Magnit moves from SAP back to 1C, although it does not quite suit it

2024: Abandonment of SAP, 1C implementation

Magnit closed the ERP transformation project based on SAP products, which at the time of launch in 2020 was announced as the largest ERP transformation project in retail. Timofey Gorokhov, head of the architectural headquarters of the Magnit IT directorate, told TAdviser about this . At the same time, the company chose not to disclose the details of the introduction of alternatives to the solutions of the German vendor.

From the vacancies of Magnit, published as of October 2024 and earlier at various recruiting sites, it follows that the company is now extensively implementing and using 1C solutions. So, for example, in one of the current vacancies for October - a leading developer in the department for the development of integration flows "1C"^[1] - the 1C:Enterprise 8.3 platform, an atypical configuration, is included in the technology stack. And among the duties of the desired employee is the creation of design solutions and development in an atypical configuration.

Among the solutions mentioned in other vacancies are "1C: Accounting," "1C: ERP," "1C: Document Flow." Also, Magnit is developing information systems for calculating wages on the basis of 1C using the 1C: Payroll and HR Management solution. One of the vacancies in the corresponding team, consisting of about 80 people, states that "1S:ZUP KORP 3.1" is the largest installation, deployed by more than 300 thousand employees. The team is engaged in expanding the current functionality of the RM, creating end-to-end data transfer processes, and at the same time is not limited to only "1C" - it integrates new technologies and develops its own solutions based on "1C" related to many personnel systems.

Our team is actively in contact with the "1C" itself, providing recommendations that become part of the standard release, - says the vacancy of the developer "1C: Payroll and HR Management"[2].

source = "Magnet"

On 1C technologies, it is planned to launch a new project of Magnit stores in a franchise. As part of the project, it is planned to introduce "1C ERP," "1C: UT," "1S:RMK" and other configurations based on "1C." "Our plans to implement the largest 1C installation for 20 thousand retail facilities, and we already have a team working with 1000 facilities in one database," says^[3] in one of^[4].

At the same time, Magnit also develops its own solutions for automating some of the main business processes for which SAP was previously intended. For example, in October, the company reported that it was developing its own demand forecasting and order planning system (F&R, Forecasting & Replenishment)^[5].

In 2022, Magnit was still thinking about correcting the SAP implementation program, while indicating that 1C was not entirely suitable for the scale of their company. Due to the growth in demand from large 1C customers, the performance of its ERP 1C:ERP Enterprise Management has recently been "tightened." In early September 2024 , the company told TAdviser that it had successfully conducted load testing of the 1C:ERP Enterprise Management solution for 12 thousand users simultaneously working in a single base on PostgreSQL the OS. Linux Having coped with such a load, 1C has come close to fulfilling one of the key requirements of the largest customers still working for SAP.

At the same time, large customers can have tens of thousands of simultaneous users, and in addition to the load, there are a number of other factors that affect the import substitution of SAP for "1C" in large organizations. According to Timofey Gorokhov, the main factors are in the zone of non-functional requirements and are associated with the "very outdated platform architecture," namely:

• No multithreading, dynamic scale-out, and dynamic clustering and scrolling;
• Lack of a caching layer between DBMS and business logic to reduce the number of requests to the database, lack of in-memory calculations;
• High processor speed requirements that limit the ability to use high-load computing in the cloud;
• The lack of integration through ETL/ELT class tools caused by the presence of a document-oriented add-in over a relational database in the platform architecture;
• High complexity of administration of uninterrupted operation in highload mode on several servers, low reliability and unpredictability of server behavior;
• Inefficient mechanisms for synchronizing distributed databases, integrating and replicating data;
• Limited analytical capabilities of the platform, lack of built-in BI tools;
• Poor UX/UI out of the box, low user interface friendliness, outdated graphics design, suboptimal interface performance under high loads;
• Focus on small and medium-sized businesses, lack of interest from the vendor in solving problems of large customers.

Recall that earlier, by the time Magnit began its digital transformation based on SAP, it had been collaborating with 1C for about 25 years, but with the growth of the company's business, other solutions were needed to automate the main business processes. At the same time, in 2019, Magnit entered into a strategic cooperation agreement with 1C. Read more about this in the block below.

2019: Cooperation Agreement

On June 6, 2019, the Magnit retail chain entered into a strategic cooperation agreement with 1C at the St. Petersburg International Economic Forum (SPIEF). The companies plan to jointly optimize the capabilities of the 1C platform to better meet the requirements of Magnit's growing and diversified business and meet the tasks that the network has set itself as part of a major transformation.

Director of 1C Boris Nuraliev and general director of Magnit Olga Naumova at the signing of the agreement "(photo - retail.ru)"

Magnit launched its strategic transformation program in the 2nd half of 2018. The company aims to become "a new standard of affordable consumption and positive purchasing experience for all Russian families." The program is based on the focus on the buyer, meeting his needs, maximizing the strengths of his business model and creating new platforms for growth.

The group's 2018 annual report states that the "new" Magnit will form new digital competencies for the company, relevant to each element of the value chain. Special emphasis is placed on omnichannality. Magnit plans that the omnichannel offer for consumers will help it enter a new growing segment of the market and strengthen customer loyalty, and the digitalization of internal processes will provide a "breakthrough change in the level of efficiency."

1C was originally the main process automation platform in Magnet. In total, companies have been cooperating for about 25 years. Initially, on the basis of 1C: Enterprise, Magnit independently wrote applications for automating various processes.

Magnet uses self-written and ready-made solutions based on the 1C platform

Magnit has an internal 1C competency unit, which has about 200 developers and 150 testers and support specialists.

Later, Magnit also began to use 1C development applications: for example, ERP for production sites and the agricultural direction of Magnit, 1C: Payroll and HR Management, 1C: Document Flow, and a maintenance and repair solution (TOIR).

One of the largest systems implemented at 1C: Enterprise in Magnit are financial flow and cash management systems. On the basis of the 1C platform, a cash register management center was created, providing control over the revenue of thousands of stores and cash registers.

In total, Magnit has more than 60 thousand units of cash registers

Evgeny Melnikov, director of IT and information protection at Magnit, told TAdviser that the company's new strategy involves a large-scale transformation in terms of more offering new services to the buyer, and one of the main issues here is ensuring the maximum speed of changes.

Magnit has grown from a medium to a very large, diversified company with more than 19 thousand outlets, and so that the 1C platform it uses corresponds to growth and transformation volumes, changes need to be made to it, Melnikov said.

Together with 1C, we plan to change their platform so that it meets our new needs and can provide faster, more efficient services. As a result, this will allow us to sell faster, reduce the speed of feedback at the checkout, submit reports faster and much more, "he explained in a conversation with TAdviser.

Evgeny Melnikov added that Magnit for 1C is the largest customer in retail and one of the main customers whose interaction helps the developer improve its platform.

Among the announced plans of Magnit and 1C within the framework of strategic cooperation is to ensure the stability and high quality of processing large amounts of data in real time in order to provide new opportunities to network customers. Magnit's director of IT and information protection noted that big data is already widely used in their company.

In 2018, Magnit entered into a strategic cooperation agreement with its 1C competitor, SAP. The German vendor's software is used as the main platform for automation in Magnit's closest competitors - X5 Retail Group and Lenta. In the case of Magnit, cooperation with SAP is more specific: it provides for the creation of a platform for optimizing sales and marketing processes using Big Data technologies, as well as the development and use of tools for the development of predictive analytics.

The use of Big Data implies many areas from which the general picture is formed, which allows the retail network to see the buyer and its employees, said Evgeny Melnikov in a conversation with TAdviser. At the same time, the 1C platform serves as one of the main sources of data: personnel information, check analytics, etc., and their processing can take place on different platforms, he notes.

Magnit has very large data sets, and their analytics are beneficial when it allows you to make some decisions online, said the company's IT director. The key goal for which big data is used in Magnet is to understand the needs of the buyer and create optimal offers for him, to form the correct store passport.

The range of stores may differ depending on the location of the store, from the season and other factors, the representative of Magnit noted. The correct formation of the assortment allows you to optimally build other systems: production, logistics.

Along with network transformation, 1C solutions also support improved network profitability. Earlier, the company said that Magnit is introducing new technologies that improve labor productivity. This allows fewer people to be hired: people who leave Magnit as part of the "turnover" are not replaced by new^[6].

Notes