Perez explained, but they can be very useful in certain cases. One of these is parts production for highly regulated industries where manufacturers can use blockchain to track and trace parts all through the product lifecycle.

"It's the whole global track and trace, being able to do product authenticity at the end, being able to see product hierarchy, being able to verify the end product is what it said it was," Perez said. "It also may be the ability to see compliance to certain requirements. Or, it could be also reporting to a regulatory agency, where the government or a regulating entity wants to see [if the product is compliant], and they can go in and see that blockchain."

SAP blockchain services help with digitized manufacturing

To foster the adoption of blockchain, SAP introduced the SAP Leonardo Blockchain Co-Innovation program, which gives SAP customers and partners the opportunity to explore and develop blockchain applications.

We didn't start with blockchain and ask, 'How do we use it?' We started with the problem and came upon blockchain as the solution.
George SmallCTO of Moog Inc.

One of these partners is Moog Inc., a global manufacturer of aircraft systems and missile components based in East Aurora, N.Y. Moog currently logs everything it does within its SAP ERP system, Perez said, but has also now developed a blockchain to provide an irrefutable record of the manufacturing process. This includes information like the number of people who designed a part, the results of the first quality tests for the part and the number of tests that were conducted before the part was approved for release.

Moog's use of blockchain began when it started a project to use additive manufacturing to produce some parts and they wanted a digital process control system, according to George Small, Moog's CTO.

Additive manufacturing was an ideal use case for blockchain, because it provides an irrefutable digital record of the provenance and traceability of parts as they are developed digitally and work their way through the system to become physical parts.

"We didn't start with blockchain and ask, 'How do we use it?' We started with the problem and came upon blockchain as the solution," Small said. "It's early stages, but I see it playing a bigger role within our information team as a part of our Industry 4.0 initiative. This is moving us further down the digitization path, and blockchain fits right in."

SAP blockchain services not a fad

Blockchain has limited enterprise usefulness now, but SAP appears to be preparing the groundwork to make it available for more and more applications, according to Ezra Gottheil, senior analyst with Technology Business Research, a research and analysis firm based in Hampton, N.H.

"By itself, there are only a relatively small number of applications where you might use it, and there are clearly limitations in what it can do, but clearly there are also lots of things that it makes sense to use that technology," Gottheil said. "[The use cases that SAP demonstrated] seem to be the ones that people are talking about, like these kinds of multiparty business relationships -- supply chains, chain of custody for food and things like that -- where basically you want to know who amongst a large number of actors had a role in the custody of some concrete asset."

Blockchain services are here to stay in the enterprise, Gottheil said, and SAP is not alone in trying to provide the tools that can help businesses develop applications that use it. The main appeal is it can help companies solve problems.

"I don't have any doubt that there will be some real uses for this. It isn't a fad; it's kind of a mathematical solution to common problems, so I think it will get plugged in a lot," he said. "What I'm not sure about is whether we're going to say, 'Aha, this is a blockchain application,' or whether it's a feature of this application that has a degree of irreversibility or security. I'm sure all the big application platform shops have blockchain in their toolkits, because if you have a problem to solve, they can say this is the kind of thing that needs blockchain."

Next Steps

How will blockchain affect IT in the future?

Read more about SAP's $2.2 billion bet on IoT technologies.

Find out how SAP Cloud Platform extends IoT and robotics for manufacturing applications.

Dig Deeper on SAP trends, strategy and ERP market share

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