Russian billionaire says replacement of SAP software is costly but essential

MOSCOW (Reuters) -Russian steel billionaire Alexey Mordashov said that developing a homegrown alternative to the widely-used business software made by Germany's SAP will require more time and money than anticipated but is a matter of survival.

SAP, which became Europe's largest company by market capitalization this year, makes software that helps businesses manage functions from marketing and human resources to logistics and procurement.

SAP provided software to Russia's largest companies, including airline carrier Aeroflot and Russian Railways, but gradually curtailed its business in response to Moscow dispatching troops to Ukraine in 2022 and stopped operations in March 2024.

Steelmaker Severstal, owned by Mordashov, and petrochemicals firm Sibur have jointly sought to develop an alternative to SAP software.

"We have done a lot to study this issue over the past year, but it turned out that everything is much more expensive and complicated, requiring more meticulous refinement," he said at a technology conference.

"We understand the importance of this task... because we need to survive," he added.

SAP held up to 60% of the Russian market for business software before the Ukraine conflict, with the rest mostly divided between Microsoft and Oracle.

Currently, many Russian companies are still using pre-installed SAP software but lack access to updates and support from the German company, making their systems vulnerable to failures.

Mordashov's statement highlighted the difficulties experienced by Russian companies as they try to develop alternatives to Western software amid Western sanctions.

Severstal and Sibur initially teamed up with domestic software maker Consist but have since exited the partnership. Severstal is now looking into solutions provided by developer Business Technologies.

Other Russian companies like Russian Railways and oil firm Gazpromneft have chosen to cooperate with developer 1C, and are planning to launch a domestic alternative to SAP software in 2027.

(Reporting by Anastasia Lyrchikova, additional reporting by Oksana Kobzeva, writing by Gleb Bryanski, editing by Alexandra Hudson)