Lenta Chief Information Officer Sergei Sergeyev - about moving to the Russian cloud and using SAP in the absence of a vendor. TAdviser interview

Sergei Sergeyev: The main thing is to be a partner for business, to increase the efficiency and speed of the IT function, while maintaining the required level of reliability and availability of information systems. If we talk about the changes that needed to be taken, then the first is the analysis phase. I needed to analyze the current situation, resources, opportunities and tasks for business and business functions, measure them with tasks, resources and processes in IT, find gaps. Based on this, it was necessary to determine the first steps on changes and further begin to implement a program that would allow IT to be a faster, more effective and transparent function.

Accordingly, I would divide my work for 2022 into two blocks. The first is the analysis, adaptation and drafting of the work plan, and the second is its implementation. In about 2 months, I formed cross-functional targets for the IT Directorate that were comparable to the request from the business, and we started to implement these targets. We call them strategic.

Sergei Sergeyev: If here we are talking about the foreign IT market and import substitution, then I would appreciate our independence as high. The impact of the departure of foreign players from the market on us was minimal: we lost practically nothing in the operational work of the company. Probably, on a long horizon, this will have an impact, so we strategically take steps, build import substitution projects.

Sergei Sergeyev: We quickly migrated from him. We have a case of migration to the Russian cloud, which we simply did not publicly promote, because it cannot be called 100% effective. Russian clouds, SaaS, in particular, are not as developed as their foreign counterparts in the person of Azure and Amazon. We still have a lot to do in this project.

Sergei Sergeyev: Yes, you are right. And this is the biggest challenge - that it is not yet possible to compare foreign and Russian services in terms of functionality and reliability. We have to either add something or transform the solutions that were into the solutions that are, because Russian market players saw the development of their services differently compared to foreign counterparts.

Sergei Sergeyev: Both yes and no. Yes, because from the point of view of the overall picture, this is an excellent message for development - take and develop. But no, because Russian companies do not quite know how to work with this yet. When asked how to make a cool product for import substitution, I often say: "copy what is, start with a copy."

The whole world repeats after other companies. This, on the one hand, is not very cool, because it is in some sense plagiarism. But, on the other hand, this gives a quick start to the client base and everything else. There are a couple of successful examples of our projects where we changed the product in just two days or in a couple of months with writing code.

At the same time, making a "copy," you take only the most valuable, without repeating the mistakes of the original. This is one of the advantages. Unfortunately, not everyone acts like this, and this leads to the fact that the product is not born.

You can give a simple everyday analogy with a traffic light. If we know that a red traffic light is a ban on passage, green is a permit for passage, and yellow is attention, then why change colors by inventing a Russian traffic light with other colors? You can repeat the colors, and make a different shape, apply other technologies. This is a speech.

Sergei Sergeyev: I am used to a reasonable approach to the implementation of any cases, not only concerning import substitution. Resources are not unlimited, and there are business tasks, there are tasks related to the transformation of the architecture due to import substitution, with the replacement of systems. I prioritise: what is urgent now, what is medium and long-term. According to some decisions, there is no priority of urgency, there are long-term stories that at the moment do not require any replacement from us. If we have a good solution that belongs to us in terms of licenses, and we can safely use it for two years or longer, then why change it at the moment?

And there are blocks where replacement in a shorter perspective is required - 1-1.5 years. We are talking about replacement for various reasons: including due to business needs, due to technological backwardness, etc.

Everything you have listed is used in our landscape, we have a mix of solutions. And there is a real and future architecture. In this architecture, our task is to turn the monoliths and services that we had into convenient designs from which you can collect products. I.e. a number of enterprise solutions, including foreign ones, must be somehow deprived of functionality, "washing" it into their own developments or into new solutions, and leaving it in some way. They are quite comfortable and will work perfectly.

A simple example is HR. There is an SAP-based HR system that works perfectly, and there is no need to urgently migrate to 1C: Payroll and HR Management. But we need to adapt to Russian laws, because the tax code, payroll, etc. is changing. Our task is to learn how to do this without the participation of a foreign integrator represented by SAP. And there are solutions that are directly tied to business, such as logistics, commerce and others. There we need speed and quick response to needs. Accordingly, our movement there will be faster.

Sergei Sergeyev: Here is one of the problems of the market - if I ask you to list Russian CRM systems, then hardly anyone will give me their comparison with foreign counterparts. There is not a single such material. Our market, our analytical agencies have never done this. And if I need to replace CRM from foreign to Russian, then I will be forced to do such analytics myself - what IDC, Gartner, Forrester did earlier on the Russian market.

And if we talk about us specifically, then CRM is not a priority for us. For us, the priority is a system related to transport logistics, a system related to planning and replenishment, in the horizon of a couple of years - a system of visualization and analytical reporting. There are good Russian analogues in document management, and we are engaged in them right now.

Another human resource management system. This is something that relates to the goals, adaptation and training of staff. This is a priority in the region of 1-1.5 years. We also need infrastructure things. For example, mobile device management systems (Mobile Device Management, BYOD) - we do not have a single Russian analogue that would allow them to be controlled. Or now you and I are conducting an interview in Teams.

Sergei Sergeyev: Yes, there are a dozen solutions, including SberJazz, Yandex Telemost, VK Calls. Solutions are evolving, and perhaps in a year they will be comparable to foreign counterparts. But now there are many difficulties with them.

Sergei Sergeyev: There have been two approaches to the market so far. The first is to get a fix from the manufacturer that will be part of the kernel. The second is to write this change yourself. Now the second approach is spreading - to write changes yourself. This can be done by the same people who previously worked in SAP. Yes, it will not be part of the core, but it will also be a high-quality story. This is, in fact, about custom development. For me, as an IT manager, reliability and quality are important, and where I get it from is not so important. And the responsibility of the partner is also important in order to solve some problems later, if they arise.

Sergei Sergeyev: Our dynamics is multidirectional and dictated by two things. The first is the strategic efficiency goals that I talked about and the changes that we were making. And the second is the market situation. In other words: somewhere we spent more, somewhere less and quite significantly. But in general, we have improved our effectiveness.

Sergei Sergeyev: In a number of areas, for example, we did not have our own competencies, and we did not have the resources to deal with the architecture or with the software code that we received from the supplier - even from a Russian company. Accordingly, we have invested our own resources in staff. From the point of view of investment, we increased decently last year in terms of internal competencies and will continue to increase this direction in the areas we need.

At the same time, we worked on price optimization for some solutions, because there is competition in the market, there are certain procedures. In addition, the departure of foreign vendors is a refusal of technical support, which also created an effect on budget optimization. But I would divide like this: our own effect is 70 percent, and 30% is the impact of players leaving.

Sergei Sergeyev: At the moment of peak uncertainty, which fell in April-May and, possibly, in June, when bacchanalia took place on the market, and people tried to make money on the current situation at the moment. During this period, according to my observations, prices for some equipment tripled somewhere. At the same time, the delivery and implementation times were increased. In the second half of the year, the situation stabilized, and now the mark-up is about 10%, the maximum is 20%. At the same time, the variability of what we can get has decreased, but now there are options. At the moment there was a strong drawdown, and computer equipment almost became a shortage.

If we talk about software, then a proposal has been built in many directions, and those players who went with a logical, "adult" policy and approaches now receive the most benefits, because it is nice to work with them in a partnership. The rest slowly "fell off."

At the same time, in some market segments, for example, Russian solutions for software robotization, there is healthy competition, which is good. And in some segments, unfortunately, this is just emerging. I hope that the program that the Ministry of Digital Development and the Ministry of Industry and Trade are doing to grant support for the creation of Russian systems and technologies will have a significant effect in 2023-2024. Because in some blocks, for example, transport logistics, supplies and replenishment, there are virtually no products, although some claim that they have such a product.

Sergei Sergeyev: There is a history of the ICC, and there are funds that are engaged in the issuance of grants. We actively participate in the block of interaction with funds in order to develop a common consolidated position on the part of retail. What I designated as our priorities are common priorities developed with the retail industry.

Sergei Sergeyev: There is not a single agreed project in retail yet, under which grants would already be issued. But such projects are on the way. Those who already receive grants began to engage in import substitution much earlier than retail, where this topic became relevant earlier. For retail, this was not so critical earlier. The first projects in retail that can count on grant support should be agreed in 2023.

Sergei Sergeyev: We want to work with an assortment and with pricing, with analysis of losses and fraud in stores using modern tools, such as video analytics. Also, as I said, transport logistics is a priority - increasing the efficiency of our logistics model.

Sergei Sergeyev: Yes, it is. We want to use video analytics, including to improve self-service processes, because the current market situation dictates the buying path in different ways. And we want to ensure that by maintaining the level of service in terms of self-service, we are more efficient in terms of loss and fraud. We will actively invest in this direction.

Sergei Sergeyev: Our number of self-service cash desks grew in 2022 and will grow in 2023. We analyze where they are effective and where they are ineffective, and where it is necessary, scale.

Sergei Sergeyev: I believe that everything related to our differentiation from competitors in the market, everything that works for the strength of the company and its brand - for these systems or products, we should have our own internal competencies and be able to quickly and flexibly develop solutions. Accordingly, this is all that is at the point of interaction with the client - our front solutions: CRM, sites, mobile applications. These are also key systems in terms of business efficiency - pricing and assortment management. In addition, these are services that allow us to build the right technological platform - for example, authorization, payment services, etc.

At the same time, I do not believe that everything there should be 100% covered by our competencies. Core competencies in the form of key team-leads, architects, key managers should be inside, and then the share of borrowed personnel and internal personnel can be different. If we are talking about key front products, there should be at least 50% of internal competencies, sometimes up to 70%. And in the case of standard back core processes in the form of finance, HR, etc. - the opposite proportion, where there may be more borrowed personnel, but at the same time all key competencies should be internal. We are now moving and forming our resource landscape into such a model of insourcing and resource outsourcing.

Sergei Sergeyev: Yes, you can. Moreover, in 2022 we chose a strategy that we buy solutions - platforms that we implement together with a partner, and after that we independently begin to develop as our own branch of program code. I.e. we have the right to own and change this decision, but without the possibility of commercial distribution.

Sergei Sergeyev: These are, for example, products in the field of pricing, assortment management, promo, electronic document management. These are cases that have already happened. And the strategy extends to all products. This is not an exclusive practice for retail, other companies also do this. I had such an example at M.Video-Eldorado, where I previously worked.

This is similar to the story of grants now. If we go to some kind of grant project in the areas that I designated to you, then we will participate in it according to the same model. We need a product that in the future we can flexibly develop, adapt and differentiate from each other so that it is something better than others. We retailers are all very similar and we need differentiation - that's the value to the company.

Sergei Sergeyev: At some point in 2022 there was a danger that there would be an overflow of resources, and competent people would stop working in the Russian Federation. But there was a fracture, some stratification, and I personally don't feel a problem now. I have no problem at the moment to find competent people. You just need to be ready for certain procedures, for searching.

Of course, if you need to find 400 people in 3 months, it will be difficult. And if you build a plan, how to increase the team by 100-200 people from the current number during the year, then it can be implemented without problems. So it depends on the scale. Last year we hired about 50-70 people.

As for the structure of the team, we are now going through a transformation stage and moving away from representing the structure from information systems. Last year, most of our team consisted of classic project office departments, infrastructure support and a large application development department. And now we are in the process of creating IT blocks focused on business management. We call these blocks "domains": IT division for logistics, for HR, finance, etc. They contain cross-functional teams with specialists in different technological areas, aimed at a specific business result.