Import substitution of ERP systems

Import substitution features of foreign ERPs

Russian companies continue to work on foreign ERP solutions, since they previously invested in the implementation of significant investments and in the future of the next few years it is more profitable for them to stay on them than to migrate to Russian ERP systems. Investing in the purchase of licenses, for example, on parallel imports, is risky. Therefore, ERP systems based on foreign software are "frozen" in development.

Nevertheless, the number of those companies that have already launched the transition process is also growing. But they do it very carefully, testing hypotheses and conducting pilot projects.

There is not yet a large number of successful references, but there are concerns that the transition will bring a significant number of problems. Therefore, customers do not want to take risks and look at each other.

There are many factors that influence the decision-making of the transition. Most of those companies that have implemented foreign ERP belong to large structures. They use ERP with wide functionality, their personnel are trained and have been working in the system for a long time, serious financial and human resources have been spent on implementation. It is impossible to instantly switch to something new. You need to work out the project of such a transition very carefully, take into account possible functional differences, resource restrictions and errors of your previous project. Of course, not all customers with developed, implemented foreign ERP are now ready to start transition projects, - said Arkady Karev, Vice President for Sales and Business Development of Borlas Group.

In 2023, according to my estimate, only up to 30% of companies initiated projects for the transition from Western to domestic ERP solutions. In 2024, looking ahead, I think the growth of such projects will be at the level of 50%, by 2025 there will be only a small share of companies that will somehow continue to use Western IT systems that are already outdated by that time. But even they, having calculated the cost of ownership and assessed the impact on the business of lagging automation, will one day make the only right decision - to invest in projects for the implementation of domestic ERP solutions, - comments Alexander Pryamonosov, CEO, co-founder of the 1C integrator WiseAdvice-IT.

The key to staying on the existing platform is usually the total cost of ownership (TCO) of the product. Perhaps assessing the residual validity of licenses, legal risks to use and the budget for support in the next couple of years, the business has come to the conclusion that so far this is a more optimal option.

For those who have risked staying for now, another question arises - how to extend the life of current IT assets. There are options for localizing on-premises, carve out solutions and other approaches. For example, the system can be transferred on-premium to Russian power with the transition to free system software (Linux, PostgreSQL). This will help preserve the existing functionality and structure of the business processes.

As the main risks of using foreign systems, experts note:

• inaccessibility of resources to support the system or its development;
• inability to renew software licenses;
• inability to guarantee the stability of the main business processes;
• Information security of updates;
• reduction of specialists with practical experience in supporting such solutions.

The inability to purchase licenses is fraught with problems when scaling a business - more resources will be required for technical support and development. All changes in legislation in terms of regulated accounting will have to be reflected in the system on their own. All this in turn will lead to an increase in product costs, and in the future the issue of flexibility and speed of change will be a headache for management.

Vendor left Russia, and there is no one to make changes, especially if the company does not have its own IT department and team. Their timelessness or unreliable source create vulnerabilities. In addition, under current law, it is necessary to adhere to certain IT standards or pay fines. Another factor is the long-term decision-making on migration, we add a different level of scale of enterprises and companies - and it turns out that the longer the replacement project does not start, the more the customer loses in the future: in terms of costs, cost, terms, - says Roman Sadrislamov, Head of 1C at Develonika (Softline Group of Companies).

Mainly foreign ERP systems use large business. Under certain conditions, they will be able to work well for several more years - without substitutions and updates. Moral obsolescence will sooner or later occur, but for a whole class of tasks and companies with a certain profile of activity, this is a completely working scenario. The decision to start the transition project is made based on the balance of risks and opportunities.

In the long term, the risks of functional deficits and technical failures that will be impossible to prevent without official updates remain extremely high. Therefore, compromise solutions for their own support independent of vendors for foreign ERP systems are possible only in the relatively short term as temporary measures towards the transition to modern domestic systems, - notes Alexey Nesterov, director of ERP solutions at 1C.

According to forecasts, the main migration process in large companies will end no earlier than 2024-2025.

The public sector is now actively switching to domestic products - by 2025 it should abandon Western decisions according to the presidential decree. The business has so far taken a wait-and-see attitude: realizing that it can safely work with foreign ERPs for some time, it observes how the import substitution of ERPs in state-owned companies is going on, "comments Kirill Semion, General Director of the National Competence Center for Holding Information Management Systems (NCC ISU).

It is difficult to assess how many operators are left at the moment. The issue of migration is a budget issue in the first place, and therefore, if possible, business will postpone the transition. And, although migration is inevitable, such projects can take years in time, - said Vladimir Malakh, managing partner of the FTO.

The main difficulties of migration to Russian ERP

The larger and larger the company, the more difficult migration to Russian ERP systems, its occupancy, relationships, the number of functional blocks, integration with the missing functionality. Big business needs to think over a lot and check so as not to incur additional costs in the future.

The ERP systems market today forms its own methodology and experience in transferring data from one system to another. Import solutions were a little more mature and worked out in terms of capabilities. Domestic products still require additional "support" from software or applications to fully match the replaced products of departed vendors. Each project can have its own element: analytics or data storage, HR tools, and so on.

Western systems met all the requirements of large enterprises for ERP, and Russian automation products occupied those niches where they could compete with foreign ones. As a result, Russian ERP systems today need to develop in order to correspond to the level of Western solutions in manufacturability and performance. On the other hand, enterprises must accumulate a critical amount of necessary changes so that, unable to develop on old platforms, they begin to switch to new ones.

At the same time, at the moment, the corresponding infrastructure has not yet developed on the market for the implementation of Russian ERP for large enterprises: consultants, service partners, integrators for creating and using systems on domestic platforms. It should be formed during the implementation of implementation projects for a number of years in parallel with the accumulation by enterprises of critical baggage of changes that they will not be able to implement on existing Western systems, - said Mikhail Aksenov, operating director of the National Platform company.

According to Svetlana Kuznetsova, head of web development at IT company SimbirSoft, replacing such complex and large systems as SAP or analogues is not an easy task. Companies that have decided to start the replacement process transfer to Russian ERP systems, first of all, the part of business processes where there is a high expertise on the Russian market. For example, what is related to accounting. Further, as ERP solutions develop, the main processes will be transferred, adapted and debugged - in the form of small separate services.

The main difficulties of the transition from foreign platforms to Russian experts are:

- differences in platforms: technological, architectural, functional

Treating the transition project as a migration project in an attempt to save everything ″ as it is now ″ may ultimately fail. If ERP is already implemented, you can use ready-made data structures, descriptions of current processes, and not define them conditionally ″ from scratch. ″ But you need to be ready to analyze the current business processes and make design decisions that change them due to the restrictions or capabilities of the new system, "says Arkady Karev, Vice President for Sales and Business Development of Borlas Group.

- differences in object and process models

Significant differences in accounting ideology between Western and domestic systems require methodological training and the "landing" of accounting methodology on domestic ERP. As an additional stage of implementation, this also increases the timing and complexity of the project, as well as the burden on the company, - comments Anton Kolosov, commercial director of the ERP department group Korus Consulting.

- increase in the duration and cost of the implementation project due to an attempt to repeat the functions and capabilities of Western IT products in Russian analogues

If you try to rewrite the domestic system, make a copy of it foreign, it turns out, in my opinion, the most dangerous option. A large number of custom development makes a self-described ERP system, with all the ensuing risks and problems of implementation and subsequent operation, "warns Dmitry Nikulin, head of the automation systems department of NORBIT enterprises (part of the LANIT group).

- personnel deficit

Russian corporations began in 2022-2023 a large number of projects for the transition to domestic ERP, in which many IT specialists are involved, and, as a result, other companies feel their shortage.

When choosing an ERP solution, customers have to carefully study the availability of experienced specialists in the market for the implementation of the project and the operation of Russian ERP. Getting a competent team on the implementation project and further support is not the easiest task, good personnel are always caught up. In addition, it is necessary to take into account the availability of a quick study of the system by functional specialists of enterprises, - notes Alexey Nesterov, director of ERP solutions at 1C.

- technological issues

Enterprises faced not only the need to switch to Russian ERP solutions, but also with the replacement of domestic solutions of the entire ERP environment: office applications, operating systems, DBMS, etc. The development of the issue of introducing the entire complex of Russian software at user workplaces takes a significant time even when implementing ERP solutions on the 1C platform, which has many years of experience using import-independent OS, DBMS.

- size of the customer company

Basically, quite large companies worked on Western systems. Therefore, in projects switching from SAP to 1C systems, for example, there are technological difficulties associated with scaling, the need to create a solution for several thousand competitive users.

- functional saturation

The same SAP ERP has been developing for more than 40 years, and 1C:ERP - much less, so the set of functionality in 1C is somewhat inferior. This problem is solved by improvements in the framework of the project, but leads to an increase in the budgets and terms of transition projects.

Replacing a foreign system, for example, SAP at once is unrealistic. Western platforms have developed for decades and have incorporated the vast experience of partners and customers of the world's largest companies. We need a gradual iterative approach to migration, with the efforts of all parties: the vendor, partners and the client himself. You will need clear work planning, proper architecture, a large number of functional and load tests, etc. After all, it is important not only to transfer the data array, it is important how users will perceive the new system. Therefore, in TURBO solutions, we pay great attention to user experience and continuously modernize UX components, - said Vladimir Tarasenko, commercial director of Consyst Business Group.

In terms of quality, Russian products are still slightly behind their foreign counterparts. Simply due to the fact that well-known global IT platforms have been developing their solutions for decades, and the amount of resources spent is incomparably more than what domestic companies can afford. But active market demands and long-term work in this direction allow Russian suppliers of IT solutions to make long-term plans and look for investments within Russia for their implementation, "says Sergey Ivashchenko, head of product marketing at UMNO digital.

Functionality in SAP and Oracle has been developing for decades with an eye to the needs of large businesses. In any large Russian company, these systems have been configured and refined for years to meet the needs of users. Obviously, the main problem in the introduction of domestic systems lies in the plane of functionality for large customers - much remains to be done in this direction, - comments Dmitry Potapov, senior partner of the Digital Economy League.

- motivation issues

For customers switching to Russian ERPs, this process looks like a necessary measure, not related to the need to improve the quality of automation or the efficiency of business processes. Because of this, integrators often face requests to implement a project that is as similar as possible to the historical system. But this approach does not account for methodological and technological differences.

It is worth noting the problem with platform performance: it is not solved head-on and may require a revision of the system architecture.

According to experts, customers need to adapt, accept the fact that it is better to use the new standards that will come with domestic ERPs, and not make copies of those they are used to from them.

Business understands that sooner or later it will still be necessary to replace foreign solutions. According to our estimates, today about 20% of the enterprise companies that have so far continued to remain on Western ERPs have either already begun import substitution projects, or have made such projects in plans for the near future, - said the Mikhail Ponomarev head of the ERP division of the system integrator. Navicon