Russian billionaire: SAP software needs to be replaced * SciTechTimes.com

Russia’s SAP replacement struggles: billionaire Alexey Mordashov (pictured) says it’s a “matter of survival”.

Russia’s push to ditch Western business software is proving far more difficult and expensive than expected. Speaking at a recent tech conference, Russian steel magnate Alexey Mordashov admitted that efforts to develop a homegrown alternative to Germany’s SAP software have run into serious challenges — but insisted the mission is critical for the country’s economic independence.

SAP’s Exit Leaves a Dangerous Void

For years, SAP was deeply embedded in the infrastructure of Russia’s largest enterprises, powering everything from logistics and procurement to marketing and HR operations. At its peak, the German software giant controlled as much as 60% of Russia’s business software market, with Microsoft and Oracle splitting most of the remainder.

That changed after Russia’s 2022 invasion of Ukraine. SAP, like many Western firms, began scaling down its presence in the country and officially ceased operations in March 2024. Many Russian firms, including flagship names like Aeroflot and Russian Railways, still rely on older SAP installations — but without updates, patches, or vendor support, leaving systems increasingly vulnerable.

A Race Against Time and Sanctions

In response, Severstal, Mordashov’s steelmaking group, joined forces with petrochemical giant Sibur to develop a domestic alternative. Initially, the companies partnered with local software maker Consist, but have since withdrawn and are now exploring other options, including solutions from developer Business Technologies.

“It turned out that everything is much more expensive and complicated, requiring more meticulous refinement,” Mordashov admitted. “But we understand the importance of this task… because we need to survive.”

Other major Russian firms are also scrambling for replacements. Russian Railways and Gazpromneft, for example, have partnered with popular domestic software developer 1C, with plans to roll out a national SAP alternative by 2027.

The Bigger Picture: A Sanction-Strangled Tech Ecosystem

Mordashov’s remarks underscore the wider difficulties faced by Russian businesses as Western technology providers pull out. The country’s industrial and corporate sectors are struggling to rebuild software ecosystems once dominated by Western giants.

Interestingly, despite state-backed initiatives and growing investments, the Russian software sector has struggled to match the scale and complexity of solutions like SAP. According to Russian business media, even the more advanced local ERP platforms lack crucial features for enterprise-scale operations, and integrating them into legacy infrastructures remains a costly, complex process.

Did You Know?

Before the Ukraine conflict, SAP wasn’t just a dominant player in Russia — it was the largest software provider in Europe by market cap as of early 2024. Its withdrawal from Russia marked one of the most significant corporate exits from the country’s tech ecosystem since the sanctions began. Meanwhile, Russia’s government has pledged substantial subsidies and incentives for domestic software development, but analysts say catching up to SAP’s enterprise capabilities could take a decade or more — if ever. One thing’s clear: In Russia’s new tech reality, survival isn’t just about steel and oil anymore — it’s about software too.