Internally, 1,700 of the 107,000 employees worldwide called for a complete withdrawal from the market in an open letter to the board.
(Photo: dpa)
Dusseldorf SAP wants to completely shut down business in Russia: the largest German IT group announced an “orderly exit” on Tuesday. Existing customers who are not affected by the international sanctions will no longer receive updates and technical support for their software.
Details, such as how long the implementation should take, are still unclear. CFO Luka Mucic said they wanted to meet the legal obligations to non-sanctioned customers. In addition, it is important to “handle the effects on the more than 1000 employees in a responsible manner”. So we’re looking at different options.
Businesses and authorities in Russia will probably be able to use SAP technology for some time to come. On the one hand, contracts with major customers that are negotiated individually are considered to be complex and have long terms, making them legally difficult to process.
On the other hand, software still works for a certain time without the support of the manufacturer – experience has shown that some solutions can last for several years, said CFO Mucic.
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The manager emphasized the “significant complexity” of the withdrawal: “We are not active in the consumer business, but sell very complex software solutions.” In view of this, the group acted quite quickly but responsibly.
SAP criticized for business in Russia
The chief financial officer was reacting to the criticism that had become louder and louder in recent weeks. The SAP board of directors condemned the Russian invasion: In a blog entry, board spokesman Christian Klein spoke of an “inhuman and unjustified attack on democracy and humanity”. Nevertheless, the group initially only stopped new business.
Existing customers, unless affected by the sanctions, continued to receive updates for local installations in their organizations and also had access to the cloud services, which ran in a data center in Russia – the latter only being used by a fraction of Russian organizations.
In principle, the software manufacturer relied on three arguments. Firstly, contracts with customers cannot be terminated unilaterally in the short term. Second: Due to the importance of the SAP systems for the economy, the Russian civilian population is threatened with great damage. And thirdly: It is not the task of a company to distinguish which organizations are still offered technical support and which are not.
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With this policy, SAP attracted some criticism. In a tweet, Ukraine’s digital minister Mykhailo Fedorov asked the company how long it intends to help Russia kill children, including a software maker’s logo with blood on it. Users took up this polemic on social media. Internally, 1,700 of the 107,000 employees worldwide called for a complete withdrawal from the market in an open letter to the board.
Apparently in response to the criticism, SAP also announced at the end of March that it would end its cloud business in Russia. However, customers were given the opportunity to take over their data themselves or to migrate to a data center outside the country. The group will no longer offer Russian companies an extension after the term – usually three years – it said on Tuesday.
The exact effect of the withdrawal on the business is still unclear. “SAP was perhaps the most successful of all international software companies because, as Germans, we made an extra effort to get along with Russia, maybe even to become friends,” co-founder Hasso Plattner told Handelsblatt last week.
According to the company, the group currently generates around 1.5 percent of its sales in the region, which also includes Belarus and Ukraine, which corresponds to around 400 million euros. Measured against the entire business, the risk is “not significant,” said CFO Mucic. SAP should publish details on Friday with the figures for the first quarter.
More: SAP co-founder Hasso Plattner explains the transformation of the group