Ukraine has urged cloud-computing and software giants including Microsoft and SAP to cut off Russia to prevent an invasion of Moscow. What is at stake here.
What is Ukraine asking for?
The Ukrainian Ministry of Digital Transformation wants North American and European technology companies to completely halt any deals with Russian customers, potentially crippling Russia’s economy and forcing the Kremlin to reconsider What it called a “special operation” in Ukraine.
Some companies, such as Microsoft, have stopped accepting new customers in Russia since the invasion began last month. But many have not concluded deals with existing customers, except for those targeted by new sanctions and export controls.
What role do Western companies play in Russia’s IT systems?
Russian companies and government agencies have long relied on technology developed by the West as the basis for their owned and operated IT systems. Servers from International Business Machines, Dell TechnologiesAnd Hewlett Packard Enterprise (HPE) tops the market in Russia.
applications are also popular sap, Microsoft, ibm, Oracle, and Salesforce.com. Tools help organizations send emails, analyze data, store records, and generally manage their operations.
Vendors cannot remotely shut down some technology. But there are alternatives to choking customers’ systems.
Banking, telecommunications, transport and other organizations in Russia could be disrupted if vendors stop providing replacement parts, security patches, software updates and technical support, according to two former senior IBM salespeople in Eastern Europe.
Customers may be forced to find alternatives, even pen-and-paper bookkeeping, if services go offline or go haywire due to a lack of updates.
How will the western cloud shutdown affect Russia?
Russian companies have been largely reluctant to rely solely on cloud services, particularly from US-based providers such as Microsoft Azure and Alphabet’s. google cloudAccording to IDC analyst Philip Carter. As a proportion of total home IT spending, the cloud accounts for 5 percent in Russia, compared to 19 percent in the United States, Carter said.
As a result, Russian companies that will be dropped from the cloud will not be overly crippled, he said.
Still, the Russian cloud market has grown exponentially over the past two years, according to researchers with the pandemic driving commerce online.
According to IDC’s 2020 estimates, Microsoft has the largest market share in Russia with 17 percent, followed by Amazon’s cloud unit at 14 percent and IBM’s 10 percent. Russian company Yandex NV comes in fourth place with 3 percent market share.
But the IDC said Russia and Ukraine combined account for only 5.5 percent of all information and communication technology spending in Europe and 1 percent worldwide.
What have Western companies said?
Salesforce said Monday it has begun pulling out of its customer relationships in Russia, which it said added to a small, non-physical number.
Other companies declined to comment on whether they were considering leaving existing customers.
Amazon Web Services has said its biggest customers in Russia are companies headquartered elsewhere, and it has a longstanding policy of not doing business with the Russian government.
IBM and Oracle have said they have suspended all businesses in Russia, and IBM said it does not do business with Russian military organizations. HPE, Dell, SAP and Microsoft have all said they are stopping sales. Google Cloud did not respond to a request for comment.
Who could benefit if Western companies bow down?
Russian companies may turn to home workplace software like my office Or local cloud providers, including Yandex and ActiveCloud. IDC’s Carter said prices and quality could be less favorable.
Blake Murray of research firm Canalys said Chinese technology companies could fill the gap. Cloud providers include Alibaba Group and Tencent Holdings. China-based Huawei Technologies last year opened a data center in Moscow to the Russian scientific and academic community.
Nevertheless, any use of Western components in its operations could complicate Russian sales under trade sanctions recently imposed by the United States.
© Thomson Reuters 2022