After the recent announcement of SAP on Blockchain as mentioned in the blog post by Andreas Krompholz
“The key prerequisite to create real-world business value is the meaningful integration of blockchain technology into business processes and applications. Therefore, SAP shifted priorities away from the pure hosting of open source blockchain technology. Instead SAP will co-innovate with customers, partners and internal stakeholders to further explore enterprise-focused Decentralized Business Technologies (including Blockchain) that can be seamlessly integrated into cross-company business processes. “
Many customers and partners connected with us to understand the approach on how SAP business processes and applications could be integrated to open-source Blockchain Technology. In this blog post, we will showcase one of the ways on how this could be achieved.
Ways to connect SAP Business Technology Platform with open-source Blockchain Technology
There are two options on how this could be achieved: 1. Leveraging Blockchain Services made available with partners i.e. Azure, AWS, Google or other partners providing Blockchain service 2. Deploying Blockchain service to your own infrastructure. With your own infrastructure, you need to configure and manage all the Blockchain components i.e. database, nodes, certificates. There are pros and cons to each approach depending on the use case, type of blockchain, deployment cost, implementation efforts, and maintenance which need to be considered before finalizing on the path.
For our sample scenario, we are leveraging on Hyperledger Fabric on Azure Kubernetes Service and integrating it back to SAP Business Technology Platform which in turn, is connected to core business processes. In the context of this scenario, we will demonstrate option 1 as mentioned above.
We have picked up a scenario of Invoice Discounting using Blockchain to showcase how this could be achieved.
What is Invoice Discounting?
“ Invoice Discounting is a funding option provided to businesses that are issued by finance companies. Under the Invoice Discounting process, the business uses the unpaid invoices of its customers as collateral to access advances on cash funds that improve the working capital and cash flow position of their business.
Invoice Discounting significantly improves the cash flow and growth of a business. This is because the business obtains fast funding as immediate cash rather than having to wait the usual 30-60 days. This improved cash flow is critical for businesses as Businesses can then invest in growth. The two major downsides of Invoice Discounting is the cost and the reduced funding capacity. “
Benefits of using Blockchain in Invoice Discounting
Blockchain has the potential to make the existing invoice discounting process more efficient and also help grow the business of financier by improving their confidence to finance tier II and tier III, suppliers.
Our colleague Youssef Mohamed has already talked about the benefits of using Blockchain in Invoice Discounting in his blog post https://www.linkedin.com/pulse/invoice-discounting-using-blockchain-mohamed-youssef/?articleId=6668706512573095936
Technical Details on the scenario:
We have built Invoice Discounting application (User Interface and Business Logic) on SAP Business Technology Platform. Users (Suppliers, Financers, others ) accessing the application will be validated in the SAP Identity authentication service by fetching user details from the user store in Azure Active Directory. On submitting any transaction (uploading of Invoices, discounts offered) by the user, this data will then be written to Hyperledger Fabric on Azure Kubernetes Service using Rest API. The user certificate will be handled through Fabric CA.
The above architecture can be reused as a template for other business processes as well
- Financials with SAP S/4HANA Finance- Approval process to avoid fraud payments
- Procurement with SAP Ariba- Supplier claim settlement and verifications
- Logistics with SAP TM, SAP GTS, and SAP S/4HANA – Efficient document handling between numerous participants who are involved in the supply chain on day to day basis.
Kindly refer to the below blog post for detailed use cases across Line of Businesses,
For ease of understanding, we will be publishing these into 4 parts:
Special Thanks to the Microsoft team Chintan Rajvir, Sunil Sanjeev, Holgar, Loganathan Ramalingam, Holger Bruchelt for supporting this.