Foreign ERP in Russian companies: problems and solutions

2022: Foreign ERPs in Russian companies: what can wait for customers, and what domestic suppliers offer

It is quite obvious that after the exodus of SAP, Microsoft, Oracle and other ERP vendors from Russia, the question of the feasibility and legitimacy of using foreign systems arose before customers in full growth. However, customers will not be left alone with this problem - many large Russian integrators declare that they are ready to provide them with qualified support. Thus, T1 Consulting formed the practice of alternative support for already implemented solutions from SAP, without violating licensing requirements and without involving the vendor. But this is not equal to vendor support, the performance of the systems will remain for a limited time, warns Ilya Nabatov, production director of T1 Consulting.

Rustam Suleimanov, Commercial Director of KomLine, states that customers are experiencing difficulties on all key fronts: there are failures in support and even disconnection of systems, processes "fly," and behind them - plans, budgets. As a result, business development may slow down or completely stop. Therefore, companies will either have to completely abandon development and the opportunity to be in the legal field, or switch to Russian software.

The fact that companies were left without vendor support and access to regular updates multiplies the potential risks affecting the stability and continuity of critical business processes, warns Petr Roginko, Director of Business Development at NORBIT. However, mostly customers took a wait-and-see attitude. NORBIT experts record an avalanche-like transition to domestic solutions only among Russian representative offices of multinational companies, which in the past used the general global ERP, and now are forced to urgently look for a replacement for it among the available options.

Most customers realize that there is no one-size-fits-all solution on the market. Therefore, the competence to switch from industrial systems of Western vendors to solutions based on microservice architecture using cross-platform technologies becomes in demand.

This approach allows you to replace ERP functionality blocks step by step, provides a gradual seamless transition for users, simultaneous solution of operational tasks and investments in strategic development. A critical criterion when choosing systems is the ability to change the software solution without involving a developer. The principles of Low-code/No-code are no longer just an advantage of a software product, but its necessary characteristic, "says Peter Roginko.

For most companies, the current situation is the very case when it is more profitable to buy a new one than to redraw and sew the old one, believes Evgeny Gribkov, director of the Razdolye implementation center.

Awareness of this fact is only a matter of time, the expert is sure. He gives an example from the practice of the implementation center "Razdolye." One of the last projects of the company was the transfer to Microsoft Dynamics AX for 1C:ERP at Agroholding Belaya Dacha JSC. The main stages of implementation took 4 months. At the same time, the customer not only did not lose the functionality of the system, but even acquired a number of new features. Most importantly, the cost of licenses has been reduced by 4 times, and we can also talk about a sharp decrease in the cost of service.

The most important difficulty is underestimating the strategic risk of continuing to use Western software. - said Alexander Pryamonosov, CEO of WiseAdvice-IT. - I have no doubt that our talented IT specialists will find opportunities to continue the operation of Western systems in some perspective. But the problem is that sooner or later all technological and organizational "loopholes" will be blocked. And then the business will face the need for extreme implementation of domestic ERP systems. And this approach to projects always means that it is very expensive, difficult and without guarantees. The emergence of high demand in the context of a shortage of IT personnel will be the biggest problem that cannot be underestimated.

There are also some rainbow spots for customers. Vladimir Malakh, Managing Partner of FTO, recalls that SAP support was almost always carried out primarily by internal competence centers, and the vendor himself provided support services only on the third line. Therefore, in the future, for a year or two, SAP ERP systems will continue to function more or less normally. An unpleasant technical problem may be the need to migrate from cloud services that have ceased to work in Russia (Azure, AWS) - regardless of the systems used, says Malakh.

The most painful thing now is the shutdown of cloud applications, agrees Dmitry Potapov, senior partner of the Digital Economy League. According to him, here the clients are saved now and then the clouds did not have time to enter into fashion and most companies still operate systems installed on their own servers.

Most experts advise customers to develop a phased migration plan for domestic solutions as soon as possible, even if foreign systems are still working stably. If there is a risk of disconnecting the system in the near future, then you urgently need to look for a project team and start migrating, because personnel resources in the market are very limited, emphasizes Konstantin Smirnov, commercial director of the ERP department group of KORUS Consulting.

2018: Chances of success for SAP projects are 50-50

In February 2018 consulting , Resulting IT published the results of a study stating that only half of the implementation projects software SAP can be called successful. The survey was attended by representatives of 105 companies using software from a German vendor.

The report reports that 36% of companies that have implemented SAP software indicate that the results of the project correspond to the original plan. At the same time, 48% of projects did not lead to the fulfillment of their business goals, and 52% of the companies surveyed said that they spent more than the budget laid down at the start.

Analysts believe that SAP projects are failing due to the fact that companies expect results from them that do not correspond to business analysis.

77% of managers who were asked about the benefits of implementing SAP software answered that there were none. About half of the respondents believe that the completed SAP projects turned out to be unrelated to their business strategies.

These figures are alarming because they point to big problems with the efficiency of IT systems, in which executives saw great prospects for business, says non-executive director of Resulting IT, former Gartner analyst Derek Prior, who specialized in SAP.

It's a risk. 50-50 odds on CEO getting the right result... We see that despite 20 years of implementing SAP software, companies are still spending millions and still scared. It is difficult for customers to admit that they are doing something wrong, - said the expert.

As noted by ComputerWeekly, since key business processes are built on the basis of SAP technologies that manage the company's activities, broken expectations can have a devastating effect on the income and effectiveness of the head of the company in terms of developing a business strategy. SAP configurations are designed to support best practices, and customers can use system integrators to help businesses implement these best practices to deliver projects in a timely manner.^[1]

But SAP is not just a project. This is a lifecycle, "said Prior, explaining that Chief information officer and specialists must ensure that the right people from the business are involved throughout the life cycle of the project, and the system integrator works in the best interests of the client.

According to Derek Prior, such projects fail due to the fact that companies expect results from them that do not correspond to business analysis.

In the past, when companies began to implement SAP technologies, they entered a large phase, in which intensive development began and the waterfall type of software development process was used. It consists of the following phases: requirements collection, design, code implementation and testing. All phases are performed sequentially, only a small overlap of adjacent phases is possible. After that, there was a cycle of creating new versions and refining functions using the Agile technique, Prior notes.

Standardization remains a key factor in the success of SAP projects, he said. In addition, success depends on the number of errors and the correspondence of the results of the economic model chosen by the company.

43% of the respondents in the Resulting IT survey said that their SAP projects were successful largely due to the widespread use of software by employees. In cases where the staff did not accept the new systems well, the success of the project was reduced by 25%.

The authors of the study also concluded that SAP customers often rely too heavily on system integrators to try to capitalize on the project. Businesses most often choose integrators according to the corporate culture and experience of contractors in similar companies. 

2011: Top 10 Surprises Arising from ERP Implementation

The implementation of enterprise resource management systems is rightly considered one of the most complex types of projects of this kind. It is difficult to achieve the result, you need to put a lot on the altar of the project, but companies are also waiting for surprises that can nullify all efforts.

During the implementation of ERP systems, the case sometimes takes such a turn that it remains only to spread its hands as in that film: "Slipped, fell, woke up - cast." Leading system integrators told TAdviser that we all walk "under God" and anything can happen. They also gave advice on where to lay the thickest layer of straw before the start of the project.

1. Concept: Better measure seven times

Often the implementation ERP of the system takes an unexpected turn already at the stage of preparation of the project. ERP is not a panacea for all the troubles of the company, and in order to get a positive effect, the company will have to change. Not all customers understand this., '"Leonid Popov"' the head of the project management department of the Microtest business area 1C says that no matter how deeply the customer does not look at the task, he does not understand the scale and complexity of the tasks being solved and underestimates the time and cost of solving his internal methodological, management and accounting issues. There are also mistakes in the TA that prevent the consultant from adequately assessing his future labor costs. As a result, the overvalued budget and the extended project deadlines cause the client's displeasure and from the very beginning undermine his trust in the consultant, says the '"Alexander Chernykh"' project manager of the practice. " SAP Asteros Consulting

2. Timeline: Who believes in miracles! But everyone is waiting for them...

"In late autumn, consulting companies in the commercial market have a hot season. At this time, customers who need to launch an ERP system (including a financial unit) from January 1 often turn to us, "says Anna Korchminskaya,' Director of the Microsoft Dynamics ERP Department at KORUS Consulting.

The process of choosing an integrator is usually delayed by a month and a half. And then there are two options: the first is a revolutionary path, when, to the detriment of quality, the project is implemented in record time. Such a path will require a lot of effort, not even from the implementation side, but from the internal team of the client. The second way is to move the project to a later date. A rare solution! Preparation for the project in advance will allow to avoid such problems. The earlier the intentions, goals, project framework, team, terms of the contract are determined, the more likely the project is successful.

3. Customization: ERP a - rus

Another surprise may be that when introducing Western ERP systems, their refinement is necessarily necessary, taking into account the "national characteristics," says Denis Andrikov, Deputy Technical Director of Open Technologies. For example, for accounting and reporting in accordance with the rules of Russian law, you will have to recycle the Finance module. And redesigning the system at the software level will require additional resources - both financial and human. Another surprise can lie in wait when checking the relationships between ERP system modules and other programs.

4. Budget: you have to pay for pleasure

Vakil Galiulin, director of the consulting department of I-Teco, notes that high project costs are often a surprise to the company. The sponsor of the program on the part of the customer may be absent or removed from the project, which leads the project to a dead end.

The most unpleasant thing is that the money may suddenly run out, says Kirill Burlyuk,' head of the business applications department at Sitronics IT. "We all remember the negative effects of the 2009 global financial crisis. In a state of uncertainty, companies are striving to reduce costs and optimize costs, including through IT: projects started are frozen, the start of new implementations is postponed. "For ERP projects, these are not the best starting conditions," he concluded.

The flip side of the coin, according to Oleg Saidov-Lebedinsky,' director of pre-sale work at IBS Borlas, looks like this: "We pay you so much money, and you yourself do not want to do anything. We pay - you do; do not touch us - we need to work. "

"The separation of efforts of the customer-executor on the ERP implementation project is partly reminiscent of the process of learning a foreign language. That is, you pay a huge amount for lessons - say, a thousand dollars a month - but this does not guarantee the development of the language. Often you need to make your own efforts for another couple of thousand, "he says.

Unfortunately, any hired manager is characterized by an attitude towards the ERP system implementation project not as a process of learning a foreign language, but as a process of buying a server: he paid $1000, showed activity by 3 rubles himself - and the result is ready.

5. Automation of departments: we did not pass this, we were not asked

Leonid Popov says that in the process of introducing an ERP system at the enterprise, automation affects workshops where it is difficult to imagine a computer. "Is the customer ready for this? I don't even mean financial costs. Is the customer ready to introduce a new standard unit, allocate a room, organize measurement and rationing directly in the workshop conditions, "he asks.

IT organizations overestimate the enterprise's capabilities to solve these issues, accustomed to working in offices and with highly qualified personnel, the prevailing majority does not even imagine what the workshop of our post-Soviet enterprise looks like in reality. Another example: the involvement of designers and technologists who prefer to use specialized software in their work.

6. Staff: Ship riot

This risk does not apply specifically to ERP projects, but it is most typical and bright due to the complexity and multitasking of such projects, Popov says. Naturally, this can come as a complete surprise to the leadership. Do not forget that the implementation affects all departments of the enterprise and the issue of communications, loyalty to goals, understanding of the task being solved plays a decisive role.

The simplest thing to deal with is a clear confrontation, the most difficult is quiet and cunning inactivity under the sauce of "incredible activity and assistance." "Sabotaging the internal team, refusing to use the system by the key users is the most difficult task when it has already become a problem," Anna Korchminskaya agrees.

Maxim Andreev, head of business applications at CROC, spoke about such a sad case: the general director of one large holding decided to introduce a financial and treasury management system. He wanted to make the process transparent and understandable for everyone, not just the chief treasurer, who was the only person who understood the real state of affairs at the company. The treasurer was a key user and nominally supported the implementation of the system, but in fact did everything to prevent the project from being implemented. As a result, the company went bankrupt.

In order to avoid this problem, it is necessary to prepare personnel for the project in advance, explain the purpose and objectives, the importance of the project to the company.

7. Data: "So we still have to prepare data for you?"

Oleg Saidov-Lebedinsky noted that setting up the system for business processes is half the battle, you still need to reconcile the regulatory data and enter it into the system so that it gives an accurate and useful result. And if we are talking about hundreds of thousands of nodes and materials? Are there really nothing for technologists, chief specialists to do at the workplace, except to prepare data for the operation of an ERP system?

"Often the customer overestimates the quality of the directories at his disposal and believes that transferring them to the new system will not be difficult," says Alexander Chernykh. Such work - data reconciliation, and these are thousands of man-days of work of competent specialists - must be planned in advance, that is, to recruit and train appropriate personnel for it.

8. Project team: "went on maternity leave"

Vakil Galiulin points out that often during the implementation there are problems with the project team, this can be its poor availability or changes in the project team, and sometimes very unexpected. Market participants told TAdviser such a case when the project manager on the part of the customer went on maternity leave. Unexpected? Yes, but the process was actually frozen.

Alexander Chernykh says the key faces of the project are also often misidentified. Often, the client refuses to allocate key employees for the project, not wanting to distract them. In practice, the effectiveness of the approach has been proven, in which deputies play the role of key users with a high degree of load in the project, and heads of functional and business areas play the role of process owners.

Perhaps you should think about preparing in advance in the divisions a kind of "understudies" for key users whose participation in the ERP project is supposed to be important, "says Oleg Saidov-Lebedinsky.

9. Learning: Don't want to learn

If each user of the system has not passed the appropriate certification, it may be a surprise that when the system is put into productive operation, the number of errors made by users may exceed the critical level, or employees will begin to sabotage the project, not knowing how to cope with their work in the new conditions, says Alexander Chernykh. For many, it comes as a surprise that the costs of training staff are quite high, but they cannot be avoided, the expert says.

10. The result: a cat in a sack

ERP systems have two serious drawbacks: the cost and timing of implementation. Introducing these systems is expensive, besides, it is long and difficult, said Denis Andrikov. One of the typical mistakes is treating ERP as a tool that will help you immediately reduce your company's costs. In reality, ERP systems at best pay off only a few years after implementation. So, the lack of instant savings - may be the first unpleasant surprise.

"The customer expects to solve his internal problems from the implementation of the ERP system. They will deliver the system - and everything will spin, wrap, "says Leonid Popov. In practice, most attempts to rebuild the business logic of the enterprise to the business logic of the software product ended in failure. "Systems and solutions are created under industry standards, but, contrary to the existing belief," we are the same as everyone else, "there are many business nuances, even in two companies from the same industry," Anna added.

The most unexpected outcome of the ERP project is its Epic Fail, that is, a complete failure. Although, the expert recalls, only about 30% of today's implementations are successful. This is mainly due to the fact that, as a rule, the ERP system is implemented entirely and immediately. And this is a very risky option, which is possible only for companies with a simple organizational structure and simple production.