A Russian Software Billionaire Takes on SAP and Oracle

Boris Nuraliev seems a lot like the Soviet generation statistician he as soon as turned into, together with his huge cord-rim glasses and hairy mustache, surprise-proof Timex watch, and antique IBM computer loaded with a long time-old software program. But there’s little Soviet approximately 1C, the organization he founded 26 years ago that has grown into Russia’s No. 2 supplier of organization accounting packages, making Nuraliev a billionaire. Today, hundreds of thousands of Russians use 1C Co.’s packages for payroll, economic making plans, and controlling factories, and 300,000 coders can application in its proprietary language. “We’ve basically created a whole industry,” Nuraliev says, the use of a DOS-based file manager to fetch a spreadsheet from his laptop.

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Nuraliev, 58, was given commenced in era at some stage in the Soviet generation as a PC engineer inside the State Statistics Committee. In 1991 he founded 1C to sell business applications including the Lotus 1-2-3 spreadsheet and networking software to hyperlink computer systems within the pre-net age. He quickly delivered his own accounting packages, though he struggled to close massive deals. “Large corporations felt ashamed of using 1C,” Nuraliev says. But his software becomes flexible and cheap, a massive draw for the hundreds of small and midsize corporations that sprang up after the autumn of communism.

 

The monetary downturn of 2014 kick-commenced income amongst bigger clients, who sought to reduce charges just as a drop within the ruble made imports greater high-priced and President Vladimir Putin advised groups to update foreign technology with homegrown products. In latest years, as his software program has gotten more state-of-the-art, Nuraliev has begun serving clients which include the Russian Post, gadgets of strength massive Gazprom PJSC, and neighborhood affiliates of Daimler, Ford Motor, and Siemens—putting him in direct competition with giants which includes SAP AG and Oracle Corp. “Now, whilst big companies need to file to the government on whether they’ve replaced imported generation, it’s grown to be cutting-edge to say, ‘Yes, we use 1C,’ ” Nuraliev says.

 

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A massive advantage for 1C has been that it swiftly adapts its merchandise to ever-converting Russian accounting rules, says Olga Uskova, president of Cognitive Technologies, a Moscow business enterprise that makes software program for self-reliant vehicles. She says Nuraliev has a deep knowledge of everyday accountants and has won their loyalty with seminars on the usage of his applications to stay on the right side of the law. “Accountants begged their bosses to install 1C,” Uskova says. “You can’t dream of a higher sales force.”

The organization’s annual sales expanded 6 percent, to 37 billion rubles ($650 million) closing year, giving 1C a 3rd of the Russian marketplace for agency applications software, 2d simplest to SAP’s 49 percentage, in line with researcher IDC. Measured with the aid of installations, 1C is the leader, with approximately 5 million customers—most of the small and midsize companies that aren’t completely tracked by using IDC. Based on comparisons with SAP and 3 different publicly traded peers, the Bloomberg Billionaires Index values the organization at $2.Three billion, meaning Nuraliev—who owns extra than half of 1C—has the internet well worth of $1.2 billion.

As his corporation grew, Nuraliev couldn’t serve the lots of clients he becomes including throughout Russia’s eleven time zones. So he created a franchise model wherein companions are licensed to put in his software program and adapt it to the needs of every precise commercial enterprise. He employs 1,2 hundred engineers who expand 1C’s dozens of packages, and he has 7,000 franchisees, ranging in length from an unmarried programmer to agencies using masses of consultants skilled through 1C. The franchisees take simply over half of the income fee of the software program, plus the majority of consulting and installation expenses.

Andrey Krivenko, founding father of a 460-store grocery chain referred to as VkusVill, hired a 1C franchisee to automate his operation. The representative uses 1C’s software to tune items Krivenko’s people sign in with handheld scanners, smartphones, and image-reputation programs. All instructed, he says the 1C applications price less than 10 percent of what he might have paid one of the international giants for the same setup. When the business was started in 2009, “we just couldn’t have enough money SAP or Oracle,” Krivenko says. Although he could achieve this now, he says he’s sticking with 1C.

Nuraliev has made some income overseas as franchisees have picked up local clients in Germany, the U.S., and China. In May he formed a department to goal international commercial enterprise, even though issues approximately Russian hacking may want to make that a hard sell, and Ukraine, as an example, has limited 1C’s operations. IDC analyst Elena Semenovskaia also cautions that it could be difficult for 1C “to construct a partner community as sturdy as they’ve were given in Russia.” Nuraliev recognizes that it received’t be easy taking up the global giants outside of Russia, but he says 1C’s information with smaller corporations in a frontier financial system ought to make it a winner in many components of the growing global, noting that he’s already received contracts in Vietnam. “In emerging markets like Russia, we have an aggressive benefit,” he says. “Firms right here want to evolve to market changes speedy.”

About the author: Scott M. Long

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