Whether Russia to switch to domestic software in 2 years?

How import substitution is progressing in Russian IT, whether it is one hundred percent possible, and what products the market needs

Whether Russia to switch to domestic software in 2 years?
Photo: tadviser.ru

The list of Russian software that will have to be pre-installed on computers, gadgets and smart TVs sold in Russia has recently become known. With the help of experts, Realnoe Vremya finds out how the process of IT import substitution in the country is going on in general, why commercial companies are in no hurry to switch to domestic software, what factors hinder the introduction of a Russian product, and what the domestic IT market is particularly in need of today.

The state is driving import substitution in IT

The problem of import substitution in the field of information technology has been discussed for a long time and widely. No one has done more for this process than the state. The public sector, state corporations and companies with state participation must switch to domestic software in accordance with approved standards.

The average user does not stand aside either. For example, in August, the Cabinet of Ministers of the Russian Federation approved a new list of domestic software, which must be pre-installed on computers, laptops, mobile phones, tablets, smart TVs sold in Russia, from January 1, 2022. This list is compiled in accordance with the rating of the Ministry of Digital Developemnt, the main criterion for getting into it is that the programme must be popular among users (there are clearly developed standards for this popularity). At one time, the Ministry of Digital Development of Russia commented on the order of including Russian software into this list to Realnoe Vremya as follows:

“The ministry has formed a rating of the popularity of programmes based on the data provided by companies and confirmed by independent audit opinions. Additionally, a commission was formed under the Ministry of Digital Development of Russia to evaluate the bids, which included the heads of leading Russian industry associations: RATEK, RUSSOFT, Otechestvenny Soft, APKIT, associations of Internet trade companies and others. When preparing the pre-installation rules, the Ministry of Digital Development of Russia observed all the norms of Russian legislation. The procedure for selecting programmes for pre-installation, provided for by the Decree of the Government of the Russian Federation dated 18 November, 2020 No. 1867, was agreed with the Ministry of Economic Development of Russia, the Federal Antimonopoly Service and Rospotrebnadzor.”

But the IT market is much more than search engines and payment applications. Its huge sector is connected with business structures, and here the process of import substitution is more difficult to formalise in a directive order: no regulations have yet been issued that would regulate which software companies need to install to work with documents, which one to solve logistical problems, and with which one to control business processes. The field of choice is very wide — there are ready-made solutions, but in many cases, large corporations order the development of certain systems purely for themselves.

In August, the Cabinet of Ministers of the Russian Federation approved the new list of domestic software that must be pre-installed on computers, laptops, mobile phones, tablets, smart TVs sold in Russia, from January 1, 2022. Photo: ixbt.com

However, the leaders in the implementation of domestic software are still the enterprises that are somehow connected with the state: they are simply forced to do it, in accordance with a number of regulations. Tatarstan was one of the “locomotives” in this activity: for example, we once developed a system of public services and passed its pilot testing. Back in 2019, Tatarstan departments used more than fifty domestic programmes in their work — primarily functional systems where reporting, monitoring of various indicators and other work with big data were conducted. As an example, we can cite the electronic document management system, which is now used not only by departments and institutions, but also by commercial structures with state participation (Gazpromtransgaz Kazan can be cited as an example).

How the government helps to introduce domestic software

Realnoe Vremya asked the Ministry of Digital Development of the Republic of Tatarstan to comment on the progress of import substitution in the field of IT. We were told that at the moment there are domestic analogues in several variations for all well-known software products developed by world leaders. Russian solutions provide the full functionality needed by consumers. Given the growth of the exchange rate, the use of domestic software products is more profitable from an economic point of view.

“In the work of state institutions today, information systems are used — both departmental and general accounting or management-reporting ones from Russian developers. Moreover, many of them are made in Tatarstan," the Ministry of Digital Development informed our publication and listed the support measures that the government of the Russian Federation developed in 2021 to intensify the introduction of new Russian software.

  • For example, these are grants of up to 80 million rubles for companies that implement domestic digital solutions. The grant can be spent on salaries of employees, purchase of software, equipment and other expenses.
  • Grants for digital transformation up to 300 million rubles. The grant can be spent on developer services, equipment purchase, licenses and other expenses.
  • Subsidies for developers — to reimburse part of the costs of developing digital platforms and software products in order to create and develop the production of high-tech industrial products. They provide up to 50% cost recovery. Such subsidy is provided to developers of digital platforms and software products for further implementation at industrial enterprises operating in the manufacturing sectors of the economy.
  • Besides, loans are subsidised through authorised banks to Russian organisations implementing digital transformation projects and implementing IT solutions (they can get a loan at a rate of 1-5%).

Tatarstan also pays attention to local software developers. The republican law on tax benefits for entrepreneurs applying the simplified taxation, amendments have already been approved to support the IT industry. Thus, the tax rates under the simplified taxation system for IT companies — residents of technoparks in the field of high technologies are 1% — if the object of taxation is income, 5% — if the object of taxation is the income reduced by the amount of expenses. Enterprises with up to 100 employees and annual revenue of up to 150 million rubles can count on the benefit.

Enterprises with up to 100 employees and annual revenue of up to 150 million rubles can count on the benefit. Photo: tadviser.ru

Russian market needs document management systems, processors and laptops

But the IT market is very wide. In what products is there the maximum need for import substitution today? Realnoe Vremya asked this question to experts from several large IT companies representing the Tatarstan and Russian markets.

Director General of Bars Group JSC (Tatarstan) Timur Akhmerov answers this question as follows:

“The software of wide application (office software and others) has a huge range of users, so there is a potential for the introduction of a Russian product for their daily and work tasks. In part of the databases, an “import-substituting” product with open source PostgreSQL is used, and the transition to it is carried out everywhere (taking into account the technical limitations of this DBMS). But the most urgent and difficult task is to completely transfer working business applications to Russian products and databases, since they have to be rewritten to another technological stack (which is not always available in Russian execution). Besides, in our opinion, it is worth talking not only about import substitution of working software, but also about the importance of developing and using new ways to create business systems. This is not a single product segment, but a complete infrastructure of Russian-made software and hardware that provides the ability to create end-to-end business applications.”

Sergey Kapliy, the director of the computing systems department at Step Logic, believes that the task of import substitution affects all elements of the IT infrastructure, which are known to be interrelated. He draws attention to the fact that at the moment the market is experiencing a need for domestic high-performance central processors that could solve many problems in the server segment and DSS segment. But so far, the expert states, there are no such offers on the Russian market.

Dmitry Sorokin, the head of the department for the development of domestic IT solutions at Softline, explains the legal aspects of the Russian import substitution programme:

“If we are talking about import substitution in the sphere of state institutions, then the focus area is the workplace of a civil servant with domestic office systems installed on it, the list of which includes: operating systems, office and communication applications, a browser, electronic document management system and antivirus. In particular, thanks to the methodological recommendations approved by the Order of the Ministry of Communications No. 334 dated 29 June, 2017, and by the Order of the Ministry of Communications No. 335 dated 04 July, 2018. And the Government Decree No. 1432 of 28 August, 2021, which amended the procurement of radio-electronic products under 44 Federal Law, increased the relevance of domestic products in terms of AWS, laptops, tablets and servers.”

Photo: rostec.ru

Dmitry Sorokin adds: if we talk about import substitution in the sphere of state corporations and companies with state participation, there is an interest in more complex infrastructure solutions — application systems that solve the necessary business tasks. This coincides with the recommendations of the Ministry of Digital Developemnt approved by the Order of the Ministry of Communications No. 486 dated 04 July 2018, the Methodological recommendations on the digital transformation of GC and companies with state participation dated November 17, 2020 and the directive of the Government of the Russian Federation dated 4 April, 2021, “On ensuring the development (updating) of the digital transformation strategy (programme) until 2024".

R7-Ofis confirms the urgent need for import substitution of office applications and document management systems. Each company determines its priorities individually, depending on when it needs to switch to a Russian product, what IT systems it already has, and what resources it is ready to invest in an import substitution project.

“It is optimal when investments in Russian solutions are combined with investments in software and business process modernisation," says Natalia Agafonova, CEO of R7-Ofis. “In general, three types of systems can be distinguished by the complexity and import substitution cost. It is easiest to replace and implement office systems and applications, it is a little more difficult to transfer the operating system, and, finally, it is even more difficult to implement specialised application software.”

As an example, Natalia Agafonova cites the R7-Ofis platform, which is designed to help with solving all the tasks of everyday office work. It solves the problems of small and medium-sized businesses by including not only document editors, but also a project management system, CRM, file storage, organiser, e-mail, messenger with VCC, and other elements. One can use all of them, or it is possible to build a system based on the model of the designer only from those solutions that the company needs.

“We also assessed the main problems that companies face when switching to new software and tried to prevent them. For example, when switching to the platform, there is no need to convert company's data, since R7-Ofis was originally developed for DOCX, XLSX, PPTX and other popular formats that it reads natively. An important quality of domestic software is compatibility with any operating system, and we have also implemented this property into our platform. The platform supports all known file storage services and many popular business programmes — for example, document automation," says the expert.

Experts confirm the urgent need for import substitution of office applications and document management systems. Photo: r7-office.ru

Is full IT import substitution possible in a couple of years?

Timur Akhmerov believes that in a couple of years the development of domestic software will reach a level that will fully meet the needs of the digitalisation market. According to him, Russian solutions are developing gradually, but at a rapid pace, competitiveness is increasing, and state support plays a significant role in this. Some classes of systems were developed under unique Russian business processes — for example, document management systems or the systems strictly regulated by regulatory legal acts of the Russian Federation. In this regard, Russian solutions are already out of competition.

Sergey Kapliy (Step Logic) states:

“The more widely the product is used, the more likely it is to find a domestic replacement option. For example, there are many Russian virtualisation systems and operating systems on the market, but there are few or no domestic analogues of the solutions such as CAD. But for a part of information systems, a complete transition to import substitution is possible today.”

Dmitry Sorokin (Softline) says that now in Russia there is a whole ecosystem around import substitution, the system has already been built:

“During the development of the structured transition to import substitution, we have received a clear, understandable, structured scheme of interaction between legislative authorities, relevant ministries, various associations of Russian software and hardware developers. As a result, we have a whole ecosystem developed around import substitution. As an example, Softline has built its own ecosystem of support for domestic products around the needs of an existing customer, which includes assistance, testing, consulting services, a training centre, technical support and outsourcing.”

Perhaps, in a couple of years, the development of domestic software will reach a level that will fully meet the needs of the digitalisation market. Photo: tadviser.ru

Thus, the expert community is divided in opinion on whether it is realistic now to organise the most autonomous information system in Russia. Some point out that there are not enough domestic solutions for narrow tasks, while some look at full import substitution with optimism.

Lyudmila Gubaeva
Tatarstan