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Russian Firms Struggle to Replace SAP Software Amid Sanctions Challenges

SAP

Business Honor
11 June, 2025

Domestic alternatives face high costs and complexity as Western support disappears.

Russian companies are dealing with huge obstacles in substituting SAP's business software following the German company's exit from Russia in March 2024. SAP, Europe's largest company by market capitalization, was the top performer in Russia, providing critical software to leading firms such as Aeroflot and Russian Railways.

SAP held about 60% of the Russian business software market before the conflict in Ukraine, with Microsoft and Oracle sharing the majority of the remaining market share. However, because of Western sanctions and diplomatic tensions, SAP reduced operations in Russia over time and eventually halted all support, leaving a number of companies that were dependent on old systems with no updates or technical support. This has raised the risk of software crashes and operational problems.

Alexey Mordashov, Russian steel billionaire and owner of Severstal, recently discussed this effort at a technology conference. A joint team of Severstal and Russia's petrochemical company Sibur started with software company Consist to develop in-house alternative SAP software. According to Mordashov, it cost much more than they had expected and was incomparably more complicated.

“We conducted a lot of research in the past year, but it needs more time and precise polishing," Mordashov stated. "This job is very important for us to exist in the existing environment.

Severstal has subsequently departed the Consist partnership and is currently in talks with another local developer, Business Technologies. Meanwhile, other big businesses like Gazpromneft and Russian Railways have contacted developer 1C with plans to launch their own SAP substitute by 2027.

The incident highlights the larger challenge Russian companies face to detach themselves from Western technology in the face of sanctions. While the process is slow and complex, such efforts are regarded as crucial to Russia's long-term industrial stability and independence.