Gartner Research predicts that nine out of 10 companies will do a blockchain proof of concept (PoC) project this year, but most won’t go any further ─ even if they are successful. On the other hand, top-notch disruptors love a challenge, and maybe that’s why a show floor session on blockchain was standing room only at the recent SAPPHIRE NOW & ASUG Conference.
Joseph Fox, Senior Vice President at SAP Ariba (below), led the discussion, which was entitled, “Revolutionize Buying and Selling with Blockchain for B2B.” I was fascinated the first time I heard Fox speak about blockchain at SAP Ariba Live when he talked about the Everledger partnership, and he didn’t disappoint at SAPPHIRE either.
Whole new meaning to farm to table
Fox called blockchain and internet of things the perfect marriage for many industries. For example, “chaining” the movement of food by location, temperature range, shaking – all data collected as it travels from harvested field through arrival at the supermarket, dramatically changes how companies operate. If someone eats that food and becomes ill, it no longer takes weeks to figure out where it came from.
“Track, trace and recall is important in industries like food, healthcare and airlines, and with blockchain it can be done in minutes, especially if you have IoT-connected devices. Companies can obtain exact information on where an item originated quickly, and do recalls more efficiently,” said Fox.
Although blockchain wasn’t originally designed to be a transactional system, Fox said the distributed ledger in a secure, digital signature-based environment is ideal for global, peer-to-peer collaboration.
“Today on the internet it’s very difficult for businesses to interact with each other in a trusted format. Blockchain makes it possible for any business with credentials to interact with any other business globally through the chain,” he said. “It makes sense for SAP Ariba to look at blockchain because we’re dealing with 2.4 million companies transacting daily on our business network, totaling over 1 trillion dollars. If we’re down for a day, suppliers can’t get their food to buyers and people don’t eat.”
Trust doesn’t mean losing standards
But the return of peer-to-peer transactions means the loss of standards, which isn’t necessarily good for B2B commerce. Without standards, smaller companies scramble to meet the multiple formats of larger companies. Trust is equally critical. Companies need to be very careful about who they pay because if you accidently send $1 million to the wrong company it’s very hard to get it back.
“Our strategy is to add blockchain at the platform layer of the SAP Ariba business network and to our applications,” said Fox. “You maintain a transactional environment with standards and get the chain technology of ledgering trusted commerce. Also, there’s no middleware for blockchain interactions, so if you ask a small company to join a chain right now, they probably don’t have the technology to do so.”
Where blockchain is most valuable
Fox saw tremendous opportunities in adding new trust and verification capabilities across manufacturing and trading processes. Proof of delivery, faster payment without a third-party in between, more efficient and lower cost cross-border payments are just a few of the benefits blockchain promises. For example, smart contracts are among blockchain’s innovations, incorporating business rules that automatically trigger responses like discounts on purchase orders at designated thresholds.
“When a part is manufactured or mined, it can be chained through its lifetime so customers can verify that they actually receive the true item,” said Fox. “This protects brands whether it’s a printer or a diamond. It also increases collaboration. Members of the SAP Ariba network will not only be able to transact with members of the network, they’ll be able to interact with non-members like shippers who can update the chain as they bring products to the dock.”
Originally invented to move the crypto-currency Bitcoin, blockchain is morphing into something with far more potential value in the B2B market for trusted commerce.
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