SAP will completely pull out of Russia, winding up its cloud operations there, the company announced this week, in response to Russia’s invasion of Ukraine at the end of February. The move follows on measures the enterprise software giant had already taken, along with the international community, to protest Russia’s aggression.
“We strongly condemn the war and obviously are shocked to see the atrocities that come with it,” said SAP CFO Luka Mucic in a teleconference with media this week. “At the same time, it has been incredible to see how the whole world has come together. We have seen unprecedented action from governments around the world, establishing unprecedented sanctions, and I’m also proud to say that the private sector has been quick to respond to this crisis and has acted not only in line, but also beyond those sanctions.”
Mucic called the sanctions “a crucial tool to advance the peace process.”
SAP Employees in Russia
The announcement marks a significant moment for SAP, which noted in its statement that it has built an "excellent team" in Russia and has operated there for more than 30 years. Mucic said the company has 1,200 employees in Russia.
“We are making taking care of our employees a significant part of our considerations, with in particular a primary focus on their safety and well-being,” he said, adding that this work is still in process and too early to discuss publicly.
Cloud Shut Down
He noted that SAP’s moves to punish Russia's aggression thus far have exceeded sanctions. For instance, on March 2, a week after the invasion, SAP suspended new sales of products and services in Russia and Belarus, Mucic said. On March 24, the company announced it would actively shut down cloud operations in Russia.
SAP said this week that as part of its cloud shutdown it has given non-sanctioned companies in Russia a choice to have their data deleted, sent to them, or migrated to a data center outside of Russia. For companies that chose migration, SAP will not renew their contracts upon expiration of the current subscription term.
What About On-Premises?
SAP also said that it will end support and maintenance of on-premises products in Russia. Mucic said the company is evaluating how it will execute this decision to ensure it honors legal obligations to non-sanctioned customers.
Ending support is the maximum action that SAP can take, according to Mucic. He said SAP cannot remotely turn off or withdraw any on-premises software operating in Russia.
“Many customers in Russia that are using our existing on-premises solutions will still be able to use their products in this regard,” he said. “It’s a little bit the same as if someone in Russia has bought a car on the 23rd of February. It will still drive, at least until it needs some additional parts that may not be available anymore.”
Help for the Refugee Crisis
SAP also noted its humanitarian efforts in support of Ukrainian refugees, including a total commitment so far of €3.7 million. Plus, the company has offered to convert its office space at locations across Europe into camps and shelters, Mucic said. In addition, the company has launched its Qualtrics tool to provide employees and colleagues the opportunity to register to provide accommodation to refugees and now has the resources to support up to 4,000 refugees. In addition, SAP has donated Ariba solutions to an NGO that is working on medical procurement in Ukraine.
Responding to criticism that it took the company too long to announce its Russia exit, Mucic said winding up business and these kinds of enterprise solutions is very complex. Under normal circumstances, shutting down cloud operations, for instance, would require a year of preparation and then structured implementation, he said.
“We are not in a consumer business. We are selling significantly complex software solutions,” he said. “In light of that we have acted very swiftly, but responsibly.”