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SAP Thinking Ahead Of Blockchain Threat

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Enterprise software conglomerate SAP has been forced to rethink its market strategy as blockchain innovations inch into the market, reports said on Friday (July 29).

Blockchain technology has been on the radar of software giants for some time. But the World Economic Forum recently identified the innovation as a "mega-trend" in computing, estimating that up to 10 percent of global GDP may be stored on blockchains by 2027.

And as major businesses, like JPMorgan and Toyota, experiment with using distributed ledger technology, the threat of losing market share for SAP and other Software-as-a-Service players increases, reports said.

"The potential for disruption is huge," said SAP Chief Innovation Officer Juergen Mueller. "If we would not move, this would be a huge threat."

Reports explained that businesses like SAP operate via centralized ledgers of transactions within manufacturing, accounting and other business processes.

Part of the company's move to get ahead of the blockchain threat, however, is to create new software allowing corporations, like banks and health care companies, to connect into blockchains with SAP's HANA Cloud Platform. The service could be used for a variety of use cases, like sharing medical records, reports said, or transferring money across borders.

SAP recently scored a victory in the latter initiative when it, along with ATB Financial and Ripple Labs, successfully moved money from Canada to Germany in 20 seconds.

The company also released better-than-expected second quarter data this month.

"For technology vendors, like Microsoft, SAP and IBM, blockchain represents a big opportunity to help their enterprise customers implement the next generation of database technology," said Wedbush Securities stock analyst Gil Luria in an interview with reporters. "Jumping in now is by no means late."

These enterprise software giants are facing market changes on another front. Oracle recently announced a takeover of NetSuite for more than $9 billion, a move that may signal consolidation in a cloud-based corporate services industry that has been filled with false acquisition starts in recent months.

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