Enterprise Adoption in the Ethereum Ecosystem - Simon Engel | SAP

[Applause] good thanks it's always a pleasure being the first one after a Coffee corner and bringing in the people so let's see if the crowd uh goes up um first of all big shout out to the organizers because um I told it you at the moment right but I think this event is really really well managed very professionally so it's happy I'm very happy to be here to present you a little bit about my uh experience as a product manager at sap working at the intersection between like traditional companies and also like the crazy wild west of web free and how things are so first things first um I think we are running a marathon um if you work in crypto I need to tell you you signed up for a marathon um it's really exhausting very long time also until a project is Su successful um and it's really a long time also for us um because we really believe in a new paradigm and this Paradigm is decentralization it's being owner of its own content um certain other things token economy it's really about we believe in a new paradigm that's not or where we see a better future compared to where where we are today and for every Marathon you should actually study the Trail um and like maybe look at the past hey what worked well when I did my training run um but also look into the future hey where are there some hikes or obstacles I need to pay attention because otherwise you will be super exhausted and uh this this was me running my first marathon when I was actually not studying the trail um and it really hurt me a lot to be very Frank so that's that's the primer for everybody working in crypto at least what I see and this is for several reason let's look a little bit in the past for enter press software right sap um was founded I think 50 years ago um when like computers became mainstream but Enterprises and organizations needed to manage their processes already and do accounting right the first leder was pen and paper and then like on premise you had your main frame you could purchase a license plug it in run the software on your own that's kind of the on premise area and now we have this F Paradigm with Cloud maybe web 2 you call it where you have centralized Services it's very cheap very scalable and actually really good breeding ground for AI use cases because you have very centralized platforms they sit on a data treasure and they can do amazing things with let's just look at jgpt Etc so as you see enterprise software evolved over the years right and it would be also the right conclusion to say okay maybe there's even a new paradigm after that and for me at least personally how I see it it's really onchain it's the deployment model on where to deploy code you could deploy it in a written form on a paper you could deploy it on your uh laptop as on premise if you purchase the license you can do it in the cloud deploy it in the hyperscaler or you can actually deploy your code that runs process on chain as a smart contract or whatever or tap and this is also the reason why I believe we're really running a mun because most companies I see and work with they are stuck between here they still have their own software run in their own data centers a lot are now making the move to the cloud still some to follow but it's really it takes time you highly underestimate the stickiness of enterprise software when one company actually purchased it um I mean I'm still young but uh I I work now for eight years at sap and it's really astonishing to see how long certain projects can run to do the migration from a non premise and Cloud world and actually also transform the processes the same will need to happen for onchain so the question is how can you actually build Bridges and make it easier for companies that do want to move to an onchain world because they have better and more efficient processes to go there and for this um I do want to look at a very simple like product management framework right so first pillar is like is the solution actually desirable so is there a business value a clear business value why I should use the solution second pillar is the viability this a little bit more for the Enterprise but can I sell the software in a sustainable way like can I make profit money with it is the business model viable and then third feasibility like is the technology fitting my purpose and actually working in the way I intended to do so I brought some statistics to look at it and look where maybe some challenges are exactly so Tailwinds over the Brooklyn Bridge into the onchain world first one desirability um one major use case is personally is that stable coins actually find traction and utility why do I believe this because 70% of the onchain transaction value is actually generated by stable coins while they only compose like 10% of the market cap of the whole crypto market right and what does onchain transaction mean people are using it for several reasons could be a crossborder payment could be a remittance but they are using it it's really comparable if we go back to the SAS world you pay a subscription you want to use the software if you're not seeing the value you just cancel your subscription and you're out that's DET turn in the cloud world everybody is preventing you from or does not want to happen the same you see here with stable coins they find utility they find traction people Enterprises can and want use it and this is really driven by I mention it uh certain use cases I see it's really crossb payments it's super inefficient to send money to Argent Tina if you want as a big corporate um it's also really about tokenizing Fiat and third and I think this is maybe a little bit the first thing where the European Union actually could lead is again regulation because a lot of trefi and fintex are not really considering crypto again and stepping up um and this in my opinion actually drives standard option also to the Enterprise because if the traditional Finance instit tions can offer Financial products crypto related it just creates a lot more trust with the Enterprise to actually onboard into this world second feasibility um in the Enterprise context or at least also when I go around internally there is this great choke right what is a blockchain it's just a super expensive database and this statement is actually not true anymore because I mean you you are quite the experts here but after the Duncan upgrades um the L2 chains actually are very competitive in terms of a transaction fee so it gets really competitive to push a payment over an L2 and not over like a credit card like if you look at the established credit card networks usually they take a 1 to 2% fee plus 8 cents for a generic payment like this is your mom and pop shop down the road also the reason why they usually or do not want to accept credit cards at some points but if you now compare it with an L2 with usually between one and three cents it becomes a very very comparable and competitive to use blockchain as uh payment rail viability um Can can a company generate profit with blockchain and like sustain stainable profit not like creating a meme coin pumping it taking in the cash and running away and if you look as ethereum ldl1 I would sell hell yeah you can make a lot of profit with a protocol and very sustainable I think the the numbers are a little bit outdated because I looked them up two weeks ago but in the last 90 days ethereum generated a revenue of almost 1 billion US dollar that's sizable and if you substracted minus the token incentives it's a profit of approximately 200 million in the last 90 days that's huge without any CEO sure you have a great Community like in belgrad and everywhere around the globe who's really pushing the product adopting it and using it but in terms of a employee to revenue comparison that's quite leading and profits attract companies so people are really willing to pay for Block space let's have a quick like case study of it um I'm sure everybody is aware of Bas Bas is on L2 which was spun out by coinbase coinbase in my opinion is really a web 2 company they're Crypt native because they understand it centralized exchange but the technology is like based on cloud software right and what they did is really spun out base in my opinion in a very very great way and also made 40 million uh in the last 90 days with I think a team of 10 15 people that's insane why do they do this because they are now building a bridge from the Cloud Web 2 world into the onchain web 3 world with this al2 plus it's good business for them also there in terms if you compare it employees versus Revenue uh employee and revenue quote it's a very very sizable quote and you can make hybrid applications so think about your coinbase account you can now make the US dollar payment already on base it's a hybrid scenario you have the blockchain embedded but the user still has the feeling hey I'm in the cloud world so it's really helping the the adoption of Enterprises and users to use blockchain technology in a way so those are the reasons why I believe um the threee dimensions are closer than ever right so we're really at the edge where Enterprises can adopt certain things and the most demanded use cases I is really crossb payments it's quite straightforward nft for loyalty and marketing so Enterprises really realize hey there's a new marketing channel there's a new audience a younger audience I can reach with nft with coins the other thing is really about supply chain traceability and the fourth thing is about the whole notion of remote workers and how do I pay my remote workers in crypto when they sit in Argentina and South Africa wherever so the usual Shilling a little bit about what the sap is doing right we're a big company we're really a cloud company one of the vas but we're also really looking into how can we make digital currency in payments better so one of the products I think we hope or I know we will launch soon is the sap digital currency Hub it's an Enterprise wallet which integrates into your financial processes second solution is sap green token which is a solution to trace your supply chain in certain certain commodities for example like pal oil and do the mass balance to really say okay this is orgenic palm oil because of the mass balance and the third thing is an nft management platform for exactly this community building and marketing purpose Simon so you say okay we are at the edge of the sweet part where's the mass adoption when when lamboo when Moon and that's a tricky part remember we are on a marathon and there is this great book by Joffrey Moore called the jasm um and it really explains how to Market Innovation and technology and we are still very very early we still have not found this Gap the chasm in my opinion I think we're still a little bit with the innovators the early adopters we're growing new people new Enterprises coming in every day every year that's great but it's still not the early majority why do I believe this there was a great study by kasb last year and they asked Enterprises around the world heyy which of the following would increase your likelihood to adopt blockchain for your business and 50% of them said I need to learn more how my peers are actually using it so they're really trying to get some references and see what's actually possible today 47% of them said I need to learn more about blockchain I I don't feel comfortable working with this technology so it's really about education and enablement and 43% they like a a clear understanding of the business value so what can this technology provide actually for my business like can it increase Revenue can it cut cost can it prevent me from a fraud what does it do so it's really also about the product messaging of those web free products have a look now let's have a look um how to maybe prevent this and for the future how to think about hey how how can we drive the Enterprise adoption in the in the ecosphere um because we are really transitioning from the innovators to the Early adopters to the early majority and the tricky part is the early majority so the customers you want to get after the big gap they only buy from the early majority so you have this deadlock situation where everybody is cross referencing everybody and nobody does want to make the first move so how do you actually resolve this in a nice manner how do you create this reference ability without being the first who needs to adopt it and also here maybe a very basic case study on how to do it with the US dollar and stable coins but but you need to provide your buyer and the buying Center two Alternatives one is the market alternative that's what already is in use everybody's using is used to and knows how to use it it's very simple in our case US dollar you fat system everybody knows it it's the old Tech if you will and you need a product alternative which is built on the new tech in a broad Market because this is how you tell the buying Center to say look there's also detect alternative with the same benefits as we do uh and circle I just pick Circle for for some reason um they did it quite nicely because and this is just from the website right um they claim money is now open move money faster and ly with usdc so you can really make it easy for a buying Center to understand okay if I use a circle stable coin it's new tech I get the efficiencies but on the other side I also have references to the old world Fiat money but and the other product alternative could be tether could be your other USD stable coin right that's how you resolve this reference ability um second thing is education Executives and buying centers they they need to be able to use blockchain safely if you remember in the on premise world everybody was used to make a backup in the cloud world no one does a backup now because like cloud and the service provider they do it for you on the other side you needed to learn maybe I shouldn't put my very confidential information into this cloud service I don't really recall where like the computer is standing right so it's really also a habit change how to use the technology the same will need to happen for Enterprises and Executives with web free and blockchain so they need to learn it they need to learn what is a wallet how do I sign trans transactions what do I do with it why is it helpful and it will take time I mean you sign up for a marathon right plus user experience still sucks honestly um like if I make some transactions larger I still sweat like sometimes you're really you're really not sure will this work I did some test transactions but it could still fail so uh user experience is still a big gap like on the uix side on the transaction side I think we're making good progress on the account abstraction side and smart wallets that's a very nice thing it's going into the right direction but it's still not there yet where my grandma would use it right and the other thing Executives don't care on what technology your product is built on um like they really don't care it could be smart monkeys sitting somewhere doing the calculation if it would be fast enough cheap enough they would buy it from a technology perspective they just don't care what you're using period And this is also what you need to understand for the product messaging of your Enterprise product they care about the business value so be very precise and maybe have some very concrete kpis or again references to say this is how this solution is helping your business it's bringing 10% my Revenue it's reducing turn by 15% but this is what Executives need to understand before they can make the buying decision so it's really about creating a clear business outcome and a clear product messaging and I think the industry grew up a lot also matured but we're still too crypto Centric in a way and I think we did it even like with one product of ours um like AB tested it so one was really a crypto Centric landing page the other one was really centered around the business outcome and guess what actually won and brought the most leads it was the outcome cic page no one cared about blockchain really no one cool um yeah so I mean we have a bunch of people here if you're a developer if you're product manager if you're Community Builder um you're on the right track the tech is there it's really about now building educating also the businesses the Enterprises and if you build a product or Community then really go for the business outcomes like don't go for the crypto just because of crypto sake but make the business better um this is also a little bit my personal mission um I do want to educate Executives in web free because I really think this is a big lever in driving adoption so um I'm currently planning to write a small book will be will be a very quick a lot of pictures Executives like pictures so um if you want to help me it's a short survey just type in what you believe they should know if you have experience and I'll just send you also the first draft cool that's me um I mean if you want to connect feel free I'll be around here whole day also tomorrow so if you just want to chat maybe also see the products we develop hit me up um um and with that I think we're open for Q&A we definitely are so first of all give a give it up for Simon Simon and let us open a quick Q&A session so with that being said Do we have any questions to the audience yes over there do we have a mic or yes okay thank you great presentation um so you showed the use case slide with four and all of those use cases are at least seven years old um they are since 2017 and the only one so obviously crossb payments using Stables is like very much been adopted but the other three I would like be pretty confident to say I've basically seen no progress um at least in actual adoption and The Innovation on blockchain is like the consensus layer right not the execution layer but you had that slide talking about onchain compute is like a next step in the same we went on Prem to cloud and so what point would you give up on this belief that enterprises are going to put compute on blockchain um you know if if five five years from now four years from now we still have only seen stable coin whether it's like remittance payments crossborder payments what however you want to look at it if all we have is stable coins as the only use case for businesses on chain would you yeah basically give up like would you realize that this is actually maybe not a technological innovation that applies to business and it really applies to um entities that are more likely to have a dispute maybe like central banks this sort of stuff um good good question so I just want to say one more thing the consensus layer for the business world is contract law and so like you're not going to replace that with a blockchain so yeah just when would you give up but yeah great presentation thank you is is it's a very good and very valid question actually um I would answer it like this personally I'm very excited what currently like the whole deepin narrative is also doing in like decentralizing the cloud and everything so there is a way to decentralize your compute but the question is what is currently cheaper to really compute and where do you actually train I I think like the most compute intensive applications we we know as of today the AI models right it's all centralized data center highly optimized because centralization is cheaper faster right that's the whole trilemma we all know um so Enterprises will need to make certain decisions where the compute of certain applications will need to run would I imagine a world in the next 5 years where we will where we can train actually AI models in a blockchain I don't believe it honestly I think there are some great great starting points with Federated learning Etc and also the Privacy enhancing Technologies are helping but um it's just a compute intensive why would you distribute it if you all if you can make it cheaper in your own data center right um so I I think that's that's my answer to the first part um the second part is about the contract law and the consens consensus um Enterprises are like an or organization by by definition right or and if I think about Enterprise processes sap is selling Enterprise processes to companies if you have a process inside your company there's also no reason to use blockchain for it you can do it perfectly in your own solution because you trust yourself so um making an internal order easier done cheaper in the cloud world because it's an inside process but the benefit web free actually is having like you said in the consensus world with all the contract laws if you need to engage with an external party could be an organization could be a employee could be whatever and making this in inter business process much more effic efficient and faster um so I I hope this aners it in a way way perfect I think there was another question somewhere do we have one more question yes here please hello great presentation um my question is uh in your opinion uh what domains uh are going to be the main adopters and who will push the border and step into the next level uh in terms of Enterprises in terms of blockchains in Enterprises for me it's the financial industry to be very honest um because now they have the regulation they have the clarity how to deal with crypto sure the regulation could be also improved and there's still some Gray Zone but from the conversations I see is that at least in Europe also now in the US with like the uh Bitcoin ETF and things right mm they can deal with it and they also see this as a big business opportunity while your traditional Enterprises maybe in manufacturing or consultancy right though those more traditional Enterprises who do not have like a close proximity to this technology they're still far down the road I would say they're more the late majority but Finance institutions at the moment really really drive for it try to figure out what's the the business value um what's also the efficiency for them internally because they have old banking systems um nobody does want to touch basically and there is really a good good opportunity to optimize this and a part of them do you have any idea um not the and then now I would go different so that's the industry now I would go from a customer segmentation it's a small small small Enterprises right they have razor thin margins so everything that helps them make a better margin for example with payments don't pay like the fee to Master Card or Visa card but maybe to a chain whatever helps them it will take a very long time for the big big Enterprises but from industry perspective the small ones yeah and it's very diverse it could be a coffee shop it could be a small agency maybe a consultant see maybe a very small manufacturer um but it's really the smaller smaller mom and pop shops and then I think it grows up will be then the medium-sized companies and then maybe at some point the large ones thank you and unfortunately we are out of time I did see the question however we are out of time but feel free to like to network with Simon Simon is going to be here uh for the rest of the day and tomorrow I hope so feel free to uh talk to him privately he's a really nice guy so I I'm pretty sure he's going to be more than glad to talk to you and with that being said please give it up for Simon