The volume of the Ukrainian system integration market in 2014 decreased almost threefold – to $200 million. The fall in hryvnia equivalent was 30%. Sales fell by a third. Due to the annexation of Crimea and the war in Donbass, some players stopped working in these regions. Due to the growth of the dollar exchange rate and the decline in sales, integrators purchased a third less hardware and software. Large businesses reduced their IT costs – most companies are implementing so-called survival budgets instead of development budgets. How do system integrators survive? They are betting on medium-sized businesses.
System Integration Market
The economic and political crisis of 2014-2015 has hardly changed the basic balance of power in the system integration market. The top five companies by revenue in 2014 included Inkom, S&T, Technoserv Ukraine, AMI, and RIM 2000. The five largest integrators control more than 60% of the market, with Inkom accounting for more than a third of the country's system integrators' revenue. But the number of competitors has increased. Since many companies have optimized their staff, many professionals have appeared on the market who are launching their own projects in the field of system integration. It is not a fact that many of them will be able to survive, but for now the cost of their services is lower than that of the major players.
The target audience of system integrators has also changed. If previously the services of "system integrators" were mainly used by banks, telecom companies, and large industrial enterprises, now the composition of clients has changed. More and more retailers, restaurateurs, and farmers are acquiring enterprise management systems and IT infrastructure. "There are almost no government orders left, the volume and number of projects in the industrial sector have decreased. "Retail is probably the only industry that is showing a positive development trend in the Ukrainian market," says Nikolai Dovzhenko, Vice President of Inkom. Alexander Tarasov, Head of Sales at RIM 2000, notes that in addition to retailers, pharmacy chains and pharmaceutical distribution representatives, as well as clients from the food industry, are ready to pay for IT, while the situation is somewhat worse with agricultural producers.
But the emergence of new clients from the medium-sized business segment has influenced which solutions have become more popular. "In the context of economic uncertainty, companies practically do not invest in the construction of their own IT systems, but more often turn to services such as data placement in a public cloud, outsourcing, etc., transferring IT costs from capital to operating," says Inkom Vice President. Gennady Karpov, Director of Technology at DeNovo, agrees with him: "From the point of view of project business, the market is at a dead end. It is not possible to plan expenses for a long period, so the demand for services that do not require capital expenditures is growing.”
