Russian ERP occur — are new products 1C

1C Company, the largest domestic manufacturer of automation systems (ERP), introduced a series of new products with which it can enter into competition with such global giants as SAP, Oracle and Microsoft.


"1C: Enterprise 8.3" and "1C: Enterprise Management (ERP) 2.0» — the so-called new products from 1C, which were presented at the recent annual conference and marked a new stage of market development, Russia’s largest producer of enterprise information management systems.

In 1C joke: "In Russia the word" 1C "and" accounting "are inseparable, as his time in the phrase" Glory to the CPSU. ‘" Indeed, in the early 1990s 1C began with the development of programs for the automation of accounting. The company managed to establish cooperation with the Russian tax authorities (though they, too, were concerned that accountants have a good tool for reporting), and "1C: Accounting", reacting quickly to changes in the non-permanent Russian legislation was a necessary component of every domestic company.

  • In recent years the share of the Russian market 1C ERP systems has increased significantly
  • In recent years the share of the Russian market 1C ERP systems has increased significantly

Gradually 1C appeared solutions not only for accounting, but also for warehouse, department personnel, customer relations — in short, all the most important aspects of modern enterprises. In 2003, 1C has released information platform "1C: Enterprise 8", which became quite successful distributed in the market.

According to IDC, in 2003 the 1C are not even in the list of key players in the Russian market of information systems, business management, in 2005, she already owned 9.7% of the market in 2007 — 14%, in 2009 — 22%, and now the company owns more than 30% of the market (see Figures 1 and 2).

Today, according to statements made by 1C Company solutions used by more than one million Russian commercial enterprises and government agencies. Impressive and sales growth. Their company has not officially disclosed, but, according to the "Expert" received from sources close to the company, in 2003 the annual sales of the order of 1C were $ 60 million, by the end of last year they approached $ 900 million.

What are the reasons for the success 1C? On the one hand, since the early 2000’s, the company got on the wave of growth in the Russian economy, when small businesses quickly become medium and large. They have used a minimum of "1C: Accounting" and made a choice in favor of 1C solutions to automate other business processes.

The second term success — a unique, unparalleled in the world of affiliate network. State 1C is not so great — about a thousand employees. However, the network of partners, that is, those who implement and maintains the product is huge: it has 6.7 thousand innovative companies in 750 Russian cities, with more than 100 thousand IT professionals.

The uniqueness of the partner network 1C is that it is built on the principle of franchising, which is not practiced by the world’s leading manufacturers of ERP-solutions. In this system, 1C partners earn more than the partners of major foreign players: in fact, they only pay for the license and make a point gain from the introduction and maintenance.

Until recently, 1C solutions are targeted at small and medium-sized enterprises. With the release of a new product is aimed at more than 1C margin and deep piece of the market — large enterprises. Get it will not be easy — here for many years dominated by global giants. Moreover, SAP, Oracle and Microsoft are meeting — they are trying to master the segment of small and medium-sized enterprises, to which previously they did not get around to.

Trumps 1C — is primarily a flexible platform for IT solutions that can adapt to the specific needs of enterprises. It is no secret that Russian business is often to the Western mind — the "thing in itself" because the business processes of Russian enterprises are often different from Western standards.

Western manufacturers of ERP-systems, coming to the Russian companies usually offer them re-engineer their business processes by information system. It is fair to say that the transition to a more clear-cut, well-functioning and transparent international standards of doing business often is beneficial to the company.

1C is a slightly different way: if the Russian company does not want to change their customary business processes, the information platform 1C can satisfy almost every whim and create an IT solution for any convoluted and obscure foreign integrator process, such as warehouse management or trade.

The company says that quite successfully promotes its solutions specifically among large enterprises. If a few years ago, her clients included the structure, automation of ordering a few hundred jobs, now introduces solutions 1C, where the number of workstations in the thousands. At the last annual conference 1C, in particular, projects were presented in implementing solutions to such major Russian companies as KamAZ (7.4 thousand workstations) TransMashHolding (5 million), "UniMilk" (1.7 million) .

However, some of the participants of the conference 1C criticized for being just a large number of users (1 million) while the proposed solutions do not cope very effectively. However, the company promised that in the near future its products will easily cope with the simultaneous operation of even tens of thousands of users.

About how 1C plans to confront the global ERP market giants "Expert" says the head and founder of the company Boris Nuraliev.


Before yours systems called acronym SCP and only now you started use common The term ERP. Due whether this with those that at Your new products seriously changed set Functions or same speech is about new positioning decisions?


— Abbreviation SCP designated decision "Manufacturing Enterprise Management", which has enabled us to press very much in the market competing ERP-system. Now he is preparing to replace the "Enterprise Management (ERP) 2.0» on our new platform "1C: Enterprise 8.3", and with the help of solutions for corporate clients, we are opening up new possibilities in the field of safety, mobility, security and scalability. We have deliberately removed from the title the word "production" as a new solution designed for businesses of various types. Before, we did not use the term ERP, assuming that the client "to go" is more important than the "checkered". However, havi
ng decided to leave the corporate market, we have built up their system to the requirements of this abbreviation. On the other hand, the decision to purchase such systems take longer accountant and often do not even CEO, and business owners, which is strongly influenced by the propaganda of foreign market guru, so that the use of imported fashion labels was appropriate.

As you can formulate yours main competitive Benefits before leading world manufacturers of ERP-decisions?


— The "1C: Enterprise" platform architecture is very flexible and very good scalability — on a common basis, we can build solutions for large corporations and small businesses. Our foreign colleagues platform solutions much more "heavy", but for small businesses, they offer a "hard" system. Our approach has demonstrated a higher efficiency. Another important advantage — the affiliate business model that allows partners to earn a good steady income as a primary sales and to demand services for implementation and maintenance of systems.

A in than namely yours platform better?


— Platform — a means of rapid development of specific solutions for the needs of enterprises. A significant advantage of the platform "1C: Enterprise" is that it is possible to quickly adjust (customize) system to the needs of the customer in relation to the forces of a small team of experts, all run fast, and she immediately starts to give effect. It happens that even a foreign company in Russia to quickly open, say, a subsidiary. And then a very large international companies with their global standards automation quietly chosen in Russia 1C and remain satisfied. Another clear advantage 1C — a situation when you need to quickly rebuild the production or certain business processes. And unlike the United States and Western Europe, the Russian market is very dynamic, there is often need to quickly rebuild the business processes by rapidly changing external conditions. In this sense, 1C ahead. Well, in the area of common knowledge to our advantage. For example, in the autumn of 2008, the country’s leadership crisis has taken a decision to change the income tax rate until the end of the deadline for submission of declarations had literally two days. All those who had counted on the new tax rate, who is supported by the system, have received substantial savings. But equally important in times of crisis management was flexible automation. Won by those who in the face of falling demand was able to quickly implement a CRM-system and retain more customers. During extreme changes in the exchange rate providers quickly goes to work on a prepaid basis, and stores daily recalculated price lists and changed the price tags. Many businesses have managed in a short time to rebuild production and even launch new lines of business — for example, to add to the retail division of the previously built up wholesale.

In than now is competitive fight between Russian and Western manufacturers of ERP-systems?


— The fight is a grown-up. The Russian market is open to imports of business software, it is not subject to customs duties and VAT. Western program can be as simple as ours, to run a single click, and no one will buy the software because it is home. So our system — one is not very frequent examples of successful competition of Russian high-tech products with international giants. Since 2004, when analysts IDC first noticed the presence of 1C on the Russian market of integrated systems of enterprise management (ERP), we have increased its stake to almost 30 percent in value terms, and the number of workstations in the lead by a wide margin. In general, the earlier competition with Western companies are a kind of counter-fight. Prominent Western counterparts squeezed their corporate systems to enter the market relatively small enterprises. And we developed a "1C: Enterprise" to meet the needs of increasingly large companies. Now we and our foreign colleagues propose solutions for both small and large enterprises. The competition was not so straightforward, in different directions, and segments of the market — different players and different situation. We all try new approaches and technologies — mobile, cloud, and so on, are adapting to the new realities of our business model. For example, we have a rapidly developing new affiliate software rental model: the partner does not sell "box", and Internet access to "1C: Enterprise", deployed in any data center, and we deducts from this royalty. If you use military terminology, but now the situation when there is no division in front of a solid front line, it is not clear where you can make a breakthrough. In this case, the release forward reconnaissance, fingered the same direction and to project force where there has been a success.

For account what Russian programmers Can work out the best decision than at Western World Giants with billions of dollars budgets?


— It is necessary to think better, to assemble a team of smart and creative enthusiasts, is proud to provide a good software millions of users. Mass replicable software — this industry, it is not always achieved the best result only due to the mass of money and armadas of developers, because the core of the system developed by a relatively small team. Many well-known and very successful products developed by small teams without a huge investment at the start. There is a famous tale about how Americans spend millions of dollars on a pen that could write in zero gravity. In the Soviet Union there was no problem to master the taxpayers millions of rubles, and the astronauts were given pencils. And it is not the bike, as Sergei Korolev, deciding to build rocket engines in the package, has overcome the problem of the backlog from the Americans in the power of a single engine and created the first mass-efficient vehicle that still brings a lot of vehicles in orbit. And we were able to approach their platform to effectively involve the development and customization of our solutions creative power of hundreds of thousands of domestic experts.

Let’s now move on to your original model interaction with partners. Why < strong>you decided choose format franchising which not has analogs on World ITmarkets?


— When in the first half of the 90s it became clear that for the business of software is very important and in demand services — implementation, customization, training, support, we decided to build a franchise like most industrial model distribution service with a guaranteed level of quality. We have created a model has been repeatedly demonstrated its effectiveness. Of course, any business model is not only the advantages but also the limitations, but we plan to build on our partner network in the long term and continue to improve it in the new technological realities.

But Western Company go on several other way interaction with its Affiliate network. Andreceive more significant profit from introduction to or other product. In your same model Business you give more income Franchise companies.


— Yes, it’s true, and I believe that this is the strength of our partnership business model. As I said, we are playing against the world’s leading giants with reserves of marketing knowledge, with huge capitals. And we are acting, you can tell by the "people’s construction." Western companies often do not give partners a lot of money and all the profits to which they can somehow reach out, take for themselves. And we, on the contrary, we analyze the economy of partners even more closely than their own, and we rejoice when our franchisees high margins, which means it is very profitable to cooperate with us. We are now more than 6.7 thousand franchisees, and each of them is thinking how to better serve the customer as to sell more and, therefore, how can we work better than the big Western rivals. In Russia, as we know, did not have enough of this small business, it is difficult to break. A franchise helps small businesses how to get off the pack and grow in difficult conditions. I remember in 2011 at the Congress of "gazelles" of the journal "Expert" we proudly told us that at that time continued to operate successfully 87 percent of those franchisees who started their business even before the last crisis in 1998. Such a survival rate of small businesses is very good even for the United States and Western Europe, not to mention for Russia.

Besides systems Franchising you actively develop system joint enterprises. Recently Bought known on market the company "Megaplan ""My warehouse. " What more about do in This direction?


— This is one of the elements of our strategy: to develop new directions we are creating joint ventures with leaders and promising teams in the related sectors of the market, while 51 percent belongs to us, the rest — the one who created this business and continue to put your heart into it. The very central 1C is relatively small (about a thousand people) and a well-managed and cooperative businesses begin to grow more rapidly because of our infrastructure investments synergy between the work and the "collective intelligence." Further basting we have, but more specifically about it yet do not want to talk. After all, when going to buy something, it is better not to tell in advance because due to this purchase price may increase.

Important topic to 1S — transition to publicity and possible output on the IPO. What will IPO your Company and when this can happen?


— We have obligations under the terms of IPO itself is not. It is the intention that we quite clearly declared. You see, we believe that a business that is engaged in 1C, has great social significance. We are today the basis for the automation of enterprises and institutions of Russia and neighboring countries — Ukraine, Belarus and Kazakhstan. That is, we are in front of this community have a great responsibility, so we seem to be moving in the direction of greater openness, comply with all the canons of the market. In addition, the sale of shares will give a new perspective to our key employees and partners for joint business, they will be able to get stock options. Their involvement in a possible financial success 1C will help further consolidate the company’s business system and increase its stability and handling.

Investment fund Baring Vostok in their time bought nine percent shares your company you needed was additional capital?


— Not only. Indeed, at the time we carried out the planned expansion of our group of companies. But at least we considered a valuable experience such a financial partner. We carefully choose who we invest, considered different proposals. The sentence "Bering" we made primarily based on the recommendations. For example, we asked the opinion on the subject of "Yandex". Once they are "by Yandex" worked well, let us now will work. And for them, that’s okay too — co-invest leaders of various contemporary trends: "Yandex" CFT "Ozone".

In press given evaluation that amount dealings was 200 millions dollar that there is your company evaluated in two billion.


— We do not comment on these estimates.

A data Sales you call it?


— Now do not. Previously, we have shown these figures, and now turn to an external international audit, and we have a clear recommendation: create method in accordance with IFRS, form numbers, the auditors will look, and then you can have them publish or not to publish. And then suddenly the other auditors will count, and indicators go out, it would not be very good.

Besides Release the IPO All now excite yours plans development Foreign markets. As far as these plans ambitious?


— Talk about what 1C begins expansion abroad, are somewhat exaggerated, we have never declared that tomorrow’s world will conquer the whole market. But the demand for our products abroad is real. In the first phase we are talking about Russian companies that are expanding their business abroad. Right now I am persecuted partners, saying that his company in China open. But how big will the demand abroad? We are now trying to find different models. Still, in different countries different mentality and different approaches to business. With no superreputatsii abroad, or a large international experience, to enter foreign markets is not easy. We feel that the approach 1C is more in demand in emerging economies, where as in Russia, is very much appreciated the opportunity to quickly restructure business processes quickly start production. So we’re going to look at countries such as the BRICS. For example, we recently talked with Turkish partners that want to expand the business, to develop their own solutions Turkish. Let’s see what happens.

What you think about state Russian ITthe market? On your Conference was held separate round Table, where discussed there is whether on Russian ITmarket crisis.


— From my point of view, the crisis on the Russian IT market, but there are slow, which may be even worse for the market. It’s like with the frog, which, when thrown into boiling water, it will jump out of the pan. And if you put it in cold water and slowly heated, the frog will cook and so there is not feeling the deterioration of the situation. In the long-term demand for ERP-solutions in our country needs to grow. Now, Russia’s share of global GDP — about 2.7 per cent, while the share of expenses for the automation of enterprises — 1.6 percent of the world, we are still "nedoavtomatizirovany." So the potential is there. But the explosive growth in demand for ERP in Russia should not expect, though, because new businesses we have, unfortunately, is not created as much as I would like. We see prospects in two directions. On the one hand, will expand the use of new technologies and the use of new forms of automation — cloud, mobile solutions, and so on. On the other hand, will increase interest in automation to improve existing businesses. Because business in difficult conditions should improve the efficiency and automation — one of the few reliable ways to improve business processes.

  • Today, 1C, together with other Russian producers of ERP solutions is more than a third of the Russian market
  • Today, 1C, together with other Russian producers of ERP solutions is more than a third of the Russian market

Comparative scale of 1C, SAP, Oracle

Turnover

1C in 2010 — 0.52 billion dollars

SAP in 2011 — 14,233 billion,

Oracle in 2011 — 35,622 billion.

Net profit

1C in 2010 — 0.065 billion,

SAP in 2011 — 3.438 billion,

Oracle in 2011 — 8.547 billion.

Number of employees —

1C — 1.1 thousand,

SAP — 54 thousand,

Oracle — 115 thousand

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