Blockchain Boot Camp: Who Benefits From The New Technology?

How Blockchain is Reshaping Business shutterstock T Blockchain Boot Camp: Who Benefits From The New Technology?

Sharing ideas was a core focus at the SAP Next-Gen Blockchain Boot Camp in Zurich. Participants took part in workshops to design and discuss application scenarios for different industries. The bottom line? The new distributed ledger technology adds value to almost any industry.

The participants arrived at boot camp in Switzerland to thick snowfall, even at the end of April. For them, these snow was simply erratic weather conditions, but for farmers and wine and fruit growers, the arrival of such wintery conditions in spring can threaten their livelihood. Fortunately, many are insured against potential crop failure. And even more fortunate are those whose insurance runs on blockchain.

Thanks to blockchain technology, through which encrypted data can be securely exchanged, the insurer can automatically review a farmer’s claim using defined parameters — for instance, more days of frost in April — and release the payment accordingly.

Blockchain: Less administration, greater customer focus

Paul Meeusen, from global reinsurance company Swiss Re, explains: “As insurers, we need to remind ourselves what our core business is all about: providing people with assistance and protection. To achieve this, we have to rethink our often drawn-out processes.”

Blockchain can help customers redefine standards and processes, meaning that claims can be reviewed automatically and policyholders can receive their money quickly. This process has already been implemented in the agricultural sector as well as in the travel sector. If a flight is delayed by more than half an hour, the policyholder can claim compensation. This can be processed automatically, as the blockchain network has access to real-time flight information and releases the payment as soon as the contractual criteria have been fulfilled.

This is the reason Swiss Re is turning to blockchain and working with 15 industry leaders, including Munich Re and Allianz, to develop the standards as part of the B3i initiative. The vision is for B3i standards to be as important for insurance companies as SWIFT is to the banking sector. In June, the new generation of contracts, or smart contracts, will be tested using blockchain.

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Successful innovation in banking

Blockchain has the potential to revolutionize finance, as transactions will be automatically executed and cleared in a matter of seconds. SAP has already achieved the first international blockchain payment from Canada to Germany between Canadian bank ATB Financial and the fintech startup Ripple Labs. For global companies, this model could mean an end to slow, expensive traditional bank transactions.

For former SAP CIO Oliver Bussmann, who today heads up his own consulting firm, blockchain is a “mega trend.” Referring to a study that he conducted together with the World Economic Forum, Bussmann said that more than 24 countries were currently investing in blockchain technology, including the United States, the United Kingdom, China, and Russia. In the past three years, U.S.$ 1.4 billion has been invested in blockchain, more than 90 banks are also jumping on the blockchain bandwagon, many are involved in networks.

According to Bussmann, digitalization is powering forward in collaboration with other new technologies, such as IoT: “We are moving away from a central cloud computing business model towards decentralized edge computing – in real time, and across a wide variety of industries.” And blockchain technology is necessary for this business model. His advice to all participants: “Don’t waste time, and make us of the early adopter benefits.”

New decentralized business model: Uber and blockchain

Approximately 1,600 startups are already on board. They are also the subject of a research project at the Munich Technical University. Most of the startups are involved in the finance and insurance sector. It’s a question of exploring ideas such as electronic wallets and application examples within the field of Bitcoin infrastructure (development of Bitcoin ATM machines). Other industries are also involved.

Dr. Andranik Tumasjan, who researches blockchain business models at the Technical University, named the following application examples: 3D printing in manufacturing and traceability in the logistics chain. Is organic really organic? A transparent blockchain logistics chain could ultimately provide the answer to this.

Blockchain is also involved when it comes to music copyright. Unlike with Spotify, which charges a monthly fee, blockchain technology allows startups to stream songs and the payment is sent directly from the consumer to the artist. For Tumasjan, this is a major benefit of blockchain: “In the future, there’ll be no more need for the middle man, just like with Uber. In five to 15 years, these intermediaries will be completely redundant.”

A decentralized startup similar to Uber, LaZooz, is already set to launch.  It functions just like an Ebay-blockchain model (OpenBazaar), whereby the buyer pays the seller directly using bitcoin. Other models involving blockchain include automatic, decentralized business models, such as the crop insurance company Jami Crop, or issuing compensation for delayed flights.

And how do customers benefit? With quicker processes, fewer costs, and regaining control of their own data thanks to blockchain encrypted data processes. “Ultimately, companies will become fully digitalized and decentralized, just like Otonomos.” Tumasjan explains there will be decentralized marketplaces such as Labor X, through which providers can offer their services, and receive payment using Bitcoin.

Will blockchain replace ERP systems?

And what does blockchain have to do with enterprise resource planning (ERP) systems, specifically ERP systems? McKinsey has already predicted efficiency gains of between U.S.$ 80 to 100 billion. When asked if blockchain will mean the end of the ERP world, Dirk Siegel from Deloitte gave the following answer: “We expect that ERP systems will continue to develop because of blockchain.”

This way, a part of the contract lifecycle management functions could merge with blockchain, and both systems could run alongside each other. In the future, new systems would emerge, which were specially developed with the new technology. This is illustrated by SAP’s cooperation with Deloitte, which integrates a distributed ledger technology based bonded loans platform into the loans management function of a next-generation ERP solution.

Stefan Gasslitter, CEO at Südtiroler Informatik AG, gave an example for the expected efficiency gain in the IT landscape. With the help of blockchain, authorities in South Tyrol are developing transparent systems that comply with regulations, simply IT landscapes, and enable a whole new level of data security. The South Tyrolean capital of Bolzano is looking to improve its citizen services, and has already succeeded in to simplifying a four-step process down to one step. Forty additional authorities in South Tyrol are looking to follow suit and introduce blockchain as a new infrastructure layer for the entire IT landscape. A cloud platform enables blockchain as a service.

For those who are concerned about blockchain threatening their job security, Thomas Spangemacher from the SAP Innovation Center believes that the IT industry has bright prospects: “We won’t need lawyers to draw up contracts, instead we’ll need developers.”

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