Dmytro Popinako: “Replacing 1C and other Russian software is a strategic task for Ukraine”
Special project
June, 2026
The Russian developer of 1C, by forcing Ukrainian companies to access its accounting systems for decades, has driven them into a dependency that is now difficult to escape. Moreover, continued use of Russian software exposes businesses to a whole range of risks – from data loss and espionage to the inability to plan for the future and scale.
An alternative to Russian 1C / BAS is the transition to comprehensive solutions from Microsoft, which the company offers Innoware – a certified Microsoft partner with the status of Microsoft Solutions Partner, who has over 500 successfully implemented projects in Ukraine and the world over 25 years of activity.
Innoware actively promotes the need for Ukrainian companies to abandon Russian software and helps them switch to modern and secure ones ERP, CRM, and also HR Microsoft Dynamics 365 solution.
CEO Innoware Dmytro Popinako told UP about the reasons for the dependence of Ukrainian business on 1C / BAS, the danger posed by the continued use of software developed by the aggressor country, and the importance of transitioning to international accounting standards.
– THIS YEAR, INNOWARE COMPANY IS TURNING 25 YEARS ANNIVERSARY. TELL US WHAT PROJECTS YOU ARE PROUD OF AT THIS TIME. AND WHAT ARE YOUR PLANS FOR THE NEXT FEW YEARS?
– Innoware has been operating since 2001. The company is a certified Microsoft partner with the status of Microsoft Solutions Partner, offering, in particular, services for the implementation, migration and support of Microsoft Dynamics 365 solutions (ERP, CRM, HR).
Over 25 years in the market, our experience includes over 500 successfully implemented ERP and CRM projects for companies of various sizes from various industries. We have clients from 18 countries around the world. Among them are such well-known companies as Orbico, Sos Kinderdorf, Eurocon, Obolon, Heyster and others.
Innoware is a developer of Ukrainian localization for ERP systems Microsoft Dynamics 365 Business Central and Microsoft Dynamics 365 Finance & Supply Chain Management.
We have been engaged in Ukrainian localization of accounting systems since the founding of our company – in 2001. Our first client was the Zhytomyr butter factory “Rud”, where we implemented a solution from Microsoft, and this was one of the first projects where local accounting was implemented in an “international” system. Since then, we have been improving localization and investing in its development. This is a living product that improves and develops with changing legislative requirements and business practices. The plans are to continue this work.
Why do we do localization? Because the principles of accounting in Ukraine are very different from international standards. Unfortunately, we still have post-Soviet rules, and we, as a country, spend huge resources on complying with the requirements of a burdensome, inefficient and outdated fiscal system.
Our companies are forced to keep separate tax, accounting, and management records, monthly, quarterly, semi-annual, and annual reports. We serve clients abroad – there is no such thing: they keep one record, submit reports once a year based on the data they use to prepare internal financial statements, and local state tax services calmly accept it.
Considering that Russian-made systems occupy a monopoly position in our market, they thus “preserve” the paradigm in which Ukrainian enterprises are located, and this greatly inhibits the country's economic development.
According to the report on the results of the study of the state of tax administration in Ukraine (2024), conducted by CASE Ukraine, an average of 478.2 man-days per year are required to maintain tax and accounting records under the general VAT taxation system. This is ten times more than in other developed countries. For example: in the world, on average, entrepreneurs spend 234 working hours per year on tax administration (not man-days, but hours), which is noted in the PwC report “Paying Taxes 2020” for the World Bank (analysis of 2018 data). This is approximately 29 man-days per year, or more than 16 times less than a VAT payer spends on tax administration in Ukraine. In EU countries, this figure is 161 hours per year, or about 20 man-days, which is almost 24 times less than in Ukraine. And this is only about the administration of value-added tax.
Therefore, we need to harmonize legislation and adopt international financial reporting standards as a basis - this will have a positive impact on GDP, improve Ukraine's investment attractiveness and develop Ukrainian enterprises. The transition to international systems for managing enterprises is an important step on this path, which will allow us to prepare for harmonization and provide Ukrainian entrepreneurs and managers with a modern tool used by enterprises in developed countries around the world.
– DOES THE WAR IN UKRAINE AND MIDDLE EAST COMBAT INFLUENCE INNOWARE’S LONG-TERM PLANNING? DOES THE COMPANY INCORPORATE THE LIKELIHOOD OF A CEASEFIRE OR ARMISTICE IN ITS FORECASTS?
– There is, of course, an indirect impact. As for forecasts, hardly anyone can say exactly when the war will end. That is, we do not expect that, conditionally, tomorrow the war will move to some other stage and the fighting will cease.
But we also see that businesses continue to operate. We receive requests from different parts of the world: the USA, Africa, the Middle East, Europe - based on this, we plan our activities. That is, we will continue to provide services, also expecting new clients.
– INNOWARE, AMONG OTHERS, WORKS IN THE UNITED ARAB EMIRATES (UAE) MARKET. IS THE CURRENT ESCALATION IN THE MIDDLE EAST AFFECTING YOUR BUSINESS PROCESSES, YOUR CLIENTS AND PARTNERS?
– We fully opened in the UAE about a month before the Gulf War started. The number of inquiries from the UAE increased, we saw an increase in demand, so we decided to open an office – now we already have three clients there. If we talk about previous periods, then since 2012 we have had a long-standing client in the UAE – the British tea manufacturer Ahmad Tea.
Did the war against Iran have an impact? According to our observations, the first reaction in the UAE was similar to that in Ukraine with the start of a full-scale war - business quieted down, there was a large outflow of people.
Now, more than two months have passed, and we see the opposite – people and businesses are returning, companies continue to work despite the fact that the shelling, as we see from the news, continues. That is, they are also slowly adapting. And it is nice to hear that Ukraine is helping to defend itself from drone attacks.
– AT THE BEGINNING OF 2026, THE STATE SPECIAL COMMUNICATIONS FORBIDDEN USE OF RUSSIAN SOFTWARE 1C / BAS IN GOVERNMENT BODIES AND CRITICAL INFRASTRUCTURE FACILITIES. IN YOUR ASSESSMENT, HAS THIS BAN WORKED?
– There is a decision by the regulator, but, according to my observations, it did not have a special impact. A huge number of enterprises – according to my estimates, up to 80% – have previously worked on this hostile software, and continue to do so.
By the way, not all products have made it to this list of the State Special Communications Service. 1C / BAS are the most common, by hearsay, but other hostile systems are also used very often at state-owned enterprises - in particular, "Parus", "Galaktika" are quite common. They have not yet been included in the regulator's list.
– WHY, IN YOUR OPINION, ARE STATE-OWNED COMPANIES NOT TOO ACTIVE IN REJECTING RUSSIAN SOFTWARE?
– It is worth understanding that the transition from 1C / BAS after many years of working with them is a huge effort, you need to have patience, desire and a lot of knowledge. There is little knowledge, since state-owned companies very often focus only on their core activities, and projects to implement new information systems, according to our observations, take place once every 8–10 years.
In addition, our state-owned companies must comply with procurement legislation. But the nuance is that this legislation is designed for the procurement of material objects that have physical characteristics and a price that meets these parameters. And the implementation of information systems is consulting, that is, Progressive Elaboration - gradual clarification and development, which makes it impossible to have a fixed price in the agreement.
Of course, indicators are being set to assess the cost of services, but we cannot name the exact amount until the project is completed, because the implementation of new systems requires testing and refinements. That is, we do not know in advance how much effort needs to be made - this is an approximate estimate, and the legislative procurement procedure requires a fixed price.
However, there is no way to determine how much effort is needed to launch a software product for a specific enterprise, because all companies are completely different. This approach to procurement needs to be improved.
And we need to change the management style of state-owned companies in general – it should not differ from the management of private businesses: management should have the same freedoms and opportunities. And state-owned enterprises are now, as we all hear from the news, highly regulated, and their strategies are often “given down” from above.
– WHAT ABOUT PRIVATE COMPANIES: IS IT POSSIBLE FOR THE REGULATOR TO MAKE THE SAME SOLUTION FOR THEM? AND IS IT TECHNICALLY POSSIBLE TO COMPLETELY RESTRICT THE USE OF HOSTILE SOFTWARE FOR UKRAINIAN BUSINESS, USING THE EXAMPLE OF BLOCKING VK AND OK.RU?
– If the software product is installed on a company-owned server, on its own server or in a private cloud (rented computing power), then there is no way to block it. If the product is used as a “service” – providing access to software installed on the manufacturer’s or its partners’ servers – then such access can be blocked, but constantly monitor whether the address has been changed, because such applications do not necessarily have a permanent name, like the name of the website for the aforementioned prohibited social networks, and changes can even be made automatically.
Both VK and OK.ru are, in fact, popular websites, brands associated with a domain name, and it is easy to block these domains. The domains on which the accounting systems are located are not so well-known and do not have such popular names. In addition, you can make a small program that will be on the customer's computer, he will receive a new address if he needs to change it, and that's it.
It is possible to block administratively if you monitor the addresses, conditionally, of the cyberterrorists, but this is difficult, because they change them dynamically. In short, this is a difficult job, and I am not sure whether it is even possible. This question should be answered by information security specialists and state bodies dealing with cybersecurity.
In addition, it continues to function Business Automation Union, which offers training courses and licensed access to BAS. If the activities of this association are banned, a huge number of Ukrainian enterprises will be at risk, because their accounting is carried out using this software.
Therefore, in the context of prohibitions, economic security must also be taken into account. Yes, 1C / BAS are hostile products through which Russians can spy or gain leverage over Ukrainian enterprises. This is a kind of atomic bomb in cyberspace. But it must be eliminated competently and slowly, taking into account the number of users, so as not to lead to a halt in the activities of enterprises and to give time to transition to new systems.
Unfortunately, as a country, we are currently dependent on 1C / BAS. It's like with the Druzhba oil pipeline - if we want to receive funding from the EU and then join the bloc, we were forced to unblock the "pipe" and allow the enemy to earn on oil exports for a while. Here the situation is similar: banning this software for the commercial sector is a very important step and we need to prepare for it carefully.
– IF YOU TAKE A CHRONOLOGICAL LOOK, THERE ARE REASON WHY 1C HAS BEEN AND REMAINED THE ESSENTIAL FOR MANY BUSINESSES FOR SO MANY YEARS. WHAT IS IT – CONVENIENCE, CHEAPNESS, THE ABSENCE OF ALTERNATIVES AT THAT TIME?
– I have been working with ERP and CRM systems since 1994. At that time, accounting programs in Kyiv were mostly distributed illegally at the “Petrivka” market: various products were sold on CDs and floppy disks, including those from the Russian “1C”.
The Russian Federation had previously passed legislation restricting copyright infringement, which is how 1C started collecting money in Russia, while we haven’t had such restrictions for many years. Thus, the Russian manufacturer received funds from its local market and reinvested them in product development, which is how they came out ahead in terms of capabilities and functionality. Then Ukrainian enthusiasts localized this product.
“1C” later realized that it controlled our market - then they opened a representative office through which they lobbied for copyright protection in Ukraine, and our legislators approved it.
That is, a monopolized market with a large user base ended up in the hands of “1C”: the company banned illegal use and began to collect money from everyone who wanted to work legally, for decades receiving significant income from our country. Which, of course, was invested in aggressive marketing, expanding the range of functions and cooperation with local distributors. This led to the current dominance - we are, in fact, facing a monster that will not be easy to overcome.
CRM systems of Russian origin, such as Bitrix24 or AmoCRM, are another monster that needs to be overcome. Many companies contact us about migration, because it is a big problem for them.
That is why Innoware promotes in the Ukrainian business space the rejection of Russian software and the transition to ERP, CRM, and HR solutions from Microsoft as an effective step towards Ukraine's victory in the cyberwar against the aggressor country.
– WHAT STOP FACTORS CAN PREVENT BUSINESS FROM SUCH MIGRATION?
– The biggest stopping factor is budget, that is, the need to make an investment now, in times of uncertainty. Companies, this is an objective reality, are saving a lot now, and many simply do not have the financial ability to switch to a new software product. Everything else is practical aspects.
If we talk about migration, which we offer we, small companies can purchase ready-made configurations developed by our team based on the world's most popular ERP system Microsoft Dynamics 365 Business Central, – «"IW Finance+"», "IW Trade" and «"IW HR&Payroll"». The cost of implementation is from 1200 to 20,000 dollars, depending on the package of additional services. The commissioning period of such a configuration is from 1 month.
In larger companies, in addition to accounting systems, a huge amount of other software is used that needs to be integrated, so it is impossible to do just one integration. This greatly affects the project, its implementation duration, and cost.
Package offers for large enterprises are usually not fully suitable, because the larger the enterprise, the more unique processes and specific requirements it has that need to be additionally implemented, but ready-made packages can be taken as a basis, as a core, and then you need to additionally configure all the specifics and unique requirements of a particular enterprise. That is, each such project must be evaluated separately - there is no universal template.
– IN JULY 2025, A DRAFT LAW WAS REGISTERED IN THE VERKHOVNY RADA No. 13505, WHICH PROPOSES A GRADUAL TRANSITION TO SECURE DOMESTIC OR INTERNATIONAL SOFTWARE. WHAT DOES THE LAW PROVIDE AND WHY HAS IT NOT BEEN ADOPTED YET?
– It is assumed that all prohibited software products must be decommissioned by January 1, 2030. The main provisions of the Law enter into force 6 months from the date of publication, and the sanctions block - from January 1, 2030.
The document was supposed to be put to a vote in the first reading back in November, but, unfortunately, as we can see, the work of the Council was greatly influenced by "Minditchgate" - now, roughly speaking, is not the time for that.
– WHAT RISKS ARE COMPANIES EXPOSED TO THAT CONTINUE TO WORK WITH RUSSIAN SOFTWARE?
– In addition to reputational risks, it is worth understanding that your data is under the sights of an aggressor country. I mean backdoors – they are used for both espionage and reconnaissance and theft of confidential data. We all remember the multi-stage Petya / NotPetya cyberattack in 2017 and the damage it caused to the state – it was in the billions, many enterprises did not resume their activities at all, because all their data was destroyed. This is a big risk, so we recommend that companies using 1C / BAS transfer them to an isolated network so that there is no remote access from the Internet.
– 8–10 YEARS AGO, IN THE LEADING ECONOMIC UNIVERSITIES OF UKRAINE, STUDENTS OF ACCOUNTING AND AUDITING FACULTIES STUDIED 1C, WHILE THEY HAD TO LEARN SOFTWARE FROM SAP OR MICROSOFT INDEPENDENTLY OR ALREADY DURING INTERNSHIPS OR AT THEIR FIRST JOB. HAS THE SITUATION CHANGED SINCE THEN? IS 1C STILL PREDOMINANT?
– According to our observations, 1C, unfortunately, still prevails. At the same time, having a constant dialogue with universities, we see that they are slowly starting to understand that this situation with dependence on hostile software needs to be changed.
Another problem is that universities do not pay anything for basic 1C / BAS, while you have to pay for licensed access to Microsoft packages. And many universities in our country, unfortunately, do not have the means to allocate funds for this.
We are in dialogue with Microsoft, in particular, so that Ukrainian universities can receive special licensing conditions.
The original article is on «"Ukrainian Truth"».
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