In the days after the Russian invasion of Ukraine, the German software giant SAP stopped all its sales in Russia. But it angered Ukrainian leaders by continuing to provide updates and cloud computing access to Russian customers who were not the target of Western sanctions.
This week, SAP, which makes business software to handle tasks such as logistics and accounting, announced it was taking final steps toward an “orderly exit” from its operations in Russia, a process it said was complicated by the concerns about workers and Russian laws that prohibit unilateral contract termination.
“We’re not in the consumer sector — we sell very complex software solutions,” said Luka Mucic, SAP’s chief financial officer, explaining what he called the “significant complexity” of ending three decades of business in the country.
SAP’s statement went beyond its previous announcements since the invasion, pointing to its “intent” to stop supporting and servicing its products. The withdrawal could erode back office computing at many Russian companies, including state-owned Sberbank, Russia’s largest financial institution. In 2018, SAP created what it called “Russia’s largest cloud project” to manage Sberbank’s 230,000 employees.
SAP’s planned exit follows those of other German companies such as Henkel, maker of household cleaning and hair care products, network provider Deutsche Telekom and the Obi home improvement chain. Still, others remain in Russia and face tough decisions as the war stretches into its next phase.
Among them is car supplier Continental, which on Wednesday said it was forced to temporarily restart production at its tire factory in Kaluga, outside Moscow.
Continental said it supports economic sanctions against Russia. The company stopped production in the country in early March, days after the invasion.
But the company said it was now faced with increasingly strict Russian laws on foreign companies and had to restart the factory to produce tires for the Russian market.
“We’re only doing this temporarily because we want to protect our employees,” said Birgit Hiller, a company spokeswoman. “We’re not going to make a profit.”
Legal obligations also made it more difficult for SAP to end its operations in Russia, the company said. SAP stopped all sales in Russia and Belarus on March 2. Three weeks later, it began actively shutting down the company’s cloud operations in the country.
At that time, cloud services for customers placed under sanctions were discontinued. Other customers were given the option to get their data back, delete or move it to a server outside the country. That offer was met with allegations that SAP supported companies carrying out the murder in Ukraine.
Last month, Ukraine’s President Volodymyr Zelensky reprimanded SAP, Oracle and Microsoft on a Twitter message for supporting “the bloody Russian aggressor.” It was the first time he directly mentioned multinationals.
“Stop supporting your products in Russia, stop the war!” he said.
SAP said Tuesday that while it could not prevent former customers from continuing to use its software, the company was required by law to provide unsanctioned users with options for handling their data.
“The data in data centers belongs to customers, not SAP,” it said.
If companies choose to let SAP move their data to a cloud server outside of Russia, SAP will not renew their contract.
