Why do they pay three billion?

In Russia, system integrators operate in different markets

Some companies include the cost of equipment supplies in system integration. Others are his service. Third - the cost of subcontracting work. And everyone calls themselves “system integrators.” In this market, everyone plays by their own rules, which, as our correspondent found out, are incomprehensible, even to the participants themselves, not to mention investors.

What are we trading?

The volume of the Russian system integration market is $3 billion, according to IDC (an analytical company whose estimates are used by the IT industry). But what kind of market is this, what is traded on it? Here is the definition of IDC's partner, the Russian LINEX. First, it is the creation of solutions for specific technical or business problems, including the design, development, implementation and implementation of solutions and IT project management. Secondly, planning, design and construction of corporate local and global networks, wireless and wired, including multi-service, convergent networks for voice, video and data transmission within a single infrastructure. And thirdly, system integration may include training, custom software development, and equipment installation and configuration.

It is important that maintenance and support of hardware and software is not included in the definition of system integration. As well as the cost of the equipment and software itself. IDC proceeds from this when calculating the volume of the Russian system integration market.

There are, however, other points of view. Analytics company Datamonitor includes system integration in its list of IT services along with network management, data processing services, technical support and others. The development of systems and custom applications, as well as the implementation and integration of standard software for enterprises - this is what the understanding of system integration services in the West is based on, and foreign IT companies do not experience difficulties in defining the term “system integration”.

Game not by the rules

“An integration project is not only system integration services, it is also the supply of equipment and the sale of software licenses,” Veronica Tarab, deputy general director of CROC, is convinced. - For example, our company built a data processing center. Start-up and commissioning of equipment can be classified as system integration or the equipment installation and configuration segment. Training services can fall into either the system integration or IT training segment, and audit services can fall into both system integration services and consulting.” Veronica Tarab estimates her company’s share in the Russian system integration market at 20%, which coincides with the opinion of IDC. But an important “nuance”: 20% is the share of IT services, which, according to IDC, includes system integration!

“These are research work, development of custom software, implementation of information systems, installation and configuration of equipment, creation of networks, as well as audit within the framework of the project,” - this is the definition of system integration given by the Deputy General Director for Marketing of NVision Group (another system integrator ) Sergey Golovin. He does not consider the supply of equipment as part of system integration a priority, but has nothing against including this in it. According to Mr. Golovin, system integration accounts for 24.75% of the company's total revenue.

President of the Systematics group of companies Leonid Goldenberg believes: what was previously called system integration today implies the provision of a full range of IT services. “This includes system integration, consulting, custom software development, and the development and implementation of IT systems of various sizes,” he believes.

The definition from Technoserv is extremely succinct. According to executive director Yuri Baev, system integration is a full range of services that allow solving customer business problems using information technology. That is, anything, as long as it is related to IT.

“Solving the customer’s business problems includes development, design, supply of equipment and software, implementation, personnel training, technical support,” Mr. Baev is convinced. All this - consulting services, logistics services, equipment adjustment - is, of course, required to solve business problems. However, there are no such services in the Western understanding of the business of system integrators. In IDC's understanding, no.

“In the West, there are virtually no companies that are both an integrator and a distributor,” says Sergei Matsotsky from IBS. “And even large companies like IBM are very careful not to impair their turnover with low-margin transactions or transactions that are not directly related to their business.”

They refused to assess the company's share in the system integration market in IBS itself due to the vagueness of the concept. According to Mr. Matsotsky, the company's share in the IT services market is 7%. “This is a fair assessment,” he says. The IT company also refused to estimate the share of system integration in its business. Chairman of the Board of Directors Tagir Yapparov believes that this is impossible to do, because there are no “pure” system integrators in the Russian IT market.

Systemic misunderstanding

Russian players themselves understand that the term “system integration” is interpreted too freely by them. According to Mr. Yapparov, the term “system integration” is used as a synonym for IT services in general, and even sometimes the entire business of system integrators, including the supply of computer hardware and software, is called system integration. “We, naturally, consider this not entirely correct. Such a broad interpretation leads to a distortion of the real situation in the IT services market, but it so happens in our country that the concept of “system integrator” is used as a synonym for a company running a project business in the corporate market,” sums up Mr. Yapparov.

NVision Group also understands this: equipment supplies are accounted for separately in the revenue structure. According to Sergei Golovin, in 2007 the share of project deliveries of equipment amounted to 68.15% of total turnover.

“Unlike some system integrators, these are project deliveries; we do not distribute equipment and do not sell it at retail,” explains Mr. Golovin.

He alludes to IT companies that call themselves system integrators, but make money mainly from the supply of equipment. A typical example: Technoserv's turnover for 2007 was $1.157 billion. The number of employees was only 1,486 people. IBS's turnover is comparable - slightly above $1 billion. But the size of the team is significantly higher - about 4.5 thousand. What explains this difference?

It's very simple: if a company really sells services, it needs people who will provide these services. Maximum output per person is 150 thousand dollars per year. But if a company simply transports equipment, a large number of people are not required for this. If this is not the case and Technoserv is really engaged in system integration, it is time to applaud it: the company knows how to get several times more per employee than the market average. It doesn't matter whether it's good or bad. It is important that this has nothing to do with the system integration market.

Goodwill deficit

Not only is there confusion in the definition of the concept of “system integration market,” but many companies, for example, include the cost of subcontracting work in their income to improve their rating.

Thus, the IT company subcontracts standard work (for example, installation of cable networks) and unique work that the company does not specialize in (for example, integration of an information system and CAD or GIS systems). The total share of subcontracting, which also includes logistics and consulting services, is small - 10%. And it is included in the total volume of IT services provided by IT. For other companies, this percentage is even higher.

“Any company that provides IT services has extraneous costs (from the English cost, cost. - Ed. ),” says Sergei Matsotsky. -- 10--30% is normal. But when you subcontract everything, you are no longer a system integrator, but a general contractor.” And there are such companies on the market. Why should they take credit for the work that they are actually subcontracting?

Because it allows companies to appear larger than they actually are. “Everyone wants to be first,” Sergei Matsotsky is sure. - This is a problem of an immature market. After all, it is difficult for a client to understand the business of a system integrator. But the term itself gives the company some weight. But if you think a few steps ahead, then you will have to pay for this imaginary success to investors.”

Investors, should they appear, really won’t be able to figure out what miracles are happening in the Russian system integration market. Another typical example. When asked what share of all services provided by Technoserv is IT services, we received the answer: 30%, including “part of the system integration services.” At the same time, the share of system integration itself, according to the same Yuri Baev, amounted to more than 80% (about $970 million) of the company’s revenue. Perhaps the company is confused about exactly what services they provide. This is despite the fact that Technoserv can safely claim that it is Russia’s largest supplier of IT services, without replacing this concept with system integration.

Sooner or later, the trench war for leadership, when a company “shoots” certain numbers about the volume of its business, will end. This will happen, obviously, when IT companies are interested in investors more than just ratings.

Victoria MUSORINA, iToday.ru, - specially for Vremya Novostei