1C, Russia’s largest publisher of enterprise software, has given a major face-lift to its franchisee partner network across the former Soviet Union and is putting together a strategy to expand beyond the well-tapped CIS markets.
In an exchange last week with CNews.ru, 1C CEO Boris Nuraliev explained that the franchisee overhaul addresses the widespread and growing problem of incompetence that the publisher’s partners have demonstrated time and again in marketing 1C software products. The trouble was long exacerbated by the inadequacy of Russian legislation regulating franchising relationships prior to 2011.
Two years ago, however, the law was amended to grant franchisors broader rights, and 1C has apparently made the most of it by revising contracts with its affiliated dealers and goading the franchisees to better train staff and maintain higher quality standards. Those unable to live up to expectations have been shown the door out of the partnership.
The 6,700-6,800 dealers that have ridden out the rigor of 1C’s new policy are now “true franchisees to rely upon,” Nuraliev said.
“I want to break free”
1C’s market share for enterprise management systems in Russia has grown from zero in 2003 to a hefty 31.6% two years ago. The company has shown heartiness, buying IT solution developers along the way to ensure advancement.
Nonetheless, CEO Nuraliev emphasized in his interview that the currently explored CIS markets are already too tight and economically feeble for the software developer to expect any perceptible growth there.
He quoted data from Russia’s federal tax authority revealing that more than 650,000 small businesses in Russia have been forced to wind up operations in the previous six months alone.
1C is therefore considering international expansion beyond the CIS. The firm already runs rep offices in Germany, Romania, Poland, Bulgaria and some other countries, and has localized its flagship 1C:Enterprise software product for 16 languages, including Chinese.
In a bid to tap more deeply into western market opportunities, Nuraliev noted, 1C is now developing a comprehensive stimulus program for international partners. It will focus on technology companies rather than vendors, he underscored.
The Russian firm wants to provide western developers with technical support and development tools, and is hoping to incentivize partners to use the 1C platform to create their own products.
