Billionaire Advocates for Russian Companies to Develop SAP Software Alternative

Billionaire Advocates for Russian Companies to Develop SAP Software Alternative

by Reuters News Service
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Billionaire Alexey Mordashov has proposed the creation of a Russian consortium aimed at investing billions of dollars in developing an alternative to the widely-used business software provided by Germany’s SAP. This initiative comes in response to SAP’s decision to curtail its operations in Russia following the country’s conflict with Ukraine.

SAP announced its plans to exit the Russian market in April 2022, gradually ending maintenance contracts with customers by the end of 2023 due to opposition to Moscow’s actions in Ukraine. As SAP’s software plays a crucial role in various business functions, including marketing, human resources, logistics, and procurement, finding an alternative solution is essential for Russia’s economic development, especially in the absence of access to many Western technologies.

Mordashov, Severstal’s largest shareholder, highlighted the need for a system capable of meeting the demands of industrial customers and replacing SAP’s functionality. He mentioned that Severstal and petrochemicals firm Sibur are already working on developing solutions that could rival SAP’s offerings within five years. However, Mordashov emphasized that addressing this challenge would likely require the collaboration of a consortium comprising large Russian companies.

Acknowledging the significant financial investment needed, Mordashov estimated that billions of dollars would be required over the next five years to develop an alternative to SAP’s ERP (enterprise resource planning) software. He emphasized the urgency of the situation, noting that SAP’s software is becoming outdated, and Russia’s access to updates, particularly related to cybersecurity, is limited due to the vendor’s withdrawal.

In response to Mordashov’s proposal, SAP reiterated its commitment to complying with international sanctions against Russia. The company stated that it had terminated all remaining services to Russian customers and partners since March 20, 2024, in line with EU sanctions. However, a small wind-down team is still addressing any remaining legal and contractual obligations.

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