Germany's SAP to end software support for Russian customers by year's end

MOSCOW. Sept 7 (Interfax) - SAP, the German enterprise management software developer, will end support for its products in by the end of this year and has begun sending Russian customers notices to this effect, market participants said.

The termination of SAP support "is not critical for the operation of our enterprises," the president of Russian software developers association Russoft, Valentin Makarov said on Telegram.

"The thing is that their management is run from their own servers, not from foreign clouds, which means that companies can work for a time without updates on the same SAP [software], while a replacement on Russian software is fine-tuned," he said.

Furthermore, the integration and support of these systems were handled by Russian IT companies that have gained experience and competencies for supporting enterprise resource planning (ERP) solutions, one of SAP's main products, over the many years that the German company has worked in Russia, Makarov said.

SAP had a 60% share of the Russian ERP market at the beginning of 2022, Makarov said. This level of penetration was achieved in part because SAP products are recommended by major consulting companies to all medium and large companies as a "standard" for automating their business, he said.

"Our companies were obligated to follow the recommendations of consultants and get into the relevant analytical reports and global ratings, so they acquired the software of leading foreign vendors," Makarov said.

However, market insiders said Russian customers used far from all the features of SAP solutions, including those provided from the cloud, so the company's exit from the Russian market is not a catastrophe for its customers. Support for imported software, as before, continues to be provided by Russian IT companies, including systems integrators, service partners and customers' IT subsidiaries. They previously accounted for 70-90% of technical support for customers' information systems.

At the same time, Russian customers are actively engaged in import substitution. The director of telecommunications at major Russian systems integrator Krok, Natalya Dyakonova said the business applications market grew by 30% in the first half of 2023 alone.

In some segments, such as ERP solutions, there was 100% growth and "it will be maintained for another few years," Dyakonova said in August.

SAP announced in March 2022 that it was continuing to work with Russian customers, but had suspended entering into new contracts. "We are continuing to support existing customers within the context of contractual obligations to the extent that sanctions and export control restrictions allow this. We have put new contracts in Russia on pause," SAP CIS told Interfax at the time.

However, in April 2022 SAP said it would completely stop working in Russia and Belarus. At the time, the company planned to stop servicing and support for local products, but it did not specify the timeframe for terminating technical support for its software.

SAP develops various enterprise software intended primarily for large corporate customers. The German company's Russian subsidiary, SAP CIS reported net profit up to 2.15 billion rubles in 2021 on revenue of 36.6 billion rubles.