Alexey Petrushov: Import substitution – the painful procedure, it should be performed smoothly

TAdviser: It is difficult to provide large and medium-sized enterprise in Russia where by this moment in this or that type the ERP system would not be implemented. And, as far as I know, the main part of income of Galaktika is the share of such companies. What sort ERP projects are now implemented in such companies? On what do you observe demand?

Alexey Petrushov: Yes, it is valid, the enterprise which does not use any automation equipment today — already a rarity. As a rule, first of all informatization affects the main circuits of accounting: personnel, accounting, tax. Both the purchased software, and software of own development can be used. Other tasks often remain unaddressed. Such scrappy automation badly affects business performance: a lot of things are implemented, but there is no final effect. There is no system approach. Also the fact that at many enterprises the only reliable data are the results of activity reflected in accounting complicates work. And it is inadmissible today because fight for the client escalates, our enterprises need to reach the international standards of quality and to reduce cost value. It is caused by serious transformation of the market of consumption. So, after Russia's accession to the World Trade Organization, foreign producers with other product quality, other its cost value and the final price came.

General economic recession also has an impact on the industry. As a result we observe structural change of demand for ERP. Earlier complete solutions were demanded, there are practically no such requests now: the enterprises solve specific objectives, trying to minimize the cost and terms of projects. Services of optimization of specific processes, increases in their efficiency, reliability augmentation of work of the enterprise are demanded. Also with confidence it is possible to tell that there passed time when clients bought functions of a system and very vaguely imagined the purpose for the sake of which they are necessary. Took sometimes also end-to-end system, not especially thinking of its efficiency. Today we together with clients work on the solution of specific industry tasks which liquidate painful points. Business at last understood that the functionality of the ERP system not just increases capitalization of the company, and gives the effective working tool.

I will give a specific example: recently at engineering enterprise we automated process of operational production management in workshop (dispatching). At this volume scheduling of production the customer performs in the system of own development. Such approach was comfortable for the customer, and we managed to show on six the monthly horizon outstanding results:

• management of the normative reference information is debugged;
• control of transactions of start, release is organized;
• control of a remaining balance of work in progress is automated;
• significant decrease in volume of illiquid assets is reached.

To the project on automation the production and dispatching bureau conducted planning in an expert way without binding to specific orders that led to the increased volume of a WIP and failure to meet time constraints of production of orders.

TAdviser: How does demand for ERP depending on industry accessory change? In what segments did it change lately, there are industries which show demand growth?

Alexey Petrushov: In terms of industry accessory demand for ERP was always higher in production and production and trade segments. So Galaktika actively cooperates with the enterprises of fuel and energy complex, chemical industry, food, discrete production.

For the last year as a result of the general economic downturn many of these segments stopped in development. And budgets on automation showed decrease to 15%. At the same time the state announced a course towards upgrade which was picked up first of all by defense industry enterprises — a segment which went to growth and became a perspective niche for implementation of enterprise management systems.

So far import substitution policy had no significant effect on the market yet, but if the imposed sanctions remain for several years, then with confidence it is possible to speak about development of agriculture and agro-industrial complex. Today uncertainty level in these industries therefore it is difficult to give quantitative forecasts is high, but we were engaged in development of the industry solutions aimed at automation of specific problems of HSC already today. It is a segment, interesting to us, and that experience which we already got at the enterprises of agriculture, allows to approach solving of tasks from the practical point of view.

Also still great demand in fuel and energy complex. This field of the large companies and holdings with a difficult management structure, here both capital productive productions, and cost optimization questions on maintenance, decrease in cost value of the made products. Energy industry — a perspective segment for implementation and upgrade of ERP.

TAdviser: How did demand for ERP in connection with the become complicated economic situation change?

Alexey Petrushov: Stagnation in the market of ERP provokes, first of all, not decreased requirements of the enterprises for solving of tasks and project implementation, and readiness to finance them. There is a need to offer to customers more comfortable terms.

Today we observe the following picture: projects which already began and passed into an active phase – proceed. Their stop, making changes, software connected with reorientation to another, processing of project solutions, reduction of the list of tasks — will cost much to customers. And those projects which were in plans for 2015 and at the same time did not start yet, - are suspended till the best times.

Now customers are ready to finance automation of the tasks connected with performance management of the company, control of key indicators of its activity. All these projects – integration, i.e. should be built in the operating information landscape of the enterprise and use all practices in IT made by the organization earlier.

Also it is necessary to consider the need for cutting of costs for service of the integrated information environment.

TAdviser: Those shifts in demand which you observe now, with the shifts in demand on ERP taking place in the previous economic crisis are how similar?

Alexey Petrushov: In last crisis years of the shift in demand were not so deep. So explicit industry redistribution was not observed and also it was impossible to speak about the serious growth of demand of professional services and consulting. It is connected with the fact that economic difficulties were short-term and had no significant effect on activity of our clients. Today we observe more difficult and long process which, perhaps, will seriously change the market in the short term.

We make a start, first of all, from needs of our clients. Now the primary branch for us is a MIC. And if in the previous crises of defense industry enterprise made ends meet, being reoriented on production of civil appointment, then now active approach of NATO to borders of Russia forces to strengthen defense power. From here and changes in priorities.

TAdviser: Last year in Russia the course towards import substitution was accepted. How in your opinion, it influenced a situation in the market of ERP and whether it affected somehow directly your business?

Alexey Petrushov: Import substitution – the painful procedure, it should be performed smoothly. At the enterprise it is simple to remove the western ERP system – a question how to minimize risks and to save the investments which are already made in automation. We consider that it is necessary to construct model of threats, to place priorities and to build the road map of import substitution. It is the way allowing to avoid heavy single-step expenses. We isolate a production circuit which should be protected. Business production processes of end products at most the enterprises are not automated so it is possible to use domestic solutions, integrating them with already available information environment and to move gradually further. Complete import substitution in our sphere is a work for years, not for months.

If to speak about any intermediate results, then they are not the most iridescent. Objectively on it there are several reasons:

• it was stated: "It is necessary to importozameshchat". And as to make it and who should do it – it is not defined;
• not everything can be substituted today. There are not enough technologies and techniques;
• for import substitution essential money is necessary too. And in the country of difficulty.

TAdviser: Whether some projects on replacement of an import ERP system by the solution of Galaktika take place now? Maybe negotiations on the beginning of such projects are conducted?

Alexey Petrushov: Now negotiations with some head enterprises of the state corporations entering a MIC are conducted.