Dmytro Popinako: “Replacing 1C and other russian software is a strategic task for Ukraine”
Special project
June 2026
For decades, the russian developer 1C has pushed Ukrainian companies to adopt its accounting systems, creating a dependency that is now difficult to escape. Moreover, the continued use of russian software exposes businesses to a wide range of risks – from data loss and espionage to the inability to plan for the future and scale operations.
An alternative to russian 1C/BAS is the migration to comprehensive solutions from Microsoft, offered by Innoware, a certified Microsoft partner with Microsoft Solutions Partner status, that has successfully delivered more than 500 projects in Ukraine and around the world over its 25 years of operation.
Innoware actively promotes the need for Ukrainian companies to abandon russian software and helps them migrate to modern and secure Microsoft Dynamics 365 ERP, CRM and HR solutions.
Dmytro Popinako, CEO of Innoware, spoke to Ukrainska Pravda about the reasons behind Ukrainian businesses’ dependence on 1C/BAS, the risks associated with continued use of software developed in the aggressor country and the importance of transitioning to international accounting standards.
25 YEARS OF EXPERIENCE AND UKRAINIAN LOCALIZATION OF MICROSOFT DYNAMICS 365
– THIS YEAR INNOWARE CELEBRATES ITS 25TH ANNIVERSARY. COULD YOU SHARE WHICH PROJECTS YOU ARE MOST PROUD OF DURING THIS PERIOD AND WHAT YOUR PLANS ARE FOR THE COMING YEARS?
– Innoware has been operating since 2001. The company is a certified Microsoft partner holding the status of Microsoft Solutions Partner, offering services including implementation, migration and support of Microsoft Dynamics 365 solutions (ERP, CRM, HR).
Over 25 years on the market, we have delivered more than 500 successful ERP and CRM projects for companies of various sizes across different industries. We have clients in 18 countries worldwide, including well-known companies such as Orbico, SOS Kinderdorf, Eurocon, Obolon, Hajster and others.
Innoware is the developer of Ukrainian localization for ERP systems Microsoft Dynamics 365 Business Central and Microsoft Dynamics 365 Finance & Supply Chain Management.
We began working on Ukrainian localization for accounting systems from the very foundation of our company in 2001. Our first client was the Zhytomyr Butter Plant “Rud”, where we implemented a Microsoft solution, making it one of the first projects in which local accounting was realized in an “international” system. Since then, we have continued to enhance the localization and invest in its development. It is a living product that evolves and improves in line with changes in legislation requirements and business practices. Our plan is to continue this work.
Why do we develop localization? Because accounting practices in Ukraine differ significantly from international standards. Unfortunately, we still operate under many post-Soviet rules and as a country, we spend enormous resources complying with the requirements of a burdensome, inefficient and outdated fiscal system.
Our companies are forced to maintain separate tax, financial and management accounting, as well as prepare monthly, quarterly, semi-annual and annual reports. We serve clients abroad and the situation there is very different: they maintain a single accounting system and submit reports once a year based on the same data they use for internal financial reporting, which is readily accepted by local tax authorities.
Given that software developed in russia holds a monopolistic position in our market, it effectively “preserves” the paradigm in which Ukrainian enterprises operate, significantly slowing down the country’s economic development.
According to a 2024 report on the state of tax administration in Ukraine conducted by CASE Ukraine, maintaining tax and accounting records under the general taxation system with VAT requires an average of 478.2 person-days per year. This is far higher than in other developed countries. For example, on average worldwide, entrepreneurs spend 234 working hours per year on tax administration (not person-days, but hours), according to the PwC “Paying Taxes 2020” report for the World Bank (based on 2018 data). This is approximately 29 person-days per year, or more than 16 times less than what a VAT taxpayer spends on tax administration in Ukraine. In EU countries, this indicator is 161 hours per year or about 20 person-days, which is almost 24 times less than in Ukraine. And this is only for VAT tax administration.
Therefore, we need to harmonize legislation and adopt international financial reporting standards as a basis – this will have a positive impact on GDP growth, improve Ukraine’s investment attractiveness and support the development of local enterprises. The migration to international enterprise management systems is an important step in this process, as it will help prepare for harmonization and provide Ukrainian business owners and managers with a modern tool used by companies in developed countries around the world.
HOW THE WAR AFFECTS THE COMPANY
– DOES THE WAR IN UKRAINE AND THE MILITARY ACTIONS IN THE MIDDLE EAST AFFECT INNOWARE’S LONG-TERM PLANNING? DOES THE COMPANY INCLUDE THE POSSIBILITY OF A CEASEFIRE OR A TRUCE IN ITS FORECASTS?
– There is, of course, an indirect impact. As for forecasts, it is unlikely that anyone can say exactly when the war will end. So we do not expect that, for example, tomorrow the war will move into some other stage and the hostilities will stop.
But we also see that businesses continue to operate. We receive requests from different parts of the world: the USA, Africa, the Middle East and Europe – based on this, we plan our activities. In other words, we will continue providing services while also expecting new clients.
– INNOWARE, AMONG OTHER THINGS, OPERATES IN THE UNITED ARAB EMIRATES (UAE) MARKET. DOES THE CURRENT ESCALATION IN THE MIDDLE EAST AFFECT YOUR BUSINESS PROCESSES, CLIENTS AND PARTNERS?
– We fully launched in the UAE about a month before the war in the Persian Gulf began. The number of requests from the UAE has increased and we saw a rise in demand, so we decided to open an office – now we already have three clients there. If we talk about earlier periods, 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? From our observations, the initial reaction in the UAE was similar to what we saw in Ukraine at the beginning of the full-scale war – business activity slowed down and there was a significant outflow of people.
It has now been more than two months and we are seeing the opposite – people and businesses are returning, and companies continue to operate despite the fact that strikes, as we see in the news, are still ongoing. In other words, they are gradually adapting as well. And it is good to hear that Ukraine is helping with protection against drone attacks.
HOW 1C BECAME A “MONSTER” AND WHAT SOLUTIONS INNOWARE OFFERS
– AT THE BEGINNING OF 2026, THE STATE SERVICE OF SPECIAL COMMUNICATIONS AND INFORMATION PROTECTION OF UKRAINE (SSSCIP) BANNED THE USE OF RUSSIAN SOFTWARE 1C/BAS IN STATE AUTHORITIES AND CRITICAL INFRASTRUCTURE FACILITIES. IN YOUR ASSESSMENT, HAS THIS BAN WORKED?
– The regulatory decision exists, but in my view, it has had little impact. A large number of enterprises – up to 80% in my estimation – that previously used this hostile software continue to use it.
By the way, not all products made it into the list of the SSSCIP. 1C/BAS are the most widespread and well-known, but on state-owned enterprises other hostile systems are also widely used – in particular, “Parus” and “Galaktika” are quite common. However, they have not yet been included in the regulator’s list.
– WHY, IN YOUR OPINION, ARE STATE-OWNED COMPANIES NOT VERY ACTIVELY ABANDONING RUSSIAN SOFTWARE?
– It should be understood that migrating from 1C/BAS after many years of working with them requires enormous effort – it demands patience, willingness and a great deal of knowledge. There is often a lack of knowledge, as state-owned companies are very frequently focused only on their core operations, and based on our experience, new information systems implementation projects take place only once every 8-10 years.
In addition, our state-owned companies are required to comply with public procurement legislation. However, the nuance is that this legislation is designed for the procurement of tangible assets that have physical characteristics and a price corresponding to those parameters. The implementation of information systems, on the other hand, is consulting – that is, Progressive Elaboration, a gradual refinement and development process, which makes it impossible to define a fixed price in a contract.
We do, of course, define indicators for estimating the cost of services, but we cannot name the exact amount before the project is completed, as the implementation of new systems requires testing and clarification. In other words, we do not know in advance how much effort will be required – it is an approximate estimate, whereas public procurement procedures require a fixed price.
However, there is no way to determine how much effort is needed to implement a software product for a specific enterprise, because all companies are completely different. This procurement approach needs to be improved.
It is also necessary to change the overall governance approach in state-owned companies – it should not differ from the management of private businesses: management should have the same freedoms and opportunities. However, state-owned enterprises are currently, as we all hear in the news, highly regulated and strategies are often “imposed from above”.
– WHAT ABOUT PRIVATE COMPANIES: IS SUCH A REGULATORY DECISION ALSO POSSIBLE FOR THEM? AND IS IT TECHNICALLY POSSIBLE TO FULLY RESTRICT THE USE OF HOSTILE SOFTWARE FOR UKRAINIAN BUSINESSES, SIMILAR TO THE BLOCKING OF VK AND OK.RU?
– If a software product is installed on a company’s own equipment, on its own server, or in a private cloud (rented computing resources), it cannot be blocked. If the product is used as a “service” – providing access to software installed on the vendor’s servers or those of its partners – then such access can be blocked. However, it would require continuous monitoring to ensure that the address has not been changed, since such applications are not needed to have a permanent name like the websites of the banned social networks, and their addresses can even be changed automatically.
VK and OK.ru are essentially popular websites and brands associated with domain names, making these domains easy to block. The domains where accounting systems are hosted are not as well-known and do not have such popular names. In addition, a small program can be created that runs on the customer’s computer, and he will receive a new address whenever it needs to be changed – and that’s it.
Blocking through administrative means is feasible if the addresses from which, for example, cyberterrorists operate are monitored, but this is difficult because they change them dynamically. In short, this is complex work and I am not sure whether it can be done in practice. This question should be answered by information security specialists and government authorities responsible for cybersecurity.
Furthermore, the Union of Business Automators continues to operate, offering training courses and licensed access to BAS. If this union were banned, a large number of Ukrainian enterprises would be at risk, as their accounting is maintained 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 may be able to conduct espionage or gain leverage over Ukrainian enterprises. They are, in a sense, an “atomic bomb” in cyberspace. But they must be eliminated competently and gradually, taking into account the number of users, so as not to disrupt business operations and to give time for migration to new systems.
Unfortunately, as a country, we are currently dependent on 1C/BAS. This is comparable to the “Druzhba” oil pipeline: if we want to receive funding from the EU and later join the bloc, we were forced to unblock the pipeline and allow the enemy to earn revenue from oil exports for some time. The situation here is similar: banning this software in the commercial sector is a significant step and must be carefully prepared.
– IF WE TRACE THE HISTORY, WHAT HAS CAUSED 1C TO REMAIN THE UNCHANGED CHOICE FOR SO MANY BUSINESSES OVER THE YEARS? WHAT IS IT – EASE OF USE, AFFORDABILITY, OR THE LACK OF ALTERNATIVES AT THE TIME?
– I have been working on ERP and CRM systems since 1994. Back then, accounting software in Kyiv was overwhelmingly distributed illegally through the Petrivka market: various products were sold on CDs and floppy disks, including software from the russian company 1C.
In russia, legislation restricting copyright infringement was adopted earlier, which allowed 1C to start collecting revenue from its customers there, while Ukraine did not have such restrictions for many years. As a result, the russian vendor was able to generate funds from its domestic market and reinvest them in product development, which enabled it to gain an advantage in terms of capabilities and functionality. Later, Ukrainian enthusiasts localized the product.
1C eventually realized that it had gained control of our market, so it opened a representative office in Ukraine, through which it lobbied for stronger copyright protection, and our lawmakers subsequently adopted the relevant legislation.
1C ended up controlling a monopolized market with a large user base: the company banned illegal use and started collecting payments from everyone who wanted to operate legally, generating major revenues from our country over decades. These revenues were, of course, reinvested into aggressive marketing, expanding the range of features and cooperating with local distributors. This led to its current dominance – we are, in fact, dealing with 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 tackled. Many companies contact us regarding migration, as this is a major challenge for them.
That is why Innoware promotes, within the Ukrainian business environment, the rejection of russian software and the migration to Microsoft ERP, CRM and HR solutions as an effective step toward Ukraine’s victory in the cyber war against the aggressor state.
– WHAT FACTORS MAY PREVENT BUSINESSES FROM SUCH A MIGRATION?
– The biggest limiting factor is budget – namely the need to make an investment now, in times of uncertainty. Companies are currently, and this is an objective reality, cutting costs significantly and many simply do not have the financial capacity to migrate to a new software solution. Everything else is more about practical aspects.
In terms of the migration we offer, small companies can purchase ready-to-use, pre-configured solutions 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 ranges from 1,200 to 20,000 USD, depending on the package of additional services. The implementation time for such a configuration is from one month.
In larger companies, in addition to accounting systems, a vast amount of other software is used that needs to be integrated, so developing a single integration alone is not possible. This greatly affects the project, its implementation time and cost.
Package solutions for large enterprises are usually not fully suitable, because the larger the company, the more unique processes and specific requirements it has that need to be additionally implemented. However, pre-configured packages can be used as a foundation, after which all company-specific details and unique requirements need to be further customized. In other words, each such project must be evaluated individually – there is no universal template.
– IN JULY 2025, BILL NO. 13505 WAS REGISTERED IN THE VERKHOVNA RADA OF UKRAINE, PROPOSING A GRADUAL MIGRATION TO SECURE DOMESTIC OR INTERNATIONAL SOFTWARE. WHAT DOES THE LAW PROVIDE FOR AND WHY HAS IT STILL NOT BEEN ADOPTED?
– It is envisaged that all prohibited software products will be removed from operation by January 1, 2030. The main provisions of the bill will come into force 6 months after its publication, while the sanctions block will take effect on January 1, 2030.
The bill was supposed to be put to a vote in the first reading back in November, but unfortunately, as we see, the work of the Verkhovna Rada has been heavily affected by the “Mindichgate” – at the moment, to put it bluntly, this is not a priority.
WHAT DANGERS DOES RUSSIAN SOFTWARE POSE
– WHAT RISKS DO COMPANIES THAT CONTINUE TO WORK WITH RUSSIAN SOFTWARE EXPOSE THEMSELVES TO?
– In addition to reputational risks, it is important to understand that your data is under the scrutiny of the aggressor state. I am referring to backdoors – they are used both for espionage, intelligence gathering and the theft of sensitive data. We all remember the large-scale multi-stage cyberattack Petya/NotPetya in 2017 and the damage it caused to the state, which amounted to billions, as many companies were unable to resume their operations at all because all their data had been destroyed. This is a substantial risk, so we recommend that companies using 1C/BAS move them to an isolated network, with no remote access from the internet.
DEPENDENCE OF UNIVERSITIES ON 1C
– 8-10 YEARS AGO, AT LEADING ECONOMIC UNIVERSITIES IN UKRAINE, STUDENTS IN ACCOUNTING AND AUDITING PROGRAMS STUDIED 1C, WHILE SOFTWARE FROM SAP OR MICROSOFT HAD TO BE LEARNED INDEPENDENTLY OR DURING INTERNSHIPS OR THEIR FIRST JOBS. HAS THE SITUATION CHANGED SINCE THEN? DOES 1C STILL DOMINATE?
– According to our observations, 1C, unfortunately, still dominates. At the same time, through our ongoing dialogue with universities, we see that they are gradually beginning to understand that this situation of dependence on hostile software needs to be changed.
The problem is also that universities do not pay for basic 1C/BAS versions, whereas licensed access to Microsoft packages requires payment. And many universities in Ukraine unfortunately do not have the ability to allocate funds for this.
We are in dialogue with Microsoft, in particular to enable Ukrainian universities to obtain special licensing terms.
The original article is on Ukrainska Pravda.
INNOWARE USA
501 Silverside Rd, Ste 105, # 4995,
Wilmington, Delaware, 19809-1376,
United States
Tel.: +1(302)4672024
E-mail: info@innoware.com
INNOWARE UAE
Premises 407-FZBA 055, 4th Floor, Sheikh Rashid Tower, Dubai World Trade Centre,
Dubai, United Arab Emirates
Tel.: +971588894591
E-mail: info@innoware.ae
INNOWARE UKRAINE
3, Sholudenka St., office 204 (Cubic BC)
Kyiv, Ukraine, 04116
Tel.: +380(44)4902220
E-mail: info@innoware.com
