Russian IT Market Shifting Towards Consolidation, Says PAC
Several important mergers such as Systematica with TopS BI or the recently announced merger of Smartmaster with the West Siberian Computer Trade Group have illustrated the increasing shift towards consolidation on the Russian IT market.
Jun 11, 2007
Several important mergers such as Systematica with TopS BI or the recently announced merger of Smartmaster with the West Siberian Computer Trade Group have illustrated the increasing shift towards consolidation on the Russian IT market, according to Pierre Audoin Consultants (PAC). The merging of Borlas Consulting Group with IBS Group added fuel to this observation, which indicates an acceleration of ERP market consolidation in Russia.
Pierre Audoin Consultants has released the following commentary:
In Western European countries and the U.S., mergers and acquisitions have become commonplace across all markets, and are increasingly regarded as a regular growth strategy. However, internal and external factors in Russia, such as competition, have caused M&As to be viewed as both a survival method and an opportunity to achieve market positioning while many markets are still in an emerging phase. Bearing in mind that the Russian economy is still mainly industry-driven, it is obvious that the manufacturing sector is the pioneer in terms of M&As. The IT market, however, is accelerating its consolidation processes with an increasingly impressive number of deals. As with the manufacturing sector (where any M&A between industrial giants can significantly change the market equilibrium), the IT market is also highly sensitive to consolidation.
Since the beginning of the year, there have already been some representative examples of M&As, such as the merger of the Russian systems integrator, TopS BI, with Systematica (a member of the National Computer Corporation) or Smartmaster with the West Siberian Computer Trade Group (announced at the end of April 2007). This regrouping of players on the market will undoubtedly be a catalyst for a gradual shift in the IT market structure in Russia. Like many other sectors, the IT market will be dominated by a group of local holdings in search of major deals, and there will be more pressure on foreign competitors targeting it.
The merger of Borlas Consulting Group (one of the strongest players in terms of Oracle’s practice) with one of the traditional SAP partners in Russia, IBS Group, will have a major effect on the market. This merger is expected to produce a new leading and slightly monopolistic player, which will combine the rival SAP and Oracle offerings on the local ERP market.
PAC expects the Russian IT market to experience some fluctuation in 2007, given that more M&As may take place up until the end of the year.
Pierre Audoin Consultants has released the following commentary:
In Western European countries and the U.S., mergers and acquisitions have become commonplace across all markets, and are increasingly regarded as a regular growth strategy. However, internal and external factors in Russia, such as competition, have caused M&As to be viewed as both a survival method and an opportunity to achieve market positioning while many markets are still in an emerging phase. Bearing in mind that the Russian economy is still mainly industry-driven, it is obvious that the manufacturing sector is the pioneer in terms of M&As. The IT market, however, is accelerating its consolidation processes with an increasingly impressive number of deals. As with the manufacturing sector (where any M&A between industrial giants can significantly change the market equilibrium), the IT market is also highly sensitive to consolidation.
Since the beginning of the year, there have already been some representative examples of M&As, such as the merger of the Russian systems integrator, TopS BI, with Systematica (a member of the National Computer Corporation) or Smartmaster with the West Siberian Computer Trade Group (announced at the end of April 2007). This regrouping of players on the market will undoubtedly be a catalyst for a gradual shift in the IT market structure in Russia. Like many other sectors, the IT market will be dominated by a group of local holdings in search of major deals, and there will be more pressure on foreign competitors targeting it.
The merger of Borlas Consulting Group (one of the strongest players in terms of Oracle’s practice) with one of the traditional SAP partners in Russia, IBS Group, will have a major effect on the market. This merger is expected to produce a new leading and slightly monopolistic player, which will combine the rival SAP and Oracle offerings on the local ERP market.
PAC expects the Russian IT market to experience some fluctuation in 2007, given that more M&As may take place up until the end of the year.