Import substitution of IT in retail

2024

IT companies on import substitution in retail

The consensus of the developers (participants Digitalization_retail._Review_TAdviser_2024 of the TAdviser review "Digitalization of retail 2024") on the issue of import substitution is as follows: the processes associated with this must be assessed as "difficult." However, this applies not only to the subject area.

Two serious factors significantly complicated the processes of switching to domestic software: an extremely short time and a noticeable shortage of qualified specialists. If the second problem was solved by a strong increase in the cost of automation projects and the involvement of new specialists in the IT industry, then the reduction in the timing of projects led to more significant consequences.

Alexander Zarzhetsky, Head of the Directorate for the Implementation of Integration Projects 1C-Rarus:

Most companies were forced to abandon the classic technology of implementing projects "according to PMBoK" in favor of modern "flexible" design technologies. There was categorically not enough time for the traditional "description as is" and long-term design "as it will be" and priority finally switched to short "sprints," launching solutions "in basic functionality" with further development as part of the support of the existing system.

Partner of the Digital Economy League Sergey Tinyakov:

Retail companies began to engage in import substitution, one might say, in two modes - planned and emergency. There was a planned transition earlier, but now this process has noticeably accelerated. Emergency mode is most often associated with the disconnection of cloud services. There are questions with their replacement, because the organization of a high-quality product requires maturity and the volume of the market and the internal segment is often not enough here.

In this case, we are talking about services based on Big Data related to marketing, logistics or pricing, services of large international structures.

Alexander Kazakov, Deputy Director of the Outsourcing and System Administration Department of Jet Infosystems: {{quote 'According to our estimates, in Russia by 2021 the 60% of big business worked with SAP. So far, there are no alternatives to the SAP complex in the Russian market in the segment of large retailers: a proven bundle of a large number of systems, standardized and integrated into the IT landscape, is expensive and very difficult to change. As for individual technologies, there is no replacement for product ERP and integration bus for domestic retailers yet. However, SAP's share is not growing and is unlikely to grow.}}

According to the expert, in modern conditions, customers have formed typical requests that can be divided into several points:

1. "Boxed solution," which during installation will include a set of well-thought-out functionality. The main idea is to speed up the implementation and reduce the participation of qualified highly paid personnel in these processes.
2. Thoughtful integration between IT systems. The solution should include a whole set of systems that will easily exchange information among themselves.
3. Scalability and availability of a reliable/fast/easy-to-understand database. It is necessary to implement huge data stores at a high speed of their processing. If this issue is not resolved, even the highest quality functionality will not help.
4. Standardisation. It is necessary to bring the solution to the standards of information systems.
5. Quality support.

If the platform does not fully satisfy the request, the main question is what kind of compromise or process adjustments the business is ready to make.

Objectively, it is worth noting that, unfortunately, there are no ERP class solutions for large holdings comparable in performance in Russia yet, "said Yuri Perestoronin, managing partner of the Agro-Industrial, TNP and Retail segments at IBS.

Galina Mussina, Head of the Competence Center for Retail at ICL Group of Companies:

The most difficult was the transition from ERP systems (SAP, Oracle) to Russian counterparts due to the insufficient functional maturity of the latter and the complexity of the migration projects themselves. Similar challenges have arisen with PIM systems and data analytics solutions.

Problems with the replacement of "big solutions" are superimposed on risks, due to the fact that practice on the Russian market has not yet settled, there are no clear leaders.

Sergey Mashnin, Customer Relations Director, Ferrum IT Group:

Processes (import substitution) would be assessed as difficult. However, as elsewhere. The hardest thing to replace is "big software" and "big hardware." In this regard, we can note a psychological factor: as you know, no one has yet been fired for "buying IBM" (or implementing SAP). But in the event of a purchase/introduction of Russian software and equipment, questions, in case of failure, may arise.

Russian products can be replaced by WMS, CRM, BI - they are often finalized for a specific business, while the cost of the license is lower. There is no clear pessimism about the success of replacing ERP systems.

Dmitry Radyukin, Director of IT Solutions Practice for Retail Companies Odyssey Consulting Group:

Most of the business processes that have a critical impact on the company's business are now in a monolithic ERP system. It is difficult to make changes to it, it is difficult to develop, and even more so to replace it. To effectively sell and meet market requirements, companies need to use technologies on a microservice architecture.

According to the expert, the tendency to transfer functionality from ERP to microservices that automates omnichannel sales and the creation of phygital spaces, use open source systems for this and use AI is an approach that can really increase business efficiency.

Things are different with products that were not developed on the Russian market until 2022.

Gennady Tarantasov, Commercial Director of Korus Consulting Group:

For example, solutions for automation of pricing, promo, assortment management, auto-order. Such solutions are still at the stage of revision and are just beginning to enter the market. Fresh solutions will take several more years to reach the level of departed Western products, but they are moving towards this at a rapid pace.

Dmitry Rybakov, CEO of Consid:

Today, perhaps, the biggest difficulty is the timing. Previously, projects for the implementation of WMS systems in large and medium-sized warehouses took 6-8 months, and these were quite comfortable terms. Today, the tasks of finalizing and introducing such systems at large multi-trading facilities in 3-4 months are becoming the norm. And such tasks can only be implemented when implementing flexible systems with a high degree of adaptability, which can be quickly adjusted and scaled to new warehouse objects.

In the segment of WMS solutions, the expert predicts accelerated market development. Based on many years of experience in operating foreign systems, Russian retailers form the corresponding functional and technical requirements for Russian software. This will allow you to create competitive solutions, perhaps even a better price/quality ratio. The presence of dependence on foreign software manufacturers from retail or any other company will be a lowering factor in the market financial valuation, this will become an indicator of the viability of the business in today's realities.

Among the difficulties, Dmitry Rybakov notes the shortage of professional implementation teams both among retail itself and among suppliers of Russian solutions. According to him, this deficit is especially felt in the context of the simultaneous transition of many companies to domestic software.

Yuri Vostrikov, CEO of BPMSoft (part of the LANSOFT IT holding):

Some large players are focused on self-written systems and contain expensive programmers for this in their staff, but the general trend is towards vendor solutions and abandoning traditional development.

Some companies, in addition to software, will have to take care of the hardware. The last time many people updated it before the pandemic. There is not enough Russian for everyone (and not all niches are closed), the usual Western or expensive, or completely inaccessible, alternative Chinese suppliers have their own specifics of work, which is not so easy to get used to, - says Sergey Mashnin.

Alexey Vedeneev, First Deputy General Director of Luxe Retail:

The departure from Russia of Western manufacturers of retail equipment, such as Diebold Nixdorf, NCR, Toshiba GCS, Datalogic and others, forced retailers and IT suppliers to literally make a U-turn to the East. Of course, purchases of domestic cash registers are also growing, but still, in terms of cost of ownership, price-quality ratio, the offers of Asian manufacturers - companies from China, Taiwan, South Korea - look more interesting.

At the same time, interaction with Chinese suppliers does not always go smoothly: there are problems with logistics and payments.

Retail on import substitution

For Fix Price, the topic of import substitution is relevant primarily when choosing new IT products. When introducing new systems, the company considers mainly Russian solution providers offering an alternative to foreign counterparts.

There are examples of a successful transition from foreign to domestic application software. Also, our company is gradually importing the IT equipment of Western vendors into Russian-built computers, "says Oleg Lexin, head of the Fix Price IT service.

In To tape"" they talked about a large project to transfer self-service cash desks to domestic. ON

Director of Digital Innovation and IT Lenta Sergei Sergeyev:

We were able to implement the project in 134 stores of the company. We also reconstructed 20 percent of our hypermarkets, and now they have equipment for independent purchases. This is almost 200 self-service cash desks of CSI. We tested domestic cash registers.

At the beginning of 2022, import substitution was a very acute topic for the X5, because supplies of about 80% of trade and especially technological equipment were blocked. Gradually, there was a replacement with domestic technological solutions, "on the knee" their own were developed, the search was in friendly markets, unnecessary business processes were excluded.

The company faced a critical lack of products on the Russian market that meet the high requirements for high process and technological expertise.

Separate projects X5 leads with Russian vendors raising new directions. In this case, partner teams are formed, expertise is exchanged.

Ivan Melnik, Director of Technological Business Development Kh5 Tech:

Today we can say that the tactical peak of import substitution has already been passed by us. What previously could be implemented for years and even decades, we were able to replace by the end of 2022. Of course, some of the work remains, but there is an action plan for all streams. I think that given the pace we have taken, we will complete the import substitution process by 90% in 2-3 years. The remaining 10% is something that is most likely impossible to replace for various reasons.

Especially successful projects in the field of warehouse management, AI - at the level of world analogues, noted in the company. Kh5 Tech is proud of its expertise in software engineering. But there remains an area where there is still no "solid soil" - these are complexes associated with processors, network equipment.