. Last Updated: 07/27/2016

Sberbank Breathes Life Into Slumbering Market

Last week, Hewlett-Packard announced it had won a mammoth $18 million contract with Sberbank, the Russian Federation Savings Bank, to supply personal computers, servers, networking equipment and peripherals. The deal is, of course, great news for HP shareholders, but it will also be general cause for optimism in the computer business.

Sberbank is a barometer for the whole Russian state sector. If it sneezes, then the computer business catches a cold. Sberbank is the largest single buyer of computers in the entire country. It has 30,000 branches spread across the Russian Federation. Eventually, it will have to automate all of its paper-based operations and transform itself from a Soviet-era organ to a 20th century bank.

Unlike many other Russia-wide bodies, Sberbank has money. In the spring of 1994, Unisys announced a colossal banking automation project with Sberbank worth $127 million. This deal was for what Unisys called a "comprehensive business information management solution" and involved consulting, systems integration, application development, training and the comprehensive automation of commercial banking, clearing and treasury operations at the bank. Next in line was IBM, which closed a multimillion-dollar deal to provide Moscow Sberbank with an ES/9000 mainframe computer, capable of connecting thousands of users, and later several thousand PCs.

Then, in summer 1994, Sberbank of the Russian Federation placed another massive order for PCs, network equipment and peripherals from Hewlett-Packard worth $23 million. Finally, in the autumn of 1994, AT&T Tridom announced that Sberbank had ordered a "multimillion-dollar" VSAT (satellite) system to connect the 79 Sberbank regional offices with its Moscow headquarters.

But until Hewlett-Packard's success this August, there had been no large Sberbank orders in 1996. The project with Unisys is rolling out very slowly, and only a fraction of the $127 million contract value has so far been shipped. To an outsider, it looks as if all spending plans were put on hold until the uncertainty surrounding elections had passed.

Sberbank was by no means the only organization to behave in this way. All computer suppliers complain that from the middle of last year the state and corporate sectors of the Russian computer market were shrinking. The big spenders had stopped spending.

Since the elections, the computer business has been holding its breath. Everyone is aware of how fast the Russian computer market can grow, but it demands maintaining an uncomfortable balancing act in order to be ready. Being ready means investing. To be prepared for the moment when the man from Sberbank pays a call, a computer company needs to be able to deliver, service and support its products across the whole of Russia. This investment is paid back handsomely if million-dollar orders start to flow. But if the man from Sberbank (or his equivalent) stops calling, then all that preparation can push a company into the red.

Thus Hewlett-Packard's contract should send ripples of relief through all the large computer companies active in Russia. "This deal is certainly an indication that the business is at last picking up," says Justin Lifflander, who heads Hewlett-Packard Russia's corporate account sales team and was instrumental in winning the Sberbank contract.

If things are getting back to normal at Sberbank, then Lifflander says that's good news for all: "[Sberbank] is an excellent indicator of the economic health of the whole country."

Robert Farish is the editor of Computer Business Russia fax: 929-9958, e-mail: farish@sovam.com