The term “blockchain” has been used a lot in many industries lately. Unfortunately, many aren’t aware of the possible uses of the technology, even in this sphere. Most non-specialists think blockchain and cryptocurrency are one and the same. However, blockchain as a technology has seen a lot of traction over the last few years in industrial applications. Trying to leverage it for use in situations where it’s not feasible usually results in underperformance or no performance at all. Implementing blockchain-based technologies has become easier with SAP users, thanks to new, cutting-edge additions to the suite. Before we look at what blockchain should (and shouldn’t) be used for, we must first look at what it is and how it works.
Understanding Blockchain as a Non-Specialist
Blockchains are precisely what they claim to be – a chain of “blocks.” Within these blocks are data points recorded throughout the network. A blockchain usually has multiple participants that check and verify the block as new transactions are added. The more contributors to the block there are, the more difficult it is to falsify information. Therefore, a blockchain can be used as a single source of truth among multiple networks that may be geographically separated. The only way a malicious actor or external user can modify the blockchain is by adjusting all the entries on the chain instantaneously. Because of the difficulty in doing so on large networks, blockchain can save businesses money by ensuring they need less protection against data modification.
The Drawbacks of Blockchain
One of the most glaring issues that blockchains have had is that, as the blockchain grows, the time it takes to verify data increases. There have been new blockchains explicitly developed to deal with this drawback. Many blockchains are looking at changing how verification processes work by using subnets that dilute safety by increasing verification speed. It’s a subtle tradeoff that may need more research to ascertain correctly. Another of the glaring issues that blockchain has from an enterprise standpoint is the inability to store personal data from anywhere in the EU. The General Data Protection Regulation (GDPR) requires personal data to be stored in a format that can be modified or deleted. Data stored on a blockchain can be changed (with requisite markers for when it was modified and by whom) but cannot be deleted.
Failure of Blockchain in Procure-to-Pay (P2P) Processes
Blockchain solves a lot of problems in business, for sure, but it’s a specific technology designed for a specialized environment. In a P2P system, there are usually a lot of people involved in the process of procurement. These may span multiple departments, each manipulating data within the database. A blockchain exists to enforce trust between users that may not have faith in each other. There is also the urge to manipulate data shared between users for personal gain. In a standard P2P system, all the actors within the department trust each other. None of them are likely to engage in the manipulation of data for fraud. While a blockchain could potentially be used for P2P processes, it’s inventing a problem for the technology to solve. A business could get by just fine without Ethereum wallets for use on a blockchain simply for P2P processing. If the company was involved in international trade, the use of a blockchain might be more warranted.