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2024/10/17 15:31:47

What will happen to import substitution of software in 3-5 years?

The article is included in the review Import substitution of software 2024.

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General conclusions

In 2023, the Russian software market increased by 12.5%. Experts expect a growth rate of 13-15% per year through 2028. Currently, more than 22.5 thousand items are registered in the register of domestic software. Such data were provided by Ilya Gorshkov, Managing Director for Information Technology at VESNA.

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These facts confirm that the developers continue to form a stable basis for import substitution, the expert noted.
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The demand for domestic solutions stimulates the development of technologies within the country, in the long term, strengthening import substitution will increase the economy's resistance to external shocks and sanctions. This opinion was expressed by Kirill Timofeev, head of the Obit information technology department. According to him, the domestic market will become more competitive, this will stimulate innovation and technological independence.

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In order for positive forecasts to be implemented, first of all, cooperation of all market actors is important, "he said.
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According to the expert, the state actively supports the processes of import substitution through grants, preferential loans and the provision of the status of systemically significant projects. This stimulates the development of domestic solutions and helps companies cope with financial difficulties. Vendor partners and system integrators help to mitigate difficulties in import substitution processes using comprehensive approaches.

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In recent years, there has been an increase in interest in domestic developments by government agencies and large companies, which may contribute to an increase in the share of Russian solutions in the market, "said Mikhail Bocharov, Deputy General Director for Science of SiSoft Development JSC.
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Maxim Nartov, Business Development Director of Nexign, also spoke about the importance of cooperation. He cited as an example an expert forecast according to which the domestic IT market in the future up to five years will demonstrate moderate growth by 10-15%, which is associated with the trend towards digitalization in many sectors of the economy, as well as with the development of export of IT solutions. And the driver in this process should be the readiness of big business to collaborate with suppliers who are experts in their niche.

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We participate in such projects, - said the expert.
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Despite all the difficulties that arise, the Russian IT sector has all the necessary resources and opportunities to successfully overcome these challenges and continue the course of import substitution. This is the opinion of Elvira Gilmanova, Deputy General Director of Bars Group. For example, there are a number of working groups that deal with the replacement of foreign software. These groups consider different approaches and tactics, which allows flexible adaptation to changing conditions.

In the absence of normal software updates from the vendor, companies have to constantly patch "holes" due to the emergence of new versions of infrastructure software and equipment, changes in regulatory requirements, and so on.

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Over time, the volume of such "patches" is increasing, the risks associated with the functioning of the entire system are increasing, "recalled Georgy Podbutsky, commercial director of SL Soft.
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According to Ivan Skorodumov, General Director of the EOS Group of Companies, the qualitative growth of Russian decisions is a constant value, but there is still a lot to be done. For example, the public sector buys solutions from the Register of Russian software, but how much they are used is not easy to consider from the outside. At the same time, foreign products are rapidly losing their positions, especially those that are already outdated functionally, morally and have problems with supporting and receiving new versions.

What will happen to import substitution of software in the near future

The Russian government actively promotes development domestic software in various sectors, including in. industries This support is manifested through financial investment, tax preferences and optimization of public procurement. Business also understands the significance of the transition to domestic. ON This opinion was expressed by Ilya Gorshkov, Managing Director for Information Technology at. VESNA

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Over the past 4 years, the volume of investments of the Russian industry in the development of domestic software has reached 4 trillion rubles, "he said. - However, for private business, this process can take 2-3 years.
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According to the expert, Ideco's research confirms this thesis: only 60% of Russian companies will be able to replace foreign software with domestic software by 2025. The remaining 40% of companies can continue to use foreign products until 2030.

In the next 3-5 years, an increase in the software import substitution rate to 90-95% is possible. This opinion was expressed by Ivan Panchenko, co-founder and deputy general director of Postgres Professional. The rush, hasty migration will be replaced by the time for thoughtful development of new and recycling of old systems. One of the key drivers will be demand from private companies. In 2024-2026, an active period of their migration is expected due to the obsolescence of previously purchased foreign products, the expiration of the "technological relevance" period and, as a result, with serious safety risks.

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From forced import substitution, we will move on to organic, - said the expert.
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In the financial sector, the dynamics of import substitution will increase due to the monitoring by the Bank of Russia of financial institutions' compliance with plans for the transition to domestic software, and whether they fit on time. This was told by Svetlana Markova, chief consultant at Neoflex.

According to her, such a transition is due to the decree of the President of the Russian Federation, according to which, from January 1, 2025, the objects of critical information infrastructure owned by banks, telecom operators, government agencies will have to work only on domestic software.

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Some market participants appealed to the regulator and to the relevant ministries with a request for a delay, - Svetlana Markova recalled. - Thus, in the future of the next 3-5 years, import substitution should be completed by all market participants: someone will cope faster, the rest will pull up.
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Since there is no reason to change the political situation, the share of Russian software will continue to grow. More Russian products will appear, new solutions will gain more experience in implementation, analogues of foreign systems will be created, which do not yet have alternatives. The general director of "Holmont" Alexander Zotkin is sure of this. He stated that Russian software will be used more widely in the state and commercial sectors. In part, customers will proactively carry out import substitution, in part, the replacement of foreign software will take place as it becomes obsolete.

On the horizon of 3-5 years, several important goals will be achieved, said Alexander Pestunov, Deputy General Director of Sigma. Thus, the market will be saturated with Russian solutions with a high level of maturity and the practice of real implementations, the level of import substitution in key sectors of the economy will reach 90%, and Russian solutions will be much wider than this year, presented on foreign markets.

According to the expert, the IT industry as a whole should maintain high development dynamics, as the potential of the domestic market is high. Confirmation of this is the growth in revenue of domestic IT solution providers by 78% compared to 2022 (according to Strategy Partners).

Factors that will strengthen and accelerate these processes are not only market mechanisms, but also the active attention and participation of the state in the development of the IT industry. It is significant that all the strategic goals of the development of the Russian economy listed in the decree of the President of the Russian Federation from 07.05.2024 are either directly related to the IT industry, or their implementation significantly depends on how strong and innovative it will be.

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This is a serious and very interesting challenge for all Russian IT specialists, - summed up Alexander Pestunov.
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Elvira Gilmanova, Deputy General Director of BARS Group, said that a gradual increase in the potential of Russian developments is expected in the near future, which will further reduce dependence on foreign products. Within 3-5 years, it is planned to achieve complete self-sufficiency in key segments of the IT market.

According to her, Russia is actively moving along the path of creating an independent ecosystem of digital technologies, which contributes to increasing the level of import independence of the country both in the public sector and in private business. This allows us to talk about the formation of a new model of the data economy in Russia, that is, a concept based on the value of data.

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We expect that the dynamics of import substitution will continue to grow, - said Pavel Shcherbinin, director of strategic marketing in mechanical engineering at ASCON.
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According to him, large projects to automate the engineering circuit, as a rule, take several years. Moreover, if we are talking about complete import substitution with the replacement of software in new segments for Russian developers, such projects will be completed on the horizon of the next 3-5 years. For this period, ASCON sees its task in supporting customers on projects launched earlier, and in gradually scaling the results that were obtained as part of the work on ICC projects.

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Today we are witnessing the development of cooperation between large IT-Business and industrial customers for the development of innovative software, "said Georgy Podbutsky, Commercial Director of SL Soft. - And the role of the latter in creating industrial solutions is extremely significant. Industrial centers of competence, by the way, can act as examples of such cooperation.
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According to the expert, other options for interaction are cooperation with the IT player to create joint product projects or the formation of competence centers for vendor technologies for large customers, which complement the basic products with applied expertise.

Georgy Podbutsky noted that another trend is the desire for innovation.

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Import substitution in IT for several years has been the most important direction of interaction between suppliers and customers for the market, the expert shared. - At the same time in the last year we see that the vector of strategic customers begins to shift towards innovative progress. So, for example, according to the IIDF, it is innovation that is becoming a priority area of ​ ​ development. Moreover, there is an important addition - these new developments should be based on import-independent technologies.
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If we talk about the market as a whole, said Maxim Nartov, director of business development at Nexign, in the future, the dynamics of import substitution should fade - it has passed the peak stage, the most urgent issues have been resolved. Now everything should go into the stage of normal development. That is, companies will not only replace one software complex with another for "replacement," but will focus on the key tasks of the business and its growth. Accordingly, we can expect more dynamics in terms of transformational and development projects.

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In the next two years, significant market changes can be expected: restructuring, mergers, acquisitions and the departure of individual decisions, the expert predicts. - This has already begun to happen, and, probably, the dynamics will continue. Therefore, from a business point of view, it is important to determine your niche and take a leading position in it.
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In terms of demand for Russian solutions, the market will continue to grow. A stable backbone of leaders will be formed.

In 2022, the growth in demand for import substitution was sharp and, one might say, hysterical. Artem Kostryukov, General Director of Test IT, recalled this. In 2023 and subsequent, demand leveled off, became more gentle.

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We assume that demand will continue to grow by 10-15% per year further until it reaches a plateau by 2030. Our solutions are involved in the development cycle, and there is already a fairly high level of import substitution, but there are obvious "lacunae," for example, in the IDE, - said the expert.
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Import substitution will continue to be the main driver of the development of the IT industry for many more years, says Anton Varfolomeev, General Director of Digital Design.

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But its emphasis has shifted slightly: after the first wave of abandonment of Western software in terms of the most widespread and common services, including email, portals, EDMS and BPMS, now the queue is gradually reaching highly specialized and niche systems, - said the expert. - For example, over the past 2 years, we have noted a growing interest in such products as the information system of collegial bodies "Areopad" (is a replacement for imported services ContractZen, Azeus Concern, Webex Meeting) or the AVACOR solution for automating internal audit, control and risk assessment (is a replacement for Western TeamMate and SAP GRC).
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In the context of constantly growing cyber threats, solutions in terms of information security are also in great demand, and in this segment in Digital Design they see interest in the Digital DOME information protection tool, designed for centralized authorization and authentication of users in information systems of organizations. And also to mobile applications of the "Protected Mobility" family with support for Russian cryptography.

Many experts say that 2024 will be marked by a transition to concrete import substitution actions even for those customers who have recently taken a wait-and-see attitude.

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In general, our expectations agree with this position, in 2024-2025 we will hear about many large projects in terms of complex import independence. In the next 3-5 years, the number of import-substituting projects, their budgets, their scale will also grow, - said Ivan Skorodumov, General Director of EOS Group of Companies.
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According to him, the next years will be a period of fierce competition already between domestic developers, and the pricing policy of vendors, the availability of additional services during implementation, and, of course, the actual quality of systems and their compatibility with infrastructure software will play a decisive role. For many developers, this will be a test of strength, a test of the correctness of the chosen strategy. Information security requirements will have a significant impact on the development of products. Many vendors will have to implement secure development practices, software which can slow down development for a certain period, but will allow them to supply products to certain market segments and increase the security of their products.

According to Kirill Timofeev, head of the Obit information technology department, in industry and power, the import substitution process is slower due to the specifics and complexity of the software.

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However, we expect that over 3-5 years the share of domestic solutions will gradually increase as new platforms and produktov​ are developed, the specialist shared.
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Kirill Timofeev states that IT services consulting are highly active in replacing foreign products, and in the coming years growth should continue here. Obit will continue to invest in research and development within the framework of its "native" R&D direction, and also plans to expand interaction with vendors to create more competitive products.

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In general, we can say that in the coming years, import substitution processes will continue with acceleration, especially in those areas where there are already successful domestic analogues (office software, data management systems, information security solutions and telecommunications), "summed up Kirill Timofeev.
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In the future, for 3-5 years, we expect a significant increase in the share of domestic developers. The import substitution process will be stimulated not only by state policy, but also by the growth of the quality and competitiveness of Russian developments, "said Gleb Kalkutin, Development Director of Quillis.
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How import substitution of software will be affected by sanctions

For a long period from the beginning of 2022, international sanctions against Russia led, among other things, to a shortage of Western high-tech products, spurring the trend of import substitution of software, devaluing the achievements of many domestic companies, which, moreover, found themselves in more difficult economic conditions.

The new package of US sanctions of June 12 led not only to a stop in trading in dollars and euros on the Moscow Exchange, but also explained one of the directions of the ban on the interaction of American companies with Russian ones. From September 12, 2024, overseas themis severely punishes software giants from the United States for providing any services, including software, that can be used for production activities in the Russian Federation.

How are commercial enterprises in Russia planning to survive in these conditions, which did not have time or could not switch to domestic software products, operating systems? What impact will the strengthening of sanctions pressure have on import substitution?

According to Yevgeny Shishkov, managing director of Orion soft, for state-owned enterprises and those enterprises that are subject to regulators, the new sanctions do not carry significant changes, because import substitution has long been mandatory for them. At the same time, the pressure on them "from above" will only increase. Among commercial customers, import substitution processes will accelerate - for them, new sanctions will become another sign that it will not be easier further.

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Each CIO regularly analyzes the options for building an IT infrastructure, and the fact that part of the cloud services will become unavailable further activates the process of switching to domestic software products, he said.
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Mikhail Bocharov, Deputy General Director for Science of SiSoft Development JSC, believes that tightening sanctions for vendors in the field of computer-aided design (CAD) systems will lead to the fact that foreign companies will no longer be able to return to the Russian market - they will not be allowed to do this.

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This will not lead to any serious consequences for our country in the future, since there are enough Russian software manufacturers on the market, he said.
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New sanctions are unlikely to have a global impact on the import substitution trend, believes Stanislav Shilov, director of product development at the company's Center for Digital Solutions for Business. BSS According to him, the new sanctions can, of course, pointwise speed up the processes of switching to domestic software and services in individual organizations, but are unlikely to become a globally determining factor.

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Still, the determining factors in import substitution processes are regulatory pressure (for example, regarding the requirements for import substitution of CII facilities) and the conscious strategy of the organizations themselves to reduce strategic risks associated with the use of software and services from unfriendly countries, the expert said.
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The new sanctions do not bring anything radically new, because Russian users of foreign engineering software were already deprived of support from its developers. This opinion was expressed by Pavel Shcherbinin, director of strategic marketing in mechanical engineering "ASCON."

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Most industrial enterprises have already drawn conclusions for themselves and are engaged in real import substitution, not only in the public sector, but also in the commercial sector, "he said. - Perhaps the illusions of those few who have so far hoped to stay on foreign software will disappear. We will continue to support enterprises in the real sector of the economy under the conditions of sanctions, ASCON have been implement import substitution projects for engineering software for more than a dozen years.
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Ivan Skorodumov, General Director of EOS Group of Companies, believes that for companies that have not yet decided on import substitution, new circumstances may become decisive in deciding not to postpone this process anymore. According to him, most of the American services that left Russia have domestic counterparts, and the new ban only further activates the growth of this segment. However, in parallel, the cost of such services and services for consumers may increase.

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As far as I know, the ban concerns cloud services and software products for enterprise management, design and production. This measure did not come as a big surprise, since there has long been a systematic tightening of sanctions in all directions. I think the Russian market is ready for this. Over the past few years, Russian cloud services have been actively developing, he concluded.
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The new sanctions cross out opportunities to receive service from companies from unfriendly countries, says Georgy Podbutsky, commercial director of SL Soft. According to him, the new tightening of sanctions, which was quite expected, will be an additional factor accelerating the transition to Russian software.

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Migration from cloud services will occur quickly, because "switching off the chopper" in September can significantly affect business continuity. But companies that still use on prem solutions will also increase the need for import substitution under pressure from internal and external factors, "he said.
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According to the expert's observations, a fairly noticeable share of enterprises until recently took a wait-and-see position on the issue of import substitution. Having purchased licenses of Western software, with the help of their own teams or integrators, they provided support for their systems, even in the absence of legal support from the vendor. The same situation was with subscriptions to Western cloud services.

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New restrictions on the use of foreign technologies will only push users to find Russian alternatives, he summed up.
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Individual enterprises were already under sanctions, and some suppliers - Atlassian, Autodesk, SAP - have already curtailed operations and refused to provide services to customers in the Russian Federation. So if there is a surge in demand, then more likely due to the "recovered," - said the general director of Test IT Artem Kostryukov.
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The market has long been preparing for such scenarios, many companies began to search for alternative solutions long before June 12, new sanctions could push for more active use of existing government support measures. This opinion was expressed by Elvira Gilmanova, Deputy General Director of Bars Group. Commercial companies are also not left out, she said. The ban on the provision of technical support from foreign suppliers encourages companies to invest in their own technical support and training centers.

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It is important to note the increase in the number of domestic solutions in the field of ERP, MES, MR systems, CRM platforms and other critical business applications. Many companies have already made a choice in favor of domestic software or are actively working on the transition to it. This trend is likely to continue and intensify under the influence of new sanctions, the expert predicts.
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Of particular interest to specialists is the issue of import substitution of specialized software, analogues of which are absent on the Russian market. Serious challenges really arise here: the development of such solutions requires a significant investment of time and resources.

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The new sanctions apply to a number of software categories, in particular, to enterprise and production management systems, in short, software for the industrial industry. Such solutions include Microsoft and Oracle products. SAP products do not fall under the new sanctions, as they are being developed by a German company, "said Alexander Zotkin, CEO of Houlmont.
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He believes that the new sanctions will serve as an additional incentive for the development of Russian products and custom solutions. The acquisition and support of all foreign systems has been difficult before, from 2022. There was no official way to buy new licenses, it was also difficult to get technical support from the manufacturer.

According to the expert, in today's realities, the best option is the development of information systems for managing production or an enterprise to order. Russian companies have the necessary experience and competencies in order to create a fault-tolerant and high-performance information system of an industrial scale, as well as take into account all the features of the customer's processes.

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It is unlikely that anything will bring down or suspend current operating activities. Most companies have prepared for such events and have a plan "B," - Vladimir Egorov, Deputy General Director of Consyst Business Group, a TURBO vendor (part of the product line of IT holding LANSOFT) shared his opinion.
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We always try to find positive sides in such innovations, - said Kirill Timofeev, head of the information technology department of Obit. - Despite all the difficulties, the restrictions push Russian companies even more actively to look for and introduce domestic analogues.
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In connection with the new sanctions, the trend of import substitution will only intensify, said Dmitry Slobodenyuk, commercial director of ARinteg.

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Here you should not wait for the introduction of the next sanctions, we will have to switch to domestic solutions. The latest examples, for example, with the blocking of Autodesk cloud accounts, due to which some of our developers lost access to their project documentation, are only once again convinced of this, the expert noted.
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See also