Ukrainian ERP developers occupy the 1C niche

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Ukrainian ERP developers occupy the 1C niche

The dynamics of the ERP market directly depends on the economic situation and business confidence in the future. ERP implementation projects are quite lengthy and expensive, so companies need to understand what awaits them in the next 3-5 years. Therefore, the war unleashed by Russia in Ukraine is clearly not conducive to market development.

After February 2022, there was a new dramatic decline in this market, as most projects stopped, and vendors set preferential prices for their products for existing customers, which led to a strong reduction in the market’s funds. For example, customers of SAP have been exempt from paying for SAP software support and cloud services for almost two years. Recently, the exemption was extended for the first quarter of 2024.

Similarly, Microsoft did the same, dramatically reducing the fee for using its cloud services.

Redistribution of the ERP market

In 2018, after Ukraine began imposing sanctions on Russian software, 1C made a sharp maneuver to avoid sanctions – all rights to the software product were transferred to the Polish company NetHelp, and the final product was renamed BAS (Business Automation system), which works on the basis of the Business Automation Framework (BAF) platform.

The company positions this product as a Ukrainian-Polish product, because all application software modules (so-called configurations) are created in Ukraine. At the same time, the core of the ERP system (BAF ERP) is essentially a Russian development and is no different from the one used in the Russian 1C:Підприємство system. That is, it is actually a Russian product that has been bringing significant profits to a company registered in the aggressor country every year. However, a significant share (at least 50% of the final cost) still remains with the developers in Ukraine.

However, the situation changed dramatically after February 24, 2022. Sales of BAS and other Russian software dropped significantly, while the migration of customers from Russian software to Western and Ukrainian products intensified.

To the West

Among the Western partners, the most active position was taken by Microsoft, which offered Microsoft Dynamics 365 Business Central (in fact, it is the most widely used ERP system in the world) and Microsoft Dynamics 365 Finance & Supply Chain Management (AX). Moreover, Innoware, one of Microsoft’s partners, even developed a solution specifically for the SME segment that provided functionality similar to 1C, and the price difference was very small.

Players promoting the Belgian open source system Odoo, which is distributed under the LGPL license, have also become more active. The latter is distinguished by the fact that it has not only paid SaaS licenses (in this respect, it is not much different from other commercial systems), but also a free version – after all, any developer can download the product distribution from Github and use it without paying any money. However, in this case, all the support, configuration, and hosting costs are borne by the client.

It is worth noting that Western products differ significantly from 1C in terms of architecture and integration principles, as Microsoft or SAP are based on a single core around which functional modules are built. In the 1C ecosystem, all products are separated from each other and provide only partial integration. For example, 1C:ERP or 1C:Document Management can only exchange data with 1C:Accounting.

Russian software may be subject to sanctions, and then the user will at least be isolated from receiving updates. In addition, cyberattacks on software products from Russian manufacturers have become more frequent over the past year, which jeopardizes the stability of such systems.

UGLA — комплексна ERP/CRM система нового покоління

Ukrainian software

In an effort to fill the niche that was created by the migration of customers from Russian software to other systems, Ukrainian developers began to actively storm this market. First, it is the Information Technologies company with its IT-Enterprise product. However, this ERP is mainly aimed at large and medium-sized enterprises.

For small and medium-sized Ukrainian businesses, IT-Enterprise developers have created MASTER:Accounting. This application is designed for accounting and tax accounting.

There are also relatively young Ukrainian products aimed at small and medium-sized businesses. Among them:

  • UGLA is a new generation integrated ERP/CRM system that was nominated as “Startup of the Year 2023” by HackerNoon.
  • Bimp is a Ukrainian management accounting system aimed specifically at small and medium-sized businesses, the first implementation of the product took place in 2022.
  • PERFECTUM CRM+ERP. It comes in both cloud and on-premise versions, with the first stable version of the system released in 2017.

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