Import substitution of WMS systems: difficulties and prospects

2023: "Import substitution is just a path everyone needs to overcome"

Despite the fact that more than a year has passed since the departure of foreign vendors, import substitution is still a pressing issue. It is expected that the trend towards the replacement of foreign WMS systems remains on the horizon for 2-3 years. At the same time, the market is likely to continue to grow actively, since after the departure of Western companies, many restrictions put by their head offices disappeared.

It can be noted that the number of products that customers can choose has decreased. However, you need to understand that in the past few years the WMS market has already consisted mainly of Russian-made products. According to various estimates, the share of domestic software reached 80%. The complex process of rebuilding integrators, which traditionally do not have their own software and have implemented software from Western suppliers, has also begun. They had to conclude new partnership agreements, study unusual software for themselves and, as a result, make mistakes in the "first steps." In addition, the load on all other market players has increased. The overwhelming majority of its participants were not ready even at the level of evaluating the project and concluding contracts, - commented Artem Dolgikh, director of business development at AXELOT.

Despite the limited choice of products in the automation industry, Russian WMS borrowed a lot from the foreign founders of this industry and over the past 10 years have gone very far. For example, the company "Yarus" reported that in their company there are no problems with software. The only difficulty is equipment, since western niche solutions (for example, shipping documentation for freezers) have not yet been replaced.

Also on the market so far there are no analogues to high-performance WMS systems that were previously presented by foreign vendors. In addition, some new technologies that were just beginning to appear on the Russian market, such as robotic systems or augmented reality glasses, also have no analogues in Russian developments. Creating such solutions in a short time is a certain challenge for domestic IT companies, says Anna Korchminskaya, Deputy General Director, Director of the Logistics Department of KORUS Consulting Group of Companies.

Another problem in the field is the growing personnel shortage on the customer side, caused on the one hand by migration processes, on the other, by an increase in the cost of human resources. One of the most important trends is to reduce dependence on any personnel, minimize the cost of training a new employee, and optimize the number of warehouse workers.

Artem Dolgikh (AXELOT), notes that it is not enough to simply import replace the product, you also need to import replace the service around it:

When choosing a contractor, it is also important for the client to be able to consistently reproduce a successful result - and this is already about internal tools that allow him to maintain and use knowledge, apply a systematic approach to organizing work and transferring tasks and design features between departments, provide multi-stage quality control and a general proactive position. The level of industry leaders is that you provide a guaranteed quality service, which is what attracts your client. Automation is primarily a matter of improving the efficiency and quality of management, so a responsible business cannot afford not to manage risks and chooses a guaranteed quality.

He also noted that there are no irreplaceable WMS, and replacing all Western counterparts is a matter of time.

Dmitry Blinov, founder and managing director of LogistiX Group of Companies, believes that there are no problems with import substitution:

{{quote 'This is just the way everyone needs to go - the way is understandable and transparent. Those companies that used foreign components in their products and did not think about open solutions available for use during sanctions, of course, are experiencing problems. Even now, you can find companies that sell products that are absolutely unacceptable for customers that are not included in the register of domestic software, or from a stack closed in the Russian Federation.

In such solutions, customers see possible risks in disconnecting from imported infrastructures and platforms. And companies that have adapted products for the Russian market in advance have no problems - nothing happened for them, they simply switched from some technologies to others. }}

But difficulties still arise for companies, including those that were preparing for the transition to domestic software. They are associated with IT services. For example, some companies provide services to support the customer's IT infrastructure. In this case, a large number of Windows specialists had to be reoriented to Linux. This caused some difficulties associated with scaling.

General Director of GTLogistics Ivan Denisov emphasized the risks of companies where Western WMS operate. According to him, the main danger is the inability to refine systems for new business needs and even legally use them. That is why it is important not only to replace Western solutions with domestic ones, but also to choose the right system when it comes to implementing "from scratch." Companies considering overseas warehouse systems should be aware of the high risks that their implementation poses. He also added that he expects the transition of up to 90% of warehouse systems to Russian software by the end of 2023.

2022

Import substitution in 2022 has become a key trend for the entire domestic IT market. The WMS market is no exception. The departure of Western vendors practically left no choice for Russian companies. If the situation in the sanctions and political plan does not change in the near future, which cannot yet be counted on, then companies will not have other options, except for migrating to domestic developments.

In the global sense, customers have actually been deprived of their choice. There are only three options left: custom development, "1C" or solutions of local players with closed code and dependence on a small product company, - notes Anna Korchminskaya, Deputy General Director, Director of the Logistics Department of KORUS Consulting Group of Companies.

Russian WMS vendors record an increase in the number of requests from potential customers. There is a general understanding that business should develop, and automation processes cannot be stopped.

By the spring of 2022, a number of large state-owned companies had already completed the decision-making process on the transition to domestic software (as we understand it, this process is not fast). The projects launched this spring will give significant market growth in late 2022 - early 2023, - said Vladimir Lykov, Customer Relations Director at EME.

Dmitry Azarovsky, executive director of Toplog, also predicts continued growth in demand for WMS and other software solutions for warehouse logistics with a focus on Russian brands.

Western software is no longer participating in new tenders and there is a steady tendency to replace Western software with Russian software, - confirms Dmitry Filatov, Director of Business Development at InStock Technologies.

Information on the distribution of shares between Russian and foreign solutions used by customers in Russia would help to assess the impact of import substitution on the WMS market. There is no objective and relevant data on this, so TAdviser appealed to market participants with a request to voice their own estimates for this part.

According to their calculations, the share of Russian WMS systems has grown continuously over the past years. If in 2010 the ratio of import solutions to domestic solutions was estimated at about 70/30, then by the beginning of 2020 it had changed to the contrary - about 70% of the solutions used were Russian.

At the beginning of 2022, according to the average data received from vendors and integrators of WMS systems, in piece terms (not taking into account the size of the companies), about 90% used Russian solutions. At the same time, the share of import-independent Russian software is estimated at 75%.

If we consider the largest clients of WMS, then the situation is the opposite. Thus, according to KORUS Consulting, 90% of the largest production companies in Russia use Western software. The situation is similar in the country's largest retail chains - 12 out of 15 apply foreign solutions.

According to Vladimir Lykov, in 2023 the share of new import implementations will gradually tend to zero.

There are no new requests for the introduction of foreign solutions on the market now, the expert notes.

Problems of using foreign systems

The problem faced by Russian companies that have contracts with foreign WMS suppliers is that in some cases vendors of some Western WMS limited the functionality and technical support, despite the existing contractual obligations and payments made.

The first negative moment that came immediately is a decrease in the speed of reaction of technical support or its complete termination. For a product such as a warehouse management system, where stopping a warehouse is unacceptable even for an hour, this is a very critical factor, "says Dmitry Filatov, director of business development at InStock Technologies.

The next point is that this ON one works on system software DBMS Oracle and, Microsoft which is also now unavailable for purchase in. Russia

Companies that use WMS installed on foreign servers also have very serious risks. In this case, the risk of disabling remote access to the system is added to the risk of termination of technical support.

In addition, companies in the future may face a shortage of the necessary personnel, since the number of people wishing to develop their competencies in solutions that are no longer in the local market will decrease.

According to Artem Dolgikh, Director of Business Development at Axelot-L, the only working way to do without replacing the software is a strong (at the level of vendor architects) internal team. However, part of her work in this case will increasingly resemble the work of a "group of hackers," the expert is sure.

At the same time, the only correct way, according to Artem Dolgikh, is to migrate to the solutions of Russian developers.

Migration Substitution and Complexity Options

Migration from a foreign solution to a domestic one is actually a process of implementation again. And, according to experts, there is no need to experience illusions about this. With any implementation, it is tempting to shake up outdated processes, get rid of unnecessary modifications, and introduce something new. Therefore, you need to look at it as a separate project.

It is important to initially understand that during the transition, the difference between Western, industrial software and current analogues will be significant. Some of the tasks will have to be solved creatively - somewhere to transfer development to third-party systems, somewhere to simplify processes so as not to lose in performance and quality, - says Anna Korchminskaya, Deputy General Director, Director of the Logistics Department of KORUS Consulting Group of Companies.

At the same time, Dmitry Azarovsky, executive director of Toplog, believes that integrators of Russian systems can offer at least identical to the previous, and often higher functionality of the solution in combination with the methodology for switching to a new system with minimal implementation times. He notes that now the priority among customers is the focus on reducing the cost of ownership of the software product, quick launch dates, technological independence and safety.

The cost of the transition process to the new WMS is determined by the specific situation at the customer site in terms of processes and activities in the system loop, integration interactions and reporting. In terms of the structure of work, such a project corresponds to a full-fledged project for the implementation of a warehouse management system. If implemented by an experienced implementation team on the part of the WMS integrator, it is possible to optimize the time for launching the system into pilot operation and the associated labor costs. The cost of the project without loss in quality is ensured by the use of proven algorithms for designing/recreating the target technology, as well as by simplifying the design documentation book and supporting the customer system administrators at various stages of design work, explains the Toplog expert.

According to Dmitry Filatov from InStock Technologies, a complete replacement of one WMS with another is a project for at least 6 months and cost from 10 million rubles. To reduce the launch time and cost of the project, the company proposes the transition to cloud WMS, which was introduced by InStock Technologies in September 2022. According to company representatives, the new solution allows such a migration to be carried out smoothly without serious one-time costs. It is "a fully functional warehouse management system, has basic functionality and retains all the advantages of InStock WMS," the developer's website says.

EME, in addition to completely replacing foreign WMS with Russian, proposes to consider a number of options. One of them is to ensure the continuity of operations by installing a duplicate background Russian system (BCP solution), which minimizes the impact of failures on the main system.

Another option involves the installation of a Russian solution in regional warehouses.

In the event of a primary system failure, we already have a ready-made working solution that can be quickly scaled. The very process of switching from one WMS to another does not require significant costs, in the case of 5th generation systems, you just need to transfer the remnants and logic of business processes, "says Vladimir Lykov, EME Customer Relations Director.

The Axelot-L company proposes to consider the difficulties that companies may face when migrating WMS systems to an import-independent stack.

The first option involves the migration of Russian cross-platform solutions installed on the and software Microsoft. Oracle According to Artem Dolgikh, Director of Business Development at Axelot-L, the vast majority of solutions in this category are platform solutions 1C that use the MS Windows and MS DBMS SQL Server operating systems. The combination Linux with PostgreSQL is also supported by the 1C platform, so migration is possible with minimal labor and with the preservation of all data and modifications.

At the same time, the company advises to pay attention to various plugins that are built around 1C. They may not be supported on Linux/PostgreSQL. These are, for example, com objects or scripts for the database.

The first option also includes products developed on open cross-platform stacks - Java and.Net Core. Such solutions, as stated in Axelot-L, are also usually easy to migrate while preserving all data and modifications, but provided that no business logic is implemented on the DBMS side, for example, on T-SQL (MS SQL Server) or PL/SQL (Oracle DB).

The second option involves the migration of Russian solutions based on proprietary technologies from Microsoft and Oracle. For example, implemented on.Net and/or with the implementation of business logic on the DBMS side, for example, on T-SQL (MS SQL Server) or PL/SQL (Oracle DB). Such solutions require rather laborious "porting" to the Linux/PostgreSQL stack, up to rewriting a large amount of code and solving a number of optimization tasks for the new stack.

In this case, you need to pay attention to the practical experience of using Linux/PostgreSQL stack-adapted software, says Artem Dolgikh. The complexity of migration from the old system is assessed here as medium (in the absence of modifications to the current system) or high (in the presence of design modifications). In the latter case, all improvements will have to be repeated in the new system, so we will rather talk about the introduction of a new software product.

And the third option under consideration is foreign solutions. This category includes products from Western developers from "unfriendly" countries. These are logistics solutions from SAP, Oracle, Manhattan, Infor, GSC, PSI and others. Migration is not possible here, so the transition to independent software is an implementation of a new system.

According to representatives of Axelot-L, all companies that now use foreign WMS systems accumulate problems in snowball mode - the further, the more difficult it will be to switch to new products.

Another incentive for an operational transition to domestic solutions is called in the "KomLine Company." According to Salavat Samarov, product manager of Digital Labeling, ComLine: WMS, Russian solutions are still cheaper, but there has already been a tendency to increase the cost of both the solutions themselves and the IT teams.

Read also

• Warehouse Management Systems. TAdviser Overview
• Import substitution of WMS systems: difficulties and prospects
• Technological trends of WMS systems
• Global WMS Systems Market
• Available WMS Definition
• WMS Core Capabilities
• WMS Selection and Implementation Steps
• How to train personnel to work with the WMS system
• Benefits of Implementing a WMS System in a Product Warehouse
• How to convince the company's management of the need for a WMS system?
• Import substitution of software in Russia. TAdviser 2022 review
• Import substitution of information technologies in Russia

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