How (Russian) companies are replacing Western office software, by Anna Sokolova and Valeria Borodina for Viedomosti. 07.07.2022.
And who is now fighting for Microsoft's share in the Russian market.
In March, following other Western IT companies, American Microsoft announced a halt in sales of all products on the Russian market, including office suites. At the same time, the corporation promised to fulfill old contractual obligations and, among other things, not to leave socially significant Russian institutions like schools and hospitals without updates. In a June interview with The Washington Post, company president Brad Smith said that Microsoft's business in Russia will continue to dwindle - old customers risk being left without support and updates. Against this background, domestic developers of office software can significantly increase their share in the Russian market - up to half. In 2020, J'son & Partners Consulting analysts estimated it at 38.8 billion rubles, of which only 7% was Russian software. Imported software products (Microsoft Office, "Until recently, in Russia, as well as throughout the world, the standard office application on a work or home computer was Microsoft Office,” says the director for the development of electronic services and software solutions at Marvel Distribution, which sells office packages to the Russian company P7 , Igor Martyushev. According to him, although earlier import substitution in this software segment was moving, it was extremely slow and mainly in the public sector.
The catalyst for this process was the plan for the transition of government agencies to Russian software, which was approved back in the summer of 2016. At the same time, the registry of domestic software was launched - government customers had to purchase products from its participants and justify the need to purchase Western solutions. It was assumed that the share of domestic software in government procurement by 2019 will be 60%, in state-owned companies - 45%, and by 2024 state agencies and state corporations will almost completely switch to Russian programs.
According to the Accounts Chamber, in 2018 the share of domestic solutions in public procurement reached 50%. But, according to Dmitry Komissarov, co-founder and director of product development and product development at New Cloud Technologies, which develops office suites under the Myoffice brand, only 10% accounted for finished products at that time, the rest were highly specialized programs created for specific customers.
Now the situation is changing, experts say. If earlier the implementation took place at a small group of workplaces, today, due to increased geopolitical tensions, an increasing number of corporate customers prefer to purchase domestic software licenses for all employees at once, explains Renat Lashin, executive director of the Domestic Soft Software Developers Association. According to him, government agencies and state corporations are the most active in the field of digital transformation, followed by representatives of the banking sector.
Domestic developers of office software have already noticed an increased demand for their products. Moyoffice sees a fourfold increase in sales in January-May 2022 compared to the same period last year. In the first five months, the company launched 127 testing projects, and 39 projects in the same period in 2021. In addition, in June it became known about the largest deal on the domestic software market. VTB bought 100,000 Mygoofisa licenses to replace office solutions from Microsoft. Its amount amounted to approximately 1.2 billion rubles. This was previously told to Vedomosti by a source close to VTB. Komissarov calls all deals this year the result of a lot of preparatory work, testing and pilot implementation of products. "Sanctions served only as a catalyst for making a positive decision and switching to our software,” he said. According to SPARK, in 2021 the revenue of the New Cloud Technologies company amounted to 841.8 million rubles.
Komissarov began work on the MyOffice project in 2013. By that time, he had extensive experience in developing office programs: back in the 90s. he developed the popular Russian text editor "Lexicon" for Windows. According to the entrepreneur, the product successfully competed with a foreign office: “We sold about 40,000 licenses a year, and Microsoft sold about 100,000.” This continued until the economic crisis of 1998. The company's sales fell 10 times and it became impossible to develop the text editor further, Komissarov recalls. Shortly before these events, due to disagreements with other shareholders, he sold his stake in the Arsenal company, which was developing the Lexicon. Komissarov did not disclose the details of the deal.
In the early 2010s cloud technologies were already an important trend, and Komissarov decided to develop office software, which would also work in the cloud. To stand out from Microsoftand Google, whose document services stored all their information in public clouds, he bet on a "secure environment." Corporate clients of MyOffice store and process documents on the company's own servers or servers of a trusted partner. Today, 12 packages are presented in the product line of Mygooffice. For example, the flagship product for corporate clients, MyOffice Professional, includes editors for text, spreadsheets and presentations, mail, calendar and contacts. All applications are available to work together on computers, mobile devices and in the browser. The product can be deployed both in the cloud and on the company's local network without Internet access. The MyOffice Standard package includes a text editor, programs for working with spreadsheets, reports and presentations, as well as an email client.
The company sells its solutions through integrators: a standard yearly license from Softline for corporate customers costs 6,690 rubles. for one device, for government agencies - 5320 rubles. The company's clients include more than 3,600 state organizations and large private companies. In addition to VTB , Moyoffice products are used by employees of Rosatom, Russian Post, Russian Railways , as well as employees of regional departments from St. Petersburg, the Kursk Region, and the Perm Territory.
For private clients, the company offers the free MyOffice Documents mobile application and the MyOffice Standard office suite. Home version. To date, solutions for private users have been downloaded more than 14 million times. “Now 4.5 million people use our software every month to solve their household problems,” says Komissarov. According to him, by the end of 2021, Mygooffice's market share in the corporate segment of document editors and email solutions was 5%. My Office packages work on such operating systems as Mac OS, Windows, Android, Astra Linux, Viola, Red OS and mobile OS Avrora (the last four are Russian operating systems). The company is included in the unified register of domestic software and is certified by the FSTEC and the Ministry of Defense for compliance with information security requirements.
According to SPARK, among the shareholders of New Cloud Technologies are Kaspersky Lab (61.5%), Andrey Cheglakov (22.5%), Dmitry Komissarov (5%), Vitaly Kiriyenko (5%), Alexander Timchenko (2, 5%), etc. Kaspersky Lab became one of the co-owners back in 2019, having bought 29.5%. In February 2022, it increased its stake to 61.5%. The amount of transactions was not disclosed. According to Stanislav Kolesnichenko, Managing Director of Skolkovo Ventures, the valuation of the entire company at the time of the first transaction could range from 300 million to 500 million rubles, during the second - from 1.2 billion to 1.8 billion rubles. Kaspersky Lab viewed the deal as a step towards business diversification and an investment in the promising IT segment, a representative of Mygoofis told CNews earlier. A few years before entering the capital, the company announced a technology partnership, within the framework of which MyOffice received protection against cyber threats. Kaspersky Lab did not respond to Vedomosti's request.
After sanctions were imposed and Microsoft left Russia, the demand for P7 office suites grew, Elena Klykova, the company's marketing director, said without giving details. According to her, the company has already signed several new agreements with Russian regions. Major clients include the Kaliningrad Railway, TASS, Severnaya Verf, the Treasury of Russia, Delimobil, etc. According to SPARK, in 2021, P7's revenue amounted to 503.9 million rubles, net profit - 223.9 million rubles.
The Nizhny Novgorod company P7 (formerly New Communication Technologies) has been operating in the office software market since 2010. Then it was developing a cloud office and document editors for the Latvian company Ascensio System SIA. And in 2018, she decided to release her own product, which would be focused mainly on the Russian market - "P7-Office". In addition to programs for editing documents, mail and calendar, the product line also includes CRM for managing a client contact database, a video conferencing system, a corporate messenger, etc. Office suites can be deployed in the cloud, on the company's local network, installed on a computer and mobile devices.
This year, the P7 - Cloud Office package is the most popular among customers, says Klykova. It includes editors for documents, calendar, mail, CRM and video communication service "P7-team". "P7 - cloudy office" works from browsers, it does not require software installation. This product provides work with documents in a private cloud. Its price for individuals is 2990 rubles. per year, for legal entities - 4999 rubles. per user, there is a free 30-day trial period. For the desktop version, the company offers the P7-Office package, which includes editors for documents, spreadsheets, and presentations. The desktop version is free for individuals and schools, for other educational institutions the license costs 500 rubles. per year, for companies - 5000 rubles. Often users come for office editors "P7-office", and then they start using CRM or connect the "Team", says Klykova. New Communication Technologies is included in the unified register of Russian software. P7-Office applications are compatible with operating systems based on Linux, Windows, Mac OS, iOS, Android, as well as their domestic counterparts - Red OS, Aurora, Viola, etc.
In 2020, Yandex launched its cloud solution. “During the forced self-isolation, we saw that Post and Disk became another 30–40% more in demand. The pandemic served as an additional incentive for the development of a trend towards effective business communication from any device, so we decided to create a convenient set of services for work by combining them in a common interface,” Vladimir Rusinov, Yandex 360 product manager, explains the reason for the appearance of the service. The corporation confirmed the growth of interest in its solution since February, but did not disclose the number of users and sales.
The Yandex 360 package includes Mail, Disk, the Telebridge video meeting service, Documents for creating and co-editing files, Calendar, and Notes. It is available to users for free, when you connect the premium version, you can get rid of ads, get from 200 GB to 3 TB of additional disk space and make a mail domain with your name. Subscription costs from 108 to 799 rubles. per month.
According to Rusinov, the Yandex 360 Premium audience is all users who work with a large amount of photo, video content and documents: photographers, videographers, bloggers, freelancers, individual entrepreneurs, lawyers, accountants and people who create their own family archives. They can correspond with clients and partners, exchange documents with them and customize the incoming email flow with mailing management. Yandex 360 also has an extended version for business, which includes corporate mail and messenger, calendar, mailing service and video meetings. A subscription to it for companies costs from 249 to 1399 rubles. per month per user, depending on the disk space and the number of emails in the mailing lists.
In addition to the above companies, office software is also offered by AlterOffice (Almi group) and Zircon-office (Svemel). Now Almi supplies software to regional authorities: from recent sales - the ministries of digital development of the Saratov and Vladimir regions. According to SPARK, in 2021 Almi Partner's revenue amounted to 354.7 million rubles, net profit - 1.6 million rubles. Svemel also focuses on government customers.
Among his other clients are the presidential administration, the State Duma, the Ministry of Finance and Russian Railways. According to SPARK, in 2021 the company's revenue amounted to 1 billion rubles, net profit - 2.6 million rubles. In addition to office software, Svemel is developing the Zircon operating system, which, for example, has already been implemented in the Foreign Ministry. Representatives of Almi and Svemel did not answer questions from Vedomosti.
Microsoft Office clients include the largest Russian companies, such as Gazprom , X5 Group, Technonikol, Russian Railways, Russian Post, etc. According to them, Microsoft's departure did not take them by surprise, but many are already looking for alternatives. “The main problems we encountered are the inability to acquire new licenses and include new affiliates in the EAS contract, as well as the denial of technical support since July this year,” says Vladislav Utkin, IT director of the TechnoNIKOL production company. Now the company is considering domestic alternatives - since last year it has been testing the office solutions of My Office, in the packages of which, however, there are no analogues of the Teams messenger and the Azure computing service. Interest in domestic software is associated with a significant increase in prices for Microsoft Office products, explains Utkin. In addition, Microsoft pushed the company to switch to using only cloud licenses,
38 billion rubles
was the office software market in Russia in 2020, follows from J'son & Partners Consulting data. The largest expenses in 2020 for such software were registered in the commercial sector - 26.2 billion rubles. State institutions and state-owned companies purchased office software for 9.9 billion rubles, individuals - for 2.7 billion rubles. On average, for a large organization, the transition from imported software to domestic takes about 1.5 years, experts say. For a large organization, a package of Microsoft products for a workplace costs $300-500 per year, of which the office solution is about 1/3.
A representative of the X5 Group said that there are no problems or failures, but the company is conducting a smooth import substitution "based on the criticality and market situation." He did not disclose the names of counterparties. "Rostelecom " also has no problems with Microsoft packages yet, but has been testing various products of P7 and "My Office" for several years and is going to make a final choice soon, a company representative says. He notes that the transition is hampered by the incompatibility of some Microsoft file formats with Russian solutions. But these developers have interesting features that are not in Microsoft products: for example, the native work of office suites on Linux operating systems, including domestic ones. Microsoft Office works on these systems only in emulation mode, since the company supports the release of packages mainly for Mac and Windows operating systems, says a representative of Rostelecom.
Russian Railways also buys Russian office solutions, including Mygoofisa and R7, “for trial”. The share of spending on domestic software in 2022 increased to 63% compared to 33% a year earlier, a company representative said, without specifying details.
Russian Post has been implementing Mygooffice products since 2019, when it purchased 28,000 packages. The contract amount was 352.6 million rubles. Now she is considering other Russian vendors, but admits that replacing MicrosoftOffice is very difficult. For example, the amount of code in the form of macros in Excel (this is a set of commands and instructions grouped together as a single command to automatically complete a task. - Vedomosti) is much larger than in any other systems, a representative of Russian Post shares. Therefore, while the company uses a hybrid approach - "where the amount of such code is not so significant, it introduces a domestic office suite." In addition, in documents that the user created in MS Word, and then opened in the domestic counterpart, fonts and paragraphs can go. And the most popular font, Times New Roman, is missing from Russian products, warns Igor Mandik, CEO of Pro32, an IT solutions distributor. According to him, the transition from one office solution to another is a very laborious process, requiring time not only for IT departments, but also the users themselves. He estimates the complete replacement of office software at tens or even hundreds of millions of rubles. According to Lashin, on average, for a large organization, the transition from imported software to domestic software takes about 1.5 years.
Ecosystem for office
Despite the fact that a favorable period is coming for Russian office software developers, Microsoft's departure from Russia does not mean an unconditional transition to domestic solutions, A.Partners investment manager Innokenty Krasnov is sure. According to him, only 25% of office software falls on government customers. If all state-owned enterprises, within the framework of the import substitution program, switch to domestic software, then the share of Russian developers in the market could grow from the current 7% to 40-50%. The rest will be occupied by other foreign companies, which will also see opportunities in the Russian market, he believes.
To occupy the vacated niche, local developers will have to do a good job, experts interviewed by Vedomosti believe. The fact is that Microsoft offers not just a set of applications for working with documents, but an entire ecosystem, says Mandik. According to him, now the Russian office suites consist mainly of programs for working with documents and presentations, while the flagship corporate product Microsoft 365 offers a set of cloud products and services for organizing workplaces, collaboration and unified communications. Among them, for example, in addition to Microsoft Office, there is the Teams messenger, Planner and Project project management programs, a SharePoint collaboration portal, etc. All of them are interconnected into a single platform, which is uniformly deployed and administered for all workplaces of a large company, explains Andrey Samchenko, director of Skolkovo Ventures for working with corporate partners. According to him, it is much easier to take such a package than to "glue" a similar environment on your own from different products from different manufacturers.
Although many companies have a chance to develop in those segments where there used to be powerful foreign competitors, including Microsoft, in the near future their efforts will not be spent on creating breakthrough products, but on filling internal needs and creating analogues of software that left Russia, believes Sergey Dashkov, business angel and co-founder of the Angelsdeck investor club. According to him, the current level of isolation will only increase, and without access to foreign technologies, products and services, it will be problematic to develop our own IT market. Krasnov, on the contrary, believes that state support and the departure of Western players will allow Russian solutions to develop and gain some export potential for a number of regions.