Since the early 2000s, the software products of the russian company 1C have become one of the most popular solutions for automating management and accounting at enterprises in the post-Soviet countries. It also did not bypass companies in Ukraine.
Prior to the full-scale invasion, 1C had a near monopolistic position and occupied more than 90% of the automation solutions market.
1C’s dominance in the Ukrainian market
In 2017, the National Security and Defense Council of Ukraine imposed sanctions on 1C software products, banning their sale in Ukraine. And in 2023, companies that developed other popular solutions, such as Parus Software Products and Sitronics JSC, were also banned.
Government agencies and utilities were generally prohibited from using these software products. In particular, because of the real threat of violation of confidentiality, integrity and availability of data circulating in automated systems.
However, among private companies in Ukraine, 1C still retains a dominant market position. More than 80% of businesses continue to use or buy the banned software anyway.
In previous articles, we have already talked about the reputational, operational and other risks of using russian solutions that Ukrainian businesses should pay attention to. In particular, customers of Bitrix-24, which was used by almost a quarter of Ukrainian companies.
In addition, there is a tendency to strengthen government control over the ban on russian programs.
Ban on the sale of 1C programs
At the end of 2023, the Verkhovna Rada of Ukraine registered draft law No. 10186. The draft law prohibits the sale of tax and accounting software that is based on software code written in the language of the aggressor country.
In particular, the draft law proposes to introduce fines for violating this ban. They range from 1,000 to 2,000 minimum wages, depending on the nature of the violation and its recurrence during the year. Translated into understandable numbers, the fines are proposed to be from 6.7 to 13.4 million hryvnias. These amounts can cause significant losses to any company.
This initiative was not a coincidence – it is part of Ukraine’s broader strategy to de-occupy the economy and get rid of dependence on the products of the aggressor country. The main goal is to reduce the risks of cyberattacks on the public sector of Ukraine’s economy by russia.
Both 1C and its analogues, which also have russian roots and are currently present and sold on the Ukrainian market, are written in the russian language of 1C programming.
This means that all 1C clone programs, starting with the most famous BAS ERP and ending with the UBS, KBS and UA-budget mimicking Ukrainian developments, which run on the core of the sanctioned 1C, fall under this draft law.
However, the draft law also takes into account the interests of businesses that already use this software.
In particular, it is proposed to allow the use of such programs purchased before the ban came into force. This will help avoid sudden and large-scale discomfort for Ukrainian companies. It will also enable companies to gradually switch to other software solutions without stopping or seriously disrupting their work processes.
What should Ukrainian companies do next?
Everyone understands that it will not be possible to radically get rid of 1C, but the slow process of abandonment has already begun. Of course, some companies will continue to use 1C even after 10 years, as long as there are ways to circumvent the ban, such as using cloned or pirated versions of the software.
This draft law is a signal that further use of banned software in Ukraine will create even more problems for businesses. This can lead to a change of decision urgently, without proper preparation and with the possible loss of all data.
Migration from one system to another is a necessary process if you use russian programs. Postponing it will make it much more difficult to switch to other solutions when you need to do so. The longer you put it off, the more accumulated data and settings you will have to transfer.
Many ERP solutions are flexible in their customization, so you don’t have to look for a unique solution or migrate to another system if your needs change.
For example, Dynamics 365 Finance will allow you to meet your needs no matter how they change. ERP from Microsoft is considered one of the leaders among cloud-based SaaS solutions for business. Among the advantages is access to your system from anywhere and at any time. In addition, you don’t need to hire specialized staff and invest in special equipment. Your data is securely protected on servers around the world. With a supported and legal solution, you can be sure that your accounting is compliant with the latest legal requirements both in Ukraine and abroad.
Migration from prohibited ERP solutions requires the organization of a high-quality and well-thought-out transition. Contact us for a free consultation to choose a secure business management solution for you.
