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BI in Developing Countries: The Case of Russia

by | Dec 5, 2019 | Articles

As mentioned in the previous article, business intelligence (BI) integration projects in emerging economies can be quite different from those in North America and Western Europe. In this article, we’ll continue to explore BI integration in developing countries, focusing on the Russian market.

Overview of the market

Along with Poland, Russia has one of the largest BI markets in Eastern Europe. Having many capable experts with IT and statistics background, Russia has a strong potential to grow its presence in the global BI market.

Although the BI market in Russia is a lot smaller than in North America, Japan and European countries, it is growing by leaps and bounds. Last year, the Russian BI market was growing at the rate of 40 percent a year, according to a research by International Data Corporation (IDC), as cited by Alexey Luybimov, Chairman of 3i Technologies.

In 2018, the majority of Russian businesses that integrated a BI solution preferred providers from North America and Western Europe.

“A portion of foreign vendors is around 60 percent, Russian companies represented 30 percent, while the rest was open source solutions,” said Roman Baranov, a business development director at the IT consulting firm Navicon.

When it comes to industries that are at the forefront of BI integration it is similar to that of other countries. Companies in retail, finance, manufacturing and pharmaceutical industries are the leaders in BI implementation. Microfinance, which combines banking and retail, and the government sector could be also highlighted as growing BI customers.

Finding opportunities during hard times

Large Western BI providers would have completely dominated the Russian market if politics did not come into play in 2014. For some Russian IT companies it was a blessing in disguise, as following sanctions and the import substitution laws, government agencies and government-owned enterprises switched to local providers. By signing contracts with large government-affiliated companies, Russian BI vendors had an opportunity to improve their software and market position.

It is hard to give an accurate assessment of how much Russian vendors benefited from the political changes and estimate their real revenues. Regardless, it seems to be a large number.

“There are many government-affiliated banks and oil companies that do not disclose amounts they spent on BI,” Baranov said, adding that these kinds of orders make up over a half of all BI integration projects.

At the same time, the economic recession and the dramatic devaluation of the Russian ruble forced other companies in the market to re-assess their financial capabilities and cancel existing or planned contracts with Western BI providers, as costs would have literally doubled after the ruble’s crash in November 2014.

Looking into the future

During recession times companies look for every opportunity to improve how they conduct business while counting every dollar they spend. In such economic conditions, Russian companies are particularly interested in a more effective use of marketing and sales to boost their revenues, as well as making sure logistics and operating processes are not a drag. Managers understand this and realize that BI is one of those tools that can provide effective solutions.

Russian BI companies serve and will continue to serve as both consultants and integrators. Vendor roles range from providing advice regarding the choice of a solution to auditing how customers are managing their business processes, said Alexander Levashov, the editor-in-chief of the Russian IT analytical agency TAdviser.

Regardless of the current economic situation in the country, the Russian market will continue to evolve and spend money on BI solutions, seeking to get business insights and gain competitive advantage. This means there will be more companies appearing in the market and the existing ones working to improve their solutions.

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BI | russia
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