Tagir Yapparov: There is a serious change of structure of the market

TAdviser: How in general mood in the company in connection with events of the last year?

Tagir Yapparov: On the one hand, situation in the market very difficult, forecasts for economy also difficult. IT market well feels what occurs in economy and the more so it feels a segment of corporate informatization. We grow quicker than the market in case of its growth, and we fall quicker than the market if it falls since the big share of projects which we execute belongs to investment.

We see that the market in itself is reduced two years. At the same time in a negative side for us its structure changes. The high share of own products allows to balance in income generation to us, and we make great efforts to become the global player. Generally, the situation difficult, but in it is the clear strategy, clear models of the further movement. Therefore mood moderately positive, working.

Now it is very difficult to do forecasts. And one of problems of a present situation is that long-term planning became much more risky, than was earlier. Long-term planning is possible at a stable situation. And today we are, unfortunately, in a situation when to predict something it almost like to gamble. It is possible to guess, and it is possible and not to guess.

And from this point of view we are in a situation when that approach which we considered correct - investments into new technologies and the products - now becomes much more risky and heavy. Now we are much stronger limited in terms of financing. Though in those directions where we see opportunities for the movement in global market, we continue to invest.

TAdviser: What direction do you mean?

Tagir Yapparov: We have a product - a mobile workplace of WorksPad (access to mail, documents on mobile devices). Here we see the growing market in Russia, on the one hand, and an opportunity to compete globally, on the other hand. In similar history, we consider, and it is necessary to invest.

TAdviser: Own products allow to expect participation in import substitution programs...

Tagir Yapparov: With this question in my opinion a situation very difficult. It is clear, that on the one hand development of a trend of import substitution gives us chance more to promote own products and technologies, it is possible also service, but in general big customers are in wait state so far. They created departments of import substitution, appointed directors of import substitution, but so far all this did not pass into real solutions and into the real world.

On the one hand, the systems of the international vendors installed earlier become more and more expensive asset. With another, it is not simple to find adequate analogs in many technologies. Therefore, in my opinion, there is an opportunity to save sales volume in the Russian market, and we do it because we promote the products and the solutions more, but we see opportunities for growth in global market.

TAdviser: In 2014 dynamics of ruble revenue of IT was close to zero and if to count for dollars, then there will be noticeable minus …

Tagir Yapparov: The matter is that we long ago - about seven-eight years ago - passed to ruble accounting. Before all companies in the country long enough kept account in dollars, and, of course, it was justified for many reasons. Because there was a period when everything became attached to c.u. But gradually all economy passed to ruble calculations without binding to dollar. And as all our expenses and income ruble, and a share of import products small (we not classical integrator, we integrator with a big share of own products), for us it was logical to pass completely to ruble accounting, and we, thus, conduct all planning in rubles.

For example, last year at us approximately for one billion rubles the income connected with technologies and products of our foreign vendors dropped out. We compensated them by own products. Such is our strategy of preserving of business. From this point of view that result which we see - preserving of ruble income, it for us is absolutely clear also on it we and we calculate.

Keep account in national currency - it is normal. If to look at euro, it for the last year fell to dollar from 1.35 to 1.1. It does not mean that the German companies began to keep account in dollars. They both conducted in euro, and conduct, and nothing.

TAdviser: Whether the profitability of IT in connection with increase in a share of own products in your revenue grew?

Tagir Yapparov: She precisely would grow up if the course did not change. It strongly struck, of course, those contracts which we had. Unfortunately, we have very long business. We sign the contract today, and we implement the project in 9 months. There are projects annual. At the same time clients very strictly insist that the prices were fixed in rubles. Units from them are ready to fulfill a binding of the prices to dollar.

Yes, we increased profit on own products, but, as well as everything, lost on depreciation of the ruble according to transactions with foreign products. In principle, we saved profitability, but it not such is which we expected. This year we will hope for growth if the market is stable, there will be no movements. But once again I will return to the beginning - now very difficultly to plan, major circumstances are possible any swagger.

TAdviser: Whether it was necessary to lay off employees last year?

Tagir Yapparov: Yes, we reduced in a number of divisions to 15% of employees, but in terms of result at the end of year of number of workers in the company we were stable. Because employed in the divisions connected with our services with our products.

TAdviser: Who exactly was reduced?

Tagir Yapparov: First of all back office. We reduced plus or even sold the directions which for various reasons considered not really effective or not corresponding to strategy. For example, in February, 2015 sold division which was engaged in cloud computing for medium and small business ("The Unicloud labs" was sold to the Modulbank project, a comment of TAdviser). In principle it was the interesting project, rather successful, we even found methods of its monetization. But strategically we understood for us very important thing - the market we will not go to SMB.

So for us it was a certain test - to feel the market of SMB and to understand whether we can work at it. As the company from the first day works with large customers, we saw that SMB is interesting, absolutely other model which is for us absolutely different from what we constructed for work with our customers has big perspectives, but on it. Reaches the ridiculous "household" moments. Here, for example, we should make out tens of bills a day, and in our current activity of such task is not necessary. Well and in general it is another for us model, other structure, other marketing. Therefore when there was a buyer who liked our technologies and who invested in this direction, we sold him.

TAdviser: If I correctly understand, the situation with reduction of people and inefficient divisions is inherent to many system integrators. It turns out that now in the market the whole group of specialists of a similar profile who are dismissed because certain segments failed is formed? Or it is not observed?

Tagir Yapparov: There is a serious change of structure of the market. And somewhere really there is a falling of interest, volumes, the needs for specialists. But at the same time in general the need for specialists only increases, including in telecommunications. The good specialist can be easily retrained. And here it is very important as far as the company has adjacent tasks to use specialists in other directions.

In my opinion, specialists in the market became much more, the choice became much better, but at the same time to tell that many people appeared in the market while it is impossible. It is necessary to consider that transition to the strategy of own technologies and own products gives huge resource requirement at once. For example, Rostec is going to gain 2 thousand IT employees. Sharply increased the SberTech set etc., etc. This strategy on own technologies and developments so far in Russia often develops into creation of own divisions and transfer of orders to them, internal outsourcing. The structure of the market was also so strongly distorted - about 60% of specialists work for customers, suppliers have 40%. And now it changes even stronger.

TAdviser: In 2011 you said that you are going to depart from operational management, stopped being the CEO of IT. Whether it was succeeded to perform conceived?

Tagir Yapparov: Actually, I, likely, in classical sense never was also engaged in operational management, for rather obvious reasons. The matter is that each of us has strong also weaknesses. And skill of operational management more likely my weakness, than strong. In Russia and in other countries of the world the concept 'CEO' differs. Abroad it is the person who is responsible for strategy, this is the CEO. Under him there is always an operational managing director. And it is rather classical model which exists in the big companies. It somehow imposes me more.

I then said about a certain formal situation, that I stopped being the formal CEO. From it my tasks and my position does not change. I cannot tell that I strongly changed the work. Those functions which on the CEO lie on accomplishment of operational tasks, they, of course, occupied a noticeable part of time. But in general the essence remained the same.

TAdviser: Then you said that you are going to sell a share in IT to the investor? How with it the situation is?

Tagir Yapparov: In 2008 we already were at a stage of signing of documents on sale of a share to the financial investor. Somewhere in May we approved assessment of the company and planned that we will sign documents on the transaction in the fall. But in August, 2008 burst a world financial crisis and the transaction did not take place. Since then, unfortunately, the situation in terms of investment strongly worsened, but at the same time, according to us, there are scenarios at which the investment attraction and now is possible.

We consider that own original products and technologies are better capitalized. We have a product now - WorksPad, I consider that it is one of the best products in the world for mobile employees. And we conduct negotiations with different funds for an investment attraction occasion in this project for more active promotion of a product in the world now. We can advance it integrally and we do it, but speed is very small, and the window of opportunities is limited. Only the fact that earlier we worked with the international funds more changed, and now became more focused on the Russian.

TAdviser: These are funds or some players? Rostec, Rostelecom?

Tagir Yapparov: With players it is much more difficult. The matter is that with them there is a risk of shift of focus. They solve the production problems which are not connected with business globalization. Such alliance is not considered by us yet though it also can be implemented later.

TAdviser: Whether you expect to retain control in the WorksPad project in case of involvement of the investor?

Tagir Yapparov: This question is not basic, it for me the worker. I can give an example. It was the test of the stranger for us of the market, konsyyumersky too. It is about the Life Button project. We plan that it will be service which millions of people will begin to use. But at the same time it is mass market where we have less experience.

We consider that technologies of remote monitoring in medicine will lead to creation of the huge market. Therefore decided to invest on an early phase, and understood that we need the partner who would help to develop correctly the project and to actually do it more independent of us since we with the corporate thinking risked to impose those ideas, those models which would not be effective for this market.

We received investments into IIDF and today our share less than 50%. But it not strongly concerns us because we received the strong partner just focused on similar projects. We received active codirectors and could approve strategy which is focused on mass market. So control in itself is not end in itself.

TAdviser: There is a feeling that in connection with a political and economic crisis of the venture funds which are not connected with the state in Russia it was reduced. How do you consider?

Tagir Yapparov: Live, active venture funds in Russia remained. Including not connected with the state regalia. There was a moment when they transferred activity to Israel, America, Europe. Now they return again here. We see interest, we conduct negotiations. I think that at observance of certain conditions there will be a revival in this market, but it is clear that the key terms are dictated by them.

In the history with WorksPad we understand that the project very interesting, one of the most perspective projects in Russia in the field of corporate mobility. We passed a phase of creation of technology, a product output, we actively sell it, there is very good rates an output to international markets. We see positive reaction. We are in the correct market section. But it is long, such farmer business. We need to water it, to weed, grow up. Generally, it is more or less clear what needs to be done.

TAdviser: In the last year natives of the IT companies were engaged in venture investments. For example, Andrey Cheglakov from Stipler, Anton Sushkevich from NVision. Do you have no desire to look for some small projects and to invest in them, or to attach and grow up?

Tagir Yapparov: We are engaged in it. I would not tell that it is the idea new, and colleagues thought up something like that. Practically any large player is engaged in it. In general attempts of attraction, consolidation of commands for combined solutions - they will be in the market constantly. But very few people publish these stories at an early stage. In the history with Cheglakov and New cloud technologies active PR began before the product was put on the market. It is absolutely clear history and we even try to construct with them cooperation now. If they have an office suite for mobile devices, then why not to use it in WorksPad.

What is done by Sushkevich is clear too. He was successfully built in the concept of import substitution with such key product (invested in development team of PostgreSQL, a comment of TAdviser). But all this private stories. In the strategy of professional players as it seems to me, the emphasis is placed on investment into global projects more, than in local. Risk of investments into the local project that the market very small, is less than 2% of world. It is clear, as in the local market there are good interesting challenges, but it has strong restriction.

We have an extensive experience of creation of local products. Here we understand all pluses and minuses. For this reason now we try to develop the product having both local, and global perspective. Many professional investors who left our market act this way: Borovikov created fund at Softline, Chachava - at 'Leta Group'. These funds professional. Yes, they invest in some small projects, but with work perspective in the Russian and global market. These are examples of the fact that colleagues are not unique that there are different more mature, professional investors in the market who are engaged in it long ago.

TAdviser: Whether you notice increase in demand of customers for the Russian products?

Tagir Yapparov: I would tell, interest increased. Just so far on many subjects which are discussed do not make decisions. On the one hand there is a lot of interest, hold many presentations, negotiations, corporate conferences, but so far it is preparatory work.

TAdviser: So industrial import substitution did not begin yet?

Tagir Yapparov: In my opinion, process begins to develop actively and there is a feeling that there will be real shifts. Here it is very important that in 2-3 years did not tell that it was another campaign.

TAdviser: And a problem after all that customers are rather inert or because the Russian products are not quite ready?

Tagir Yapparov: Both. And what is already much implemented and that for start it is necessary to do huge preparatory work. So plays many factors, and all of them are connected with time and resources. For example, we have the workflow system on the Alfresco platform. And we very successfully in Federal Migration Service substituted with the budget account of technical support with it a system on the Documentum platform. Kept within the amount, twice smaller, than the budget of technical support. Then reduced the budget of technical support several times.

It is in general one of trends which is discussed in the market - that in some situations the Russian systems are implemented within budgets of technical support of the western systems. For example, I know one case when the customer for money of annual technical support of SAP started transfer of the accounting system to 1C. Such stories are very positive and indicative. When these cases collect and it will become clear that foreign solutions require the overestimated budget and that in this money can and be perevnedrit, and then also to reduce the cost of technical support, of course, it will be very important incentive in order that the Russian technologies where they are, were implemented.

There is also other problem which is that in some segments there are no Russian technologies. Many technologies are not comparable on quality. But it is a matter of time, a question of efforts and support of some players. In my opinion, it is necessary just to select players who can bring these technologies to the necessary level, but maintain them not by money, not financing, and sales market creation, orders from clients. In this direction so far, unfortunately, I do not see the big movement.

TAdviser: Since September 1, 2015 becomes effective the new law on personal data which obliges to store and process all data of Russians within the country. Whether you with respect thereto notice serious changes in the market? And whether really there is an overflowing of data to Russia or this subject too so far in standby mode?

Tagir Yapparov: Nobody repealed the law and will cancel though once was already succeeded to transfer it. It seems to me that the second transfer will not be. I see that actively there is a preparation among those customers who have such task. There is nothing superdifficult in it. And in my opinion, those DPCs which in the country are are capable to contain as a first approximation data of many players in own infrastructure. Most of all questions arise at the international services here, but, in my opinion (can be, I so think because I am not a player of this market), this quite reasonable solution. There can be a speed too big, not enough time is given. But in general in terms of the interests of the country it is clear to me.

TAdviser: For IT market it too a certain incentive to development?

Tagir Yapparov: In general and, of course. I consider that such solutions increasing our markets are correct. Also as well as National Payment Card System. It is ridiculous when transactions in Russia go through America.

Of course, all of us do it clumsily. It was possible to make everything much more accurately and more quietly, without hysterics. The majority of the mature countries and do. We are not the first. All developed countries localize transactions. The task is clear and technology it is very simple. It is strange that we do it in such hysterical and emergency mode. All these actions are focused on that the country developed and protected the interests.

TAdviser: If to remember the 210th federal law which fully began to work with summer of 2012 there in the same way the situation developed. The law became effective, but nobody was ready to perform it - to work through SIEI, to stop demanding from people of the reference. And no policy then existed. It would be desirable to learn your opinion on this subject and in general about dynamics of development of the electronic government.

Tagir Yapparov: In my opinion, with some assumptions, that concept of development of electronic state services which is implemented now, it the worker, much more approximate to reality, than the first attempts which were at the beginning of 2000. Now we see actually the third attempt of the solution of a problem of creation of "the electronic government". In it there are architectural and other system problems.

But all the same the situation much more working, than was earlier. One of pluses is that there was more market, it is more than players, it is more than openness, it is more than freedom for regions. The idea in general a cap was to cover all with one system, up to municipals. But also now, in my opinion, there is a weight more of unresolved tasks.

TAdviser: For example?

Tagir Yapparov: We cannot still deal with the legal importance of electronic documents. In spite of the fact that formally, it seems, at the high level paper and electronic documents balanced, at the level of a normativka there is a lot of where the electronic document will not pass. So it is necessary to solve a set of problems already in some specific departments, specific processes. From this point of view that infrastructure which is now created is capable of bigger. And here, in my opinion, the will from the government is necessary.

Such will was shown at start of the program. There were specific terms, specific resolutions, there were KPI of governors, there were planning meetings. This tool works. But now, unfortunately, the situation exchanged and energy from this process slowly went to specific departments.

TAdviser: So there is not enough serious role of the government?

Tagir Yapparov: Of course. I can fairly tell that technologies are secondary. Success is defined by how you implement them.

TAdviser: Let's talk about a role of your company in the project of the electronic government. Earlier the AT Consulting company (AT Consulting) (AT Consulting) was considered as the largest subcontractor of Rostelecom. Recently the significant share of orders is received by IT. And, in certain cases under contracts with Scientific Research Institute Voskhod which, in turn, works under the contract with Rostelecom. Why to create such nested doll from subcontractors?

Tagir Yapparov: Understand, there are standard tasks. These standard tasks require formation of the normal state system integrator. 'Voskhod' in this role of the state system integrator exists for a long time, he is engaged in system Elections state automated system, the system of production, registration and control of passport and visa documents of new generation, the judicial system. Also its role as general contractor in this story is clear. Because the project very important for the state to depend on private players. If I built the electronic state, too would try a sutevy part, managerial, to leave behind the state. Therefore such role of Voskhod is explainable.

We were focused on a regional segment in due time and made it against approach of Rostelecom. Then Rostelecom considered that it will make single solution which will be suitable both for regions, and for federal agencies. I speculated on this subject with Alexey Nashchekin (from 2010 to 2014 the vice president of Rostelecom who was responsible for the electronic government, a comment of TAdviser), said that you will never be able to implement the regional level, there are a lot of specifics, they have the right to make changes to regulations. It is impossible to customize a system for all with identical functionality. Regions will be scary dissatisfied.

As a result there was a market of suppliers of regional solutions, and we managed to receive a significant share in this market. And then Rostelecom itself began to propose also other solutions including ours, at choice to regional customers. Thus, we began to work with Rostelecom in the regional market. Naturally, our some ideas were pleasant to them and they began to order to us them for completion of other solutions.