A full research on Russia including economic and financial indicators and an in-depth ICT spend analysis

1. Didier Andrieu,
April 2015
Russia
ICT Spend overview
Business Accelerator:
Client Buying Power Solution
Acquire DevelopRetain

2. Trivia Marketing International has developed a great knowledge and expertise to determine the companies’ IT
buying powers in more than 35 countries in the world. In the case of Russia, we conducted a survey from 2014,
with more than 6,000 IT decision makers covering every type of industry and company employee size.
We propose to return to you some of the results of our research embellished with some historical and
economic data on this large rapidly developing country.
We hope to give you food for thought. We remain at your disposal for any further information.
Enjoy the reading!
Trivia Marketing’s team.
Trivia Marketing International ©20152

3. An invitation to our Client Buying Power solution preview
From one side of the world to another
A New Vision for making faster business growth
All languages
All industries
All sizes
A New and Innovative methodology designed to:
Support strategical marketing plans
Boost sales efficiency and performance
Improve Business Intelligence
Trivia Marketing International ©20153

4. What do we deliver?
5 guaranteed budgets with a contractual qualitative rate of 80% minimum!
Trivia Marketing International ©20154

5. NEW segmentation to Prioritize Existing and New Customers
What will you get in returns & results
Trivia Marketing International ©20155

6. 7. Russia Interesting Insights
8. Russian Financial Crisis
9. Some Gross Financial Indicators
10. Measuring Russian Economic Efficiency
11. Largest Business Cities
12. ICT Spend Insights
12. ICT Market in Russia
13. Russia is in TOP10 in the ranking of ICT Spend
14. Software
15. Cloud Services
16. Computer Highlights
17. Annual Buying Power in regions
18. Total Annual ICT Spend by largest city
19. Trivia Marketing’s ICT Spend accuracy validation against IDC & Gartner
20. Trivial Marketing Geographical Expertise
21. Benefits from the Trivia Marketing CBP Solution
A quick tour of Russia in 13 slides
Agenda
Trivia Marketing International ©20156

7. Russia Interesting Insights
Geography: Russia or officially Russain Federation is the largest country in the world (17,075,400 square kilometres,
more than one-eighth of the Earth's inhabited land area). Russia is also the world's 9th most populous nation (nearly 144
million people). From northwest to southeast, Russia shares land borders with 14 countries: Norway, Finland, Estonia,
Latvia, Lithuania, Poland, Belarus, Ukraine, Georgia, Azerbaijan, Kazakhstan, China, Mongolia, and North Korea. It shares
maritime borders with Japan by the Sea of Okhotsk and the US state of Alaska across the Bering Strait. Extending across
the entirety of northern Asia and much of Eastern Europe, Russia spans 9 time zones and incorporates a wide range of
environments. Russia's extensive mineral and energy resources, the largest reserves in the world, have made it one of
the largest producers of oil and natural gas globally.
Population: Ethnic Russian people make up 81% of the total population. Six other ethnicities have a population
exceeding 1 million – Tatars (3.9%), Ukrainians (1.4%), Bashkir (1.1%), Chuvash (1%), Chechens (1%) and Armenians (0.9%).
In total, 160 different ethnic groups live within the Russian Federation's borders. Population density is 8.4 people per
square kilometre.
Language: Though most native Russian speakers obviously live in Russia, Kazakhstan, Belarus and Kyrgystan. There are
also Russian speakers in other former Soviet Union countries and approximately 250 million people speak Russian as a
native language worldwide.
Trains: The world’s longest railway is in Russia. The Trans-Siberian Railway, which runs for 9,200 km, and Moscow’s Metro
is the world’s most used subway/underground system, with over 9 million people a day moving between its stations.
Russians: Hospitality is very important in Russian culture. The people are extremely welcoming to their guests, even if
they turn up uninvited.
Trivia Marketing International ©20157

8. Crimean Crisis
Russian Financial Crisis
The Russian Financial Crisis and the associated shrinking of the Russian
economy is the result of the collapse of the Russian ruble beginning in the
second half of 2014. The lack of confidence in the Russian economy
stemmed from at least two major sources. The first is the fall in the price of
oil in 2014. Crude oil, a major export of Russia, declined in price by nearly
50% between its yearly high in June 2014 and 16 December 2014. The
second is the result of international economic sanctions imposed on Russia
following Russia's annexation of Crimea and Russian military intervention in
Ukraine.
Crimean Crisis
The crisis unfolded in the aftermath of the Ukrainian Revolution on February
2014 which removed president Yanukovych. The new Ukrainian government
was recognized by the United States and European Union but was rejected
by Russia. After pro-Russian protests were held in the Crimean city of
Sevastopol and the peninsula was occupied by Russian soldiers.
The ensuing 16 March 2014 referendum on whether to join Russia resulted in a 96.77% (Crimea) and 95.6%
(Sevastopol) affirmative vote, but the referendum was condemned by the EU, the US, Ukraine for violating
Ukraine's constitution and international law. The following day, the Crimean Parliament declared
independence from Ukraine and asked to join the Russian Federation, on next day Russia and the separatist
government of Crimea signed a treaty of accession of the Republic of Crimea and Sevastopol into the Russian
Federation. The UN General Assembly passed a non-binding Resolution that declared the Crimean
referendum invalid and the incorporation of Crimea into Russia illegal. There has been a range of
international reactions and sanctions to the crisis.
Trivia Marketing International ©20158

9. Some Gross Financial Indicators
Russian currency:
The strict sanctions against Russian companies—in
response to Russia’s annexation of Crimea and
hostilities with Ukraine earlier last year—and the
continuous fall in oil prices caused the Russian ruble
falling since July 2014. The strategic objective for
Russia now is to install the independent economy.
XE Currency Chart: RUB per 1 USD
Economic Indicators Last Reference
GDP 2097 USD Billion Dec/2013
GDP Growth Rate 0.04% Aug/2014
Unemployment Rate 5.5% Jan/2015
Inflation Rate 16.7% Feb/2015
Food Inflation 26.1% Feb/2015
GDP:
The IMF released forecast for 2014-2015 (IMF
Economic Outlook Database 2014, October). It
appears that Russia’s GDP is projected to remain
nearly flat in 2014 and recover modestly to grow by
0.5% in 2015 as investment contraction moderates
and non-energy exports strengthen. The reasons of
GDP decreasing is reducing of inflow investments in
connection with the situation in Ukraine, a significant
slowdown in manufacturing and trading of stocks and
low domestic demand.
Russian economy isn’t the best period now
0 RUB
18 RUB
35 RUB
53 RUB
70 RUB
April2014
M
ay
2014
June
2014
July
2014
August2014
Septem
ber2014
O
ctober2014
N
ovem
ber2014
D
ecem
ber2014
January
2015February
2015M
arch
2015
Trivia Marketing International ©20159

10. DB 2015
Rank
DB 2014
Rank
Change
in Rank
RUSSIA DB RANK 62 64 up 2
Starting a Business 34 58 up 24
Dealing with Construction 156 172 up 16
Getting Electricity 143 141 down 2
Registering Property 12 17 up 5
Getting Credit 61 55 down 6
Protecting Minority Investors 100 97 down 3
Paying Taxes 49 48 down 1
Trading Across Borders 155 154 down 1
Enforcing Contracts 14 14 no change
Resolving Insolvency 65 62 down 3
Measuring Russian Economic Efficiency
Russia moved up 2 positions in the new ranking of Doing
Business 2015 from the last year by the World Bank and
took 62th place (in 2011 Russia took only 120th place).
Rating presents the comfort of doing business in 189
countries around the world.
Many positive factors are also associated with the
activation of the inter-regional competition for direct
investors. Each entity now offers simplified conditions
for attracting investments.
The competition level isn’t too high yet in the most areas,
which allows almost anyone to set up their own
business.
However, some issues remain unresolved. In particular,
the lack of access to credit resources, unjustified
inspections and opacity of the judicial system. All this
adversely affects the business climate.
Trivia Marketing International ©201510

11. Russia
Largest Business Cities
Trivia Marketing International ©201511
Chelyabinsk
VORONEZH
NOVOSIBIRSK
VLADIVOSTOKCHELYABINSK
PERM
KRASNODAR
ROSTOV ON DON
EKATERINBURG
MOSCOW
N.NOVGOROD
ST.PETERSBURG
SAMARA
UFA

12. ICT Spend Insights
ICT Market of Russia
According to the analytical study of Orange Business Services the Russian market for ICT services in the B2B
segment in 2014 will be about 635 bn rubles, which is 7.4% more than in 2013. According to forecasts, the
market will increase approximately by 6% and will reach 750 bn rubles by 2017.
In March 2013, the Russian government approved a long-term forecast of socio-economic development of the
country for the period up to 2030, developed by the Economic Development Ministry. According to the
forecast of conservative scenario of economic development in 2030 the volume of the Russian IT market will
increase by 2.7 times compared to that of 2011 and will reach 4,102 bn rubles ($73 bn).
IDC company made a forecast which takes in account: fall of GDP by 3%, average dollar exchange rate of 45
rubles, the continuing escalation of sanctions and declining oil prices to less than $80- $95 per barrel.
According to analysts, in 2015 the sales of equipment in Russia will decrease by 20% in foreign currency (3% in
rubles), software sales - 25% in foreign currency (9% in rubles), and IT services - 10 % in foreign currency, but
in rubles increase by 9%.
In general, the Russian IT market, forecasted by IDC, will decrease by 18% in foreign currency and by 1% in
rubles.
Obviously the fall of Russian ruble makes the negative forecast in foreign currency. However it should be
highlighted that this economic crisis in Russia was provoked by the political situation rather than economic. It
is highly possible that the right political decisions will lead to a rapid establishment of the economy.
Trivia Marketing International ©201512

13. ICT Spend Insights
TOP 10 countries: Russia is on 9th position of the ICT Spend per person
According to Bitkom/EITO Russia is on the 9th place in the ranking based on estimated spendings on
information and communications technology par person (on each head in the country) in 2013.
Trivia Marketing International ©201513

14. ICT Spend Insights
Software
Last year the Russian market for content management software grew by 9.3% and reached $155 million of
suppliers’ prices.
Total exports of software and development services in 2013 grew by 15% to $5.2 billion.
IT exports exceed 0.9% of the total Russian exports. The share of Russian software companies in the world
market software (including custom development services) is about 2.5%.
Russian developers are paying more attention to the markets of Russia and CIS. Long time interest to USA
and Canada markets decreases.
Government becomes one of the key customers of software development. According to the world ranking
of e-government, published by the United Nations in 2012, Russia moved from 59th to 27th place in a year.
This rating presents the readiness and ability of the governments among 193 countries to use ICT in the
prospection of public services.
Trivia Marketing International ©201514

15. According to research of IDC, the total Russian market for cloud services in 2013 increased by more than 70%,
reached about 353 million dollars. This market includes operational services on a subscription (about 67% of
the market) and design services (33%), implemented within the public, private, virtual private clouds, and
combinations of them.
Today the cloud services have just 1% share of the total IT market in Russia. However the cloud is in high
demand even in the general stagnation of the IT market, which allows a variety of cloud providers to increase
their turnover by 100% a year or even more.
The consumption of cloud services depends on the sectors of the economy: public clouds are more popular
in the sector of wholesale and retail trade (mainly small and medium-sized enterprises); at the second place -
the financial service sector; at the third place - the telecommunication sector and the media.
The difficult economic situation in Russia may reduce the number of projects based on private clouds. And on
the other hand the decreasing of IT budgets and the desire to optimize IT budjets will attract companies to
cloud solutions.
The expected total annual growth of the cloud services market (including design) for the period from 2013 to
2017 will be 27%.
ICT Spend Insights
Cloud Services
Trivia Marketing International ©201515

16. According to the research of IDC, one of the main trends of the market in 2013 was the displacement of
computers by tablets (7.7 mn units against 3.3 mn units in 2012).
According to J'son & Partners Consulting in the III quarter of 2014 in Russia was delivered about 2.3 million
personal computers, which is 15.6% less than in the same period for last year. In October, analysts estimated
that the market declined by 16.1%.
The economic situation today impacts on the development of the personal computer market. There is a
tendance to reduce IT equipment budgets mostly in all companies. In the meantime the private consumers
prefer low-cost devices. And the price increasing of computer equipment (due to rubles exchange rate) is
already on the way which will freeze the consumer purchasing power.
ICT Spend Insights
Computer Highlights
2010 2011 2012 2013
8 M units
3 M units
1 M units
0 M units
7 M units
9 M units
8 M units
7 M units
4 M units
4 M units
4 M units
4 M units
Computers Notebooks Tablets + TREND
Trivia Marketing International ©201516

17. Far Eastern
950.6 M $
Siberian
2,907.1 M $
Volga
4,518.5 M $
Central
10,860.4 M $
Far Eastern
Russia
Siberian
Urals
Northwestern
Russia
Volga
Central
Russia
Southern
Russia
ICT spend budgets by region shown on this slide are
calculated through Trivia Marketing solution adding
each ICT company spend per region.
Northwestern
3,889.9 M $
Urals
2,203.1 M $
North Caucasian
0.002 M $
Southern
1,825.8 M $
$27,155.3 Million of ICT Spend in 2014
Annual ICT Spend: Sum of (Hardware, Software, Services, Telecom) spend
Trivia Marketing International ©201517

18. Total Annual ICT Spend by largest city
TOP 5 cities accounts for 59% of total spend
Novosibirsk
Yekaterinburg
ICT spend budgets by city shown on this slide are
calculated through Trivia Marketing solution adding
each ICT company spend per city.
MOSCOW
ST.PETERSBURG
N.NOVGOROD
EKATERINBURG
NOVOSIBIRSK
More than 800 M $
From 500 M $ to 799 M $
From 300 M $ to 499 M $
Trivia Marketing International ©201518

19. Trivia Marketing ICT Spend accuracy validation vs IDC & Gartner
Russia ICT Spend Gross Budget by Line-of Businesses
5,498
29,121
2,551
5,192
BP HARDWAREBP TOTAL
7,232
72,856
1,789 2,513
27,155
BP SOFTWARE
7,351
14,402
45,911
17,356
BP TELECOM
7,716
BP SERVICES
11,622
Gartner (M $)
IDC (M $)
TRIVIA MARKETING (M $)
Top-down analysis shows Trivia line-of-business ICT gross budgets fall close to Gartner forecasts as well as
Trivia Total ICT gross budget.
Trivia’s budgets are based on real figures collected through surveys conducted annually with IT exec across
the country.
Neither Trivia Marketing nor
Gartner include costs for data and
voice in TELECOM spend.
Trivia Marketing International ©201519

20. Trivia Marketing Geographical Expertise
… More than 125 million companies for which we know their ICT Spend…
Done
Work in Progress – Q2 2015
Trivia Marketing International ©201520

21. Find the prospects most likely to buy your products within the next 12 months
Ensure total market coverage and Increase market penetration
Enhance knowledge of customers/ prospects with additional indicators to enable accurate analytic and
more precise segmentation
Bring economic content to your marketing strategy
Provide better relevance of marketing actions
Increase sales response rates and sales revenues
Ensure a better deliverability of messages (across channels)
Increase accuracy and depth of the total customer view - 360°
Benefits from the Trivia Marketing CBP Solution:
Get one step ahead of your competitors!
Trivia Marketing International ©201521

22. www.trivia-marketing.com
Thank you!
Trivia Marketing International
+33 (0)1 60 92 41 32
15 avenue de Norvège
Parc d’Activité de Courtabœuf
91140 Villebon-sur-Yvette
contact@trivia-marketing.com/TriviaMarketingInternational
@TriviaMarketing