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Russian billionaire: SAP replacement is expensive but essential

Alexey Mordashov, a Russian steel billionaire, said that creating a home-grown alternative to SAP's widely used business software will take more time and money than expected but it is a matter for survival.

SAP is a software company that makes software to help businesses manage everything from marketing, human resources, and logistics, to procurement and procurement.

SAP supplied software to Russia's biggest companies, such as airline Aeroflot and Russian Railways. However, it curtailed business after Moscow sent troops to Ukraine in March 2022, and eventually stopped operations.

Mordashov's steelmaker Severstal and Sibur, a petrochemicals company, have been working together to find an alternative SAP software.

He said, "We've done a lot of research on this issue in the last year. But it turns out that everything has become more complicated and expensive, requiring more precise refinement."

He added, "We know the importance of completing this task...because we must survive."

Before the Ukraine conflict, SAP held 60% of the Russian business software market. The rest was split between Microsoft and Oracle.

Many Russian companies still use SAP software that was pre-installed, but they do not have access to the updates or support provided by the German company. This leaves their systems susceptible to failure.

Mordashov's remarks highlighted the difficulties Russian companies face in developing alternatives to Western software while facing Western sanctions.

Severstal and Sibur originally teamed up to create software with the domestic software manufacturer Consist, but they have now ended their partnership. Severstal has now begun to look at solutions offered by Business Technologies, a developer.

Other Russian companies, such as Russian Railways and the oil company Gazpromneft, have also chosen to work with 1C and plan to launch an alternative SAP software domestically in 2027. (Reporting Anastasia Lyrchikova; additional reporting by Oksana Kobieva; writing by Gleb Brynski, editing Alexandra Hudson).

(source: Reuters)