Yes, German blue rams need sand. These fish love to dig around in the substrate, so they need soft sand to protect their scales.
Like most cichlids, these fish spend most of their time hovering at the bottom of the tank and digging around the substrate. For that reason, sand is the ideal substrate for a German blue ram tank.
With a soft sandy substrate, these fish can behave like they normally do in the wild. They can dig happily without cutting or scraping themselves.
Alternatively, you can also use fine gravels or aquatic plant soil as substrate.
With plants or fine gravel, your German blue rams might not be able to dig around the way they would, but they can still hover around the bottom of the tank without hurting themselves.