There’s a def­i­nite buzz around blockchain these days. The suc­cess of cryp­tocur­ren­cies like bit­coin and exper­i­men­ta­tion with addi­tion­al uses, such as pro­vid­ing assis­tance to Syr­i­an refugees and pre­vent­ing vot­er fraud, have made com­pa­nies take note of the new tech­nol­o­gy. As they are assess­ing its poten­tial uses with­in their own orga­ni­za­tions, a lot of ques­tions are aris­ing. What’s the cur­rent state of blockchain, and what do we need to know right now?

First, What is a Blockchain?

Accord­ing to ASUG’s State of the Com­mu­ni­ty 2018 sur­vey, only one in six ASUG mem­bers is very famil­iar or some­what famil­iar with blockchain. So, let’s begin with some back­ground information.

Although it start­ed as a method to trans­fer the cryp­tocur­ren­cy bit­coin, blockchain is actu­al­ly a sep­a­rate process for record­ing and ver­i­fy­ing trans­ac­tions of all types that’s also known as a dis­trib­uted ledger tech­nol­o­gy (DLT). For exam­ple, a trans­ac­tion is rep­re­sent­ed dig­i­tal­ly as a ​“block.” Each block con­tains a link to the block that pre­cedes it, as well as a time stamp and some trans­ac­tion­al infor­ma­tion. It then becomes part of a chain, which pro­vides a trans­par­ent and per­ma­nent record of the trans­ac­tion by lock­ing into place all the infor­ma­tion stored up to that point. As the Wikipedia arti­cle on blockchain puts it, ​“By design, a blockchain is inher­ent­ly resis­tant to mod­i­fi­ca­tion of the data.”

Pub­lic and Pri­vate Blockchains

A blockchain can be pub­lic, like bit­coin, giv­ing an unlim­it­ed num­ber of users access to the same data and blocks. While an increase in num­ber of users rais­es the risk of some­one tam­per­ing with the sys­tem, the size of the user pool is also self-reg­u­lat­ing. If some­one alters the data in an already-cre­at­ed block, it would like­ly affect sub­se­quent blocks and alert oth­er users to the dis­crep­an­cy. This makes a pub­lic blockchain a rel­a­tive­ly safe and secure method of stor­ing trans­ac­tion­al data.

A blockchain can also be pri­vate and cre­at­ed for a spe­cif­ic com­pa­ny. This exam­ple is a case with a lim­it­ed num­ber of users with­in a reg­u­lat­ed and con­trolled envi­ron­ment. Few­er blocks will be cre­at­ed, mak­ing them eas­i­er to mon­i­tor and less like­ly to encounter tam­per­ing. And if tam­per­ing does hap­pen, users are like­ly to find and report any issues.

How Blockchain Can Improve the Cloud

As com­pa­nies evolve their migra­tion strate­gies to move to the cloud, a com­mon con­cern is the secu­ri­ty of the data stored there. Who can get access to your data? Who can poten­tial­ly alter or down­load it, espe­cial­ly dur­ing peri­ods of downtime?

Blockchain is one way to man­age your data secu­ri­ty. It’s pos­si­ble to attach a blockchain to any trans­ac­tion­al data you store on the cloud as you move, say for exam­ple, your accounts payable and receiv­able infor­ma­tion from an on-premise serv­er to SAP S/4HANA Finance. Cre­at­ing a blockchain to pro­tect this data (and lim­it­ing the uni­verse of peo­ple who can access it) can alle­vi­ate the secu­ri­ty con­cerns many busi­ness­es face.

Big Buzz, but What’s the Use? 

Right now, actu­al adop­tion is still low. Accord­ing to a Wall Street Jour­nal arti­cle, as of 2017, only 1 per­cent of CIOs sur­veyed by Gart­ner report­ed an actu­al blockchain deploy­ment at their com­pa­ny. Anoth­er 22 per­cent are plan­ning a blockchain project either soon or down the road, while 34 per­cent report no inter­est in the tech­nol­o­gy. Among SAP users, ASUG’s State of the Com­mu­ni­ty results indi­cate that only about one in four ASUG mem­bers (24 per­cent) believe blockchain will have a sig­nif­i­cant impact on their com­pa­ny in the next two years. Short-term, there is not a lot of momen­tum for blockchain yet.

Yet inter­est remains high: 43 per­cent of CIOs have blockchain on their radar, even with no cur­rent action planned. Sim­i­lar­ly, of those ASUG mem­bers famil­iar with blockchain, 43 per­cent are extreme­ly or very inter­est­ed in the tech­nol­o­gy. Giv­en that it’s seen as a trans­for­ma­tive tech­nol­o­gy, com­pa­nies would be wise not to ignore its potential.

A Top­ic to Watch: Bal­anc­ing Blockchain with GDPR

While blockchain and GDPR are each gen­er­at­ing plen­ty of head­lines on their own, this Dig­i­nom­i­ca arti­cle details how these two top­ics could poten­tial­ly be in con­flict. Among the new rules out­lined in the EU’s Gen­er­al Data Pro­tec­tion Reg­u­la­tion (GDPR) is the right to be for­got­ten, mean­ing that you can request your per­son­al data be removed when a com­pa­ny no longer needs it for the pur­pose for which it was col­lect­ed. The nature of a blockchain, how­ev­er, is to per­ma­nent­ly time stamp trans­ac­tion­al data, which often includes per­son­al or com­pa­ny information.

How can a com­pa­ny keep accu­rate and secure records with­in a blockchain while still being GDPR-com­pli­ant? One option men­tioned in the arti­cle is to store per­son­al data in sep­a­rate ​“off-chain” data­bas­es, while keep­ing the actu­al trans­ac­tion with­in the blockchain. Regard­less, this is an issue worth watch­ing over the com­ing months, espe­cial­ly before plan­ning any blockchain implementations.

Blockchain Take­aways for ASUG Members

SAP has a vest­ed inter­est in blockchain tech­nol­o­gy, offer­ing blue­prints for bring­ing it to your busi­ness through SAP Leonar­do, along with emerg­ing tech­nolo­gies like machine learn­ing, the Inter­net of Things (IoT), and big-data ana­lyt­ics. ASUG mem­bers may not need to rush out and invest in blockchain today, but it would be wise to start con­ver­sa­tions now about how blockchain could help secure cer­tain process­es with­in your com­pa­ny in the next 1 – 3 years.

As SAP Leonar­do indus­try accel­er­a­tors con­tin­ue to devel­op, it will be impor­tant to see what role blockchain plays, or if these are more suit­able for machine learn­ing and IoT deploy­ments. ASUG mem­bers should also ask a lot of ques­tions to make sure SAP has solu­tions or workarounds to make blockchain imple­men­ta­tions GDPR-compliant.

Read more about oth­er intel­li­gent tech­nolo­gies includ­ing Robot­ic Process Automa­tion (RPA), arti­fi­cial intel­li­gence, machine learn­ing, and more.