The Moscow Times
The systems integration market has been going through an evolution.
Not only have client demands been maturing, but integrators' expertise has also been growing — and now they are increasingly hired to optimize their customers' business processes.
According to a report by the IDC research company, Russian companies spent $850 million on information technology services in 2001, a 31 percent increase over the previous year. About 30 percent of the expenditures were on systems integration, building systems that perform processes to solve specific tasks set by a client company.
In January, Kompaniya magazine named IBS, IT Co., Tops BI, Lanit and Sterling Group the top five systems integrators in Russia, estimating their aggregate revenues in 2001 at approximately $200 million.
Dmitry Kozhevnikov, an analyst at IDC, said companies using the services of systems integrators now show a growing interest in projects aimed at performing specific business tasks, not just technological ones.
"What is changing is the way some companies now view information technology," he said.
"Today a project is regarded as successful if it solves a business problem, not a technological problem. Previously those same companies would build huge networks simply to facilitate the exchange of information."
Kozhevnikov said that in the last five or six years the level of systems integration services in Russia has become comparable to the level in the West.
The major players agree that the main trend is the evolution in customers' needs.
"The key task in the automation field that the majority of Russian companies are working on today is automation of specific business processes, such as finance management, human resources management and sales management," said Tagir Yapparov, chairman of the board at IT Co.
IBS's Sergei Merkulov Tops Bl's Vladimir Rudenko IT Co.'s Tagir Yapparov
Sergei Merkulov, vice president at IBS, said "new" systems integration goes beyond the frames of installation of information systems, becoming "a solution to many real business problems."
"New integrators are the companies that offer solutions tailored to the needs of the customers' businesses and which have an industry expertise and skills in IT consulting," he said.
Merkulov added that today customers are switching from the cost approach to the investment approach when spending money on integration systems.
Vladimir Rudenko, marketing director at Tops BI, said that 2001 saw a 20 percent growth in business integration systems based on enterprise resource planning (ERP) systems, more than in any other sector of systems integration.
The report by IDC said the market continues to be dominated by big projects, especially in banking and extraction industries.
Yapparov added telecommunications and metallurgy industries to the list of the most "IT-successful" sectors of the country's economy, where ERP system installation was actively under way.
He added that other sectors, such as machine building, forestry and energy, have been automating basic processes in finance, human resources and production. The picture is more complex with government bodies, some of which have already done a significant amount of work on building information infrastructure, while others have only started the first stage of automation.
Market players are optimistic about the prospects for the systems integration sector in Russia.
"The market is most likely to be growing at the rate of 10 to 15 percent a year," Yapparov said. "Systems integrators will be developing automation practices of business processes and will be increasing the number of business experts, consultants and ERP and other applications specialists."
Yapparov added that new forms of cooperation between clients and companies will develop, such as outsourcing.
"The necessity of starting new kinds of activities and building regional networks will require significant investments from companies. This is why we can expect new alliances, mergers and investments into these activities," Yapparov said.
Merkulov suggested that Western companies might expand into the Russian market.
"Because it's hard to develop an IT business from scratch, Western companies are very likely to enter this country's market through acquiring local companies," said Merkulov, adding that the market is still fragmented and consolidation is unlikely to start within the next two or three years.
Rudenko expects leading systems integrators' market positioning to shift further toward consulting — not just installing ready solutions, but helping their clients "solve business problems through modern information technologies."
"This will be a different kind of system integration, which we today call 'business integration,'" he said.