Whose departure has become critical for business
In the Russian market, work has been fully or partially suspended
For example, Nvidia keeps the entire cloudgaming, as well as the work of supercomputers of corporations like Sberbank. And IBM and Cisco provided infrastructure solutions for most Russian companies: all large organizations had IBM Power hardware-server complexes and occupied 10% of the Russian server market. More than 80% of companies used Oracle products.
Iron can be supplied through a parallelimports, which were legalized in Russia at the end of March. And the business, if possible, bought electronics “in reserve” in early spring, when sanctions packages began to appear. On average, most devices can last five years, and in smaller companies, twice as long. In corporations, the opposite is true: depreciation is fast, and therefore the situation is more difficult for them. How exactly, it will be clear by 2023: at least in terms of whether companies will be able to build new supply chains and decide on a payment scheme.
“On average, most devices can last five years, and in smaller companies, twice as long.”
With software, everything is much more complicated:no parallel import for software will work. And hacking is not only illegal, but also poses security risks. It's one thing when it comes to, for example, infecting a personal computer of an ordinary user. Another is the risks for the corporate structure, especially in a conditional state-owned company, with certain levels of secrecy.
However, the exit from the Russian market also hitto foreign vendors themselves. In 2021, IBM received $200 million in profit from sales in Russia, which they may lose in 2022. EPAM lost $76 million in Q1 2022 alone due to leaving Russia. For SAP, the situation is even worse - the suspension of work in Russia costs the German vendor $350 million. SAP operating profit in the 2nd quarter of 2022 amounted to $1.68 billion - against $1.90 billion in the 2nd quarter of 2021.
Corporations face the biggest difficulties, at least those that have not switched to domestic software, although active migration began back in 2018.At the end of 2021, the share of foreign software in large Russian companies fluctuated from70 to 90%.For them, the loss of many products is critical, because it will not be possible to migrate to a new solution instantly.And the refinement of any failed product takes time. And it makes the situation worseThat the transition is inevitable: large banks, energy holdings and other large and significant Russian companies are under sanctions.Even if foreign vendors return, it is not a fact that they will continueWork with sanctioned clients.
Such a different exit from the market
All problems with partial or full stopthe work of foreign software vendors in Russia can be divided according to the degree of complexity. Easy version: the supplier simply does not allow you to buy new products. For example, the German company SAP, with which Gazprom, Sberbank and other corporations worked, stopped selling CRM and ERP systems to Russian customers, but does not prohibit the use of already purchased products. Taking into account the fact that businesses often acquire licenses not for six months or a year, as individuals do, but for a longer period, it is possible that someone will be able to continue working with SAP products until the conditional year 2024. In this case, at least there is time for a soft migration to a new solution with fewer problems.
Harder version:the vendor disconnects the client from the cloud, hosting, account, and so on. That is, it does not allow you to use an already paid product. Options are possible here - first, the supplier company warns that after a conditional week it will take away access to the product, or simply abruptly cuts off all channels. For example, Atlassian did this: it blocked the accounts of Russian and Belarusian state-owned companies. This is in addition to stopping product sales. But such stories are still few.
However, even where it is simply impossible to buy newlicenses, businesses have problems. Because the product is there, but there is no service and support. It becomes more difficult to quickly get answers to emerging questions, update the system - and this is important in the first place in order to promptly close emerging security vulnerabilities. In addition, software performance will degrade over time. And if the license required activation, the vendor can revoke it at any time and leave the user alone with non-working software.
Not all companies have integrators and their ownIT departments can keep complex software running smoothly - some can only deal with minor problems. Therefore, no matter how long the license works, a business with such a “semi-dead” product is on a powder keg. Maybe, of course, the foreign vendor will return, and everything will work perfectly again. Or maybe he will finally slam the door and create problems for customers.
“Software performance will degrade over time”
What the business chooses
There are not many options for Russian business.In any case, you will have to migrate - for state-owned companies and those related to critical infrastructure, this is a mandatory requirement. For the rest, it is rather a way to preserve the old business processes and reduce the risks that some other important foreign program will suddenly stop working. The only question is how the business will go through this migration: will it find a Russian vendor with a ready-made solution or turn to custom development.
Purchasing a license of a ready-made domestic solution- an option in which migration can be started even tomorrow. But this move will stretch for a year, if we talk about the corporation. Because, firstly, with the new solution, you need to integrate all the others. Not sure if this will be easy. Secondly, adapting hundreds and thousands of employees to a new solution is also not an immediate task.
Another problem of boxed software is its complexity.selection. Russian IT companies are strong and produce many good products, but the choice is not equally wide in all segments. For example, there are many office solutions, for cybersecurity too, but this picture is not in all directions.
In addition, it is unlikely that it will be possible to quicklyfind an absolute analogue of the most popular bygone products, niche flagships. Because for years and decades, most of the companies in the world used the conditional Oracle and there was no massive demand for alternatives. Similar products appeared in the same segment, but they differed in functionality, convenience and many other aspects. Now the developers will have to hurry to improve them.
Custom product development to replace the conditionalSAP, depending on the requests, will require six months or more just to create software. For a corporation, it could be a year. But taking into account the fact that the software is prepared for a specific company, it is easier and faster to integrate into the rest of the infrastructure than a ready-made boxed solution. Because the developer initially lays in it the moments related to integration.
The main disadvantage of a custom product is the cost:it is significantly higher than that of boxed solutions. Therefore, this path is far from always justified, for example, for small businesses with low turnover. But for a large company, custom is convenient because during the transition process you don’t have to slow down all processes - the migration goes as smoothly as possible.
In general, despite the price, custom development in2021 was one of the trends in the Russian IT market. The business was moving away from boxed solutions to individual ones. And as the RUSSOFT study showed, in 2021, almost 30% of Russian vendors' sales came from custom software.
Now boxed software enjoys greatdemand, because for many companies speed is a priority: migration needs to start right now. Especially in the segments of ERP, operating systems, office suites, and cloud services. However, in general, the demand for custom has tripled on the market, state-owned companies are more likely to turn to individual solutions. For example, DBMS (database management systems) in banks is their own custom software. For this, corporations develop internal departments of custom development.
There is no universal solution for business - you needcalculate the economics of each path. Custom developments are more reliable and flexible, the market itself is growing steadily and will continue to do so in the coming years. Boxed solutions are already known, they are easier and cheaper to install, but there are always risks that they will have to be finished for a long time and diligently.
“Now boxed software is in great demand, because for many companies speed is a priority: migration needs to start right now”
What if they come back
Considering that migration is not the easiest andfast process, business slow. Many want to wait and see. If the software is still working, there are no serious problems with it, there were no loud statements from the vendor about the final withdrawal, the temptation is great not to change the product. What if the company returns to the Russian market and everything will be the same as before? It is impossible to exclude such an option, but waiting is also risky.
The key software around which the business is built,still worth changing now. Because in the worst scenario, turning it off will stop the work of the entire company, and this will be a loss of millions and billions of rubles. For the rest of the software, each business makes its own decision at its own peril and risk, weighing the consequences of each outcome.
In general, the situation for business is now stronglyvaries from industry to industry. For example, retail is easier: although the percentage of foreign solutions here was high, there are enough ready-made convenient alternatives. In the transport industry, oil and gas, in the microelectronics segment, where the share of foreign software was striving for 90%, the situation is worse. And according to representatives of the oil and gas sector, there are technically complex systems, specialized programs, engineering software that have practically no alternatives.
With a high probability of replacing such productswill be custom, but it will not be possible to develop them in one day. Therefore, for some time, businesses will try to work on what they have, maintain the existing infrastructure and invest in new solutions. This is one of the reasons why the custom development market is expected to grow threefold by 2023 alone: the number of such solutions can take 50% of all software.
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