Enterprise software leader SAP is developing multiple blockchains, including Bitcoin and Ethereum, to create cross-industry versatility tools

According to Bloomberg, multinational enterprise resource planning software provider SAP is writing specialized software that will allow users to connect blockchain to their Hanna cloud platform, which will provide an online database and provide new functionality to their SAP systems.

Juergen Mueller, chief information officer of the Walldorf, Germany-based company, said blockchain's disruptive potential is huge and that if SAP doesn't address blockchain, the technology will become a huge threat.

About 50,000 businesses run SAP's financial and operational planning software. These companies design their accounting, finance and delivery practices around SAP's software. The organizing principle of this software is a central transaction ledger. SAP's customers from agriculture, energy, banking and automotive manufacturing pay millions of dollars to run this software.

SAP develops different blockchains

SAP is researching various blockchain technologies, including Ethereum and Bitcoin blockchains.

In one instance, SAP is using blockchain software to allow patients to share their electronic medical records with drug manufacturers or doctors during a specific period of time during a course of study or treatment.

In another example, they are designing a system for farmers’ weather insurance that would be able to access rainfall data from sensors in the field and then automatically notify the insurer if a drought is imminent and a payout is needed.

Cross-border remittances are one of the key banking applications of blockchain technology. Canadian bank ATB Financial and Ripple Labs transferred 1,000 Canadian dollars ($760) to a German bank in just 20 seconds, rather than days.

Blockchain is a multifunctional tool

Blockchains can be used under open source protocols or licensed from an independent vendor. Blockchains can speed up transactions and improve security while eliminating the need for centralized systems that are managed by individual companies. Companies can use them to build smart contracts, which can automatically respond to events, saving time. Blockchain ledgers can also prevent hackers from gaining access to a network by taking over computers.

Technology vendors like SAP, IBM and Microsoft have a big opportunity to get enterprise customers to deploy next-generation database technology, said Gil Luria, an analyst at Wedbush Securities. He said it’s not too late for these vendors to invest in blockchain technology.

Microsoft has been working with the R3 banking consortium to test money transfer and other capabilities.

IBM is working on the Hyperledger project to create blockchain standards for the IT, manufacturing and financial industries.

Established companies using new tools

Established IT vendors typically manage new technologies only when they learn their customers want to use them, and then make them safer and easier to use within their tools. Microsoft has taken this approach with Linux, and Oracle did it several years ago with the open source database Hadoop.

Josh Greenbaum, a software industry analyst who advises on enterprise applications, compared blockchain technology to the connected car project, saying SAP will not create the internal electronics or the car itself, but will enable the interconnections between the car, services and the driver.

Mueller estimates that it will take two to five years for enterprises to use blockchain technology widely. But he hopes SAP will move quickly on electronic ledgers. The company's network of innovation centers is developing new technologies such as blockchain applications, machine learning and personalized medicine for SAP tools and then making them available to customers.

Mueller said a large company cannot just reap the benefits of existing customers without looking to the future, and he cited Nokia and BlackBerry as examples of companies that failed because they failed to look to the future.