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What Technologies will Help Russia to Become a Leader in Information Technology? Interview with Alexey Katkov, Sitronics Group BoD Chairman, Sistema JSFC Managing Partner, and with Nikolay Pozhidaev, Sitronics Group President

Unmanned marine vessels, private space projects, Russian IТ equipment. New solutions that change the national economy. Today we’ll talk upon promising projects in the sphere of information technologies.

Sitronics Group is a Russian IT company implementing digital projects for the state and for private businesses. It introduces digitalization into strategic branches of economy, into ship navigation and marine transportation. It implements integrated solutions for smart cities, including security solutions. The company develops software and provides systems integration. At the end of 2020, the company was in the top three largest providers of video surveillance solutions in Russia. It is one of the top 20 largest Russian IT companies in terms of net sales. Sistema JSFC owns 100% of Sitronics Group shares. Sphere of Interests show welcomes Alexey Katkov, who is the Chairman of Sitronics Group board of directors and Managing Partner of Sistema JSFC, and Nikolay Pozhidaev, Sitronics Group President.

Good day, Alexey, Nikolay, glad to see you!

Alexey Katkov: Good day!

Nikolay Pozhidaev: Hello! The first question is for you, Alexey. What is the today’s situation on the Russian IT market and what trends can you highlight for us?

Alexey Katkov: The overall concept of an IT market is rather general and vague. It can refer to electric vehicles and digitalization of lumber production, for example. Traditionally, the IT market is understood as production of all sorts of hardware and software. This year we have seen a considerable growth of this industry. I believe the nine-month’ growth is at about 13% so far.

Well, what causes this growth?

Alexey Katkov: First, it is people’s desire to consume everything online, so the market is adapting to that. Second, without a doubt, the governmental focus on it has certain influence as well. For example, beacon projects. Sitronics participates in two of those, and we see government’s support and desire to accelerate their development.

Nikolay, please tell us in what way the current digitalization ambitions are reflected in the company’s strategy.

Nikolay Pozhidaev: The basis of our strategy is to offer digitalization services to our commercial clients. We create models for the oil and gas sector, for timber industry, and for the agriculture. We are focusing on six or seven industries that are, in our opinion, ready for digitalization.

We determined some key areas to focus on. These are beacon projects, as Alexey has mentioned. These include autonomous ship navigation and electric vehicle charging infrastructure. The first area of focus is to make the water transport as safe and efficient as possible. As a matter of fact, according to the statistics, 90% of water incidents are usually attributed to some human factor. Our company develops products that neutralize these factors, which can often be hazardous.

Electric vehicle charging infrastructure includes the development of the infrastructure for a more economically viable combustion engine, for the mechanisms that are more eco-friendly. We’ve already built our networks in some cities and are now proceeding to expand them. We not only build infrastructure, we develop the software as well.

Alexey Katkov: Let’s say, Sitronics makes a major contribution to the national ESG index.

Nikolay Pozhidaev: Yes, we understand the importance of economic viability and efficiency. If ships can pass the Northern Sea Route in two-thirds of the time required today, it will mean a substantial reduction of emissions per each ton of transported goods. Therefore, it is absolutely applicable to the ESG.

Nikolay mentioned several areas of focus. Which industries are the most promising, in your opinion?

Alexey Katkov: Nikolay hasn’t mentioned one  industry, satellite development. This industry is closely related to one of the beacon projects. I’m talking about autonomous ship navigation. Only satellites can provide the required information for ships to navigate safely and correctly. This is very important for the Northern Sea Route. Everything related to ice thickness, ice piling and meteorological conditions directly affects safety.

We are trying to participate in each project in such a way as to have a robust product. To have a satellite cluster for the sounding purposes, and to have mechanisms for unmanned transport, in particular unmanned marine transport.

Nikolay, tell us more about the unmanned technologies in marine transport. What solutions does your company offer? How will they help avoid such emergencies as Suez Canal blockage, caused by human error, the captain’s mistake?

Nikolay Pozhidaev: We develop and offer three groups of systems. The first group includes the systems installed onboard a vessel. The vessel itself has to be autonomous, it is our objective. Hence, we need a set of systems that totally control the vessel with or without a crew, because today we can’t remove a crew from the vessel, mostly because of legal restrictions.

The second group of systems includes onshore monitoring systems for navigation safety assurance and informational support of each vessel. There are onshore radar clusters that transmit their information to each vessel to keep it moving. Port systems also belong to this second group.

The third group is data acquisition and processing systems. These are satellite data from remote Earth sounding, or underwater echo sounding data.

This also includes combined data from unmanned craft, both floating and flying. In some situations, unmanned aircraft can help collect information to help with the efficient navigation along the route, in particular when it comes to challenging environments such as the Northern Sea Route.

Alexey, how can space technologies help in this area?

Alexey Katkov: Space technologies will help everybody in everything. In my opinion, we as a country should follow the international practices and attract private initiatives as much as possible.

We suggest the following process for small satellites. A satellite is manufactured, checked at the base for resistance to solar radiation, for aerodynamics, and then it’s launched. While it is working, we monitor the advantages, disadvantages, deviations, so that the next one is launched with these amendments implemented. The process is very fast. We are not talking about a multiton satellite that can damage the Mir space station. It is actually a fairly small object almost invisible in outer space, which nevertheless performs a very important task. Now, state owned companies buy a lot of cartographic information abroad. It happens because their businesses have long been launching in orbit such home-made toys, I don’t mean this negatively, but these toys nevertheless provide the required data.

We are trying to take the initiative and show that we are ready to do what the entire world already does. We will be providing the state and private enterprises with the required data very soon by manufacturing task-specific satellites.

Well, Sitronics already has several satellites in orbit.

How long have they been there, Nikolay?

Nikolay Pozhidaev: Within the last two years, we launched 8 spacecraft. Today, one of our satellites has a resolution of 6 meters. The satellite allows assessing environmental conditions in a given region or changes in the landscape or structures in a certain area. The same image also allows monitoring by gradients any changes in the ice environment. In the future it will be possible to analyze changes in much smaller objects. Even today we can monitor forested areas; soon we’ll be able to solve some very local tasks.

Alexey, I’d like you get your opinion on private cosmonautics. Do you think it is possible in Russia at all?

Alexey Katkov: Yes, of course, but only with the government’s involvement. The government has to provide support either via contracts or via grants. While it is a very necessary and important thing to do, it is also very capital-intensive business. To provide a high-quality solution like that one needs to establish a cluster of several thousands of satellites.

Manufacturing satellites requires certain investments, as well as launching each satellite into orbit. Launching is a rather costly affair.

If the state provides no government contract or no grant to help a private investor, they will invest their own money to create a cluster and they will get a return on this investment, but it will take a lot more time.

Please give some advice to investors, what areas are better for investing, which of them will grow, in your opinion?

Alexey Katkov: I think it is good to set sights and study investments in building the satellite components base.

It’s a certain pain point right now, and the component base does not mean microchips.

The component base is a simple camera, which enables high-quality recording. It is a camera that has to meet the same radiation protection requirements and to withstand high temperatures.

When we make satellites, we face such problems. We have a satellite, but we have no equipment for it, so we need to find somewhere those cameras, or radars.

Is this equipment domestic or is it imported?

Alexey Katkov: It is kind of both, domestic and imported.

In what proportion?

Nikolay Pozhidaev: Optical satellites are about eighty percent domestic. With radar satellites the situation is a little worse. We’re developing them ourselves, and hope that in two to three years we’ll have them sixty to seventy percent domestically produced.

Alexey Katkov: The entire first part of our interview was devoted to industrial things — what businesses need, what the state needs and so on. However, digitalization is, first of all, for the people, and, second, for businesses.

If we move away from more complicated subjects and talk about something every day, let’s say about urban development, which is everything related to smart video surveillance. In case of a slightest deviation from the basic behavior pattern, cameras will automatically send a signal that something is going on to the central panel. Or an operator might see that the situation is out of the ordinary, and it’s related to people’s behavior at bus stop, for eaxmple. If a bus stop is overcrowded, or there are more people than should be, that will mean that something is wrong on the route, that a bus is stuck somewhere.

Sitronics actually works with this, too. We help the city with such innovations and solutions.

Nikolay, what Russian cities, apart from Moscow, are becoming digital?

Nikolay Pozhidaev: Actually, there is a rather long list of programs, including the ones funded by the state that are aimed at making cities smarter. They are constantly evolving, and we pay sufficient attention to smart cities development. We participate in projects of smart transport systems, and implement such systems. We are present everywhere, from coast to coast, that is from our branch in Vladivostok to St. Petersburg.

Russia is actively supporting the ecological trend. There are more and more electric vehicles; however, there is still the issue of charging stations. How can it be solved, in your opinion?

Nikolay Pozhidaev: One of the beacon projects that we already discussed provides funding for the construction of infrastructure and incentives for purchase of electric vehicles. The regulatory framework will be finalized and issued; we eagerly await it. We expect it will help us save significantly on networks construction.

Right now, we are developing our in-house software, finalizing user software to make this process very convenient and comfortable for any consumer and for any electric vehicle owner.

Your company also produces servers. Why have you decided to work in this area?

Nikolay Pozhidaev: It is an absolutely universal device that is needed in almost any project. Today we are developing three ranges of servers for absolutely different tasks. Our main goal today is to produce servers based on domestic CPUs Elbrus and Baikal.

By the middle of next year, we’ll have samples on the market.

To what extent are we currently dependent on import?

Nikolay Pozhidaev: Microchips are in short supply today. Their production is at full capacity, and we, actually, have some problems today too. The current version of our server uses 4 Elbrus microchips, i.e. 4 CPUs are needed for one server. So, it is a pretty big problem for a manufacturer to fill the market with such large quantity of CPUs.

And the last question. What do you think, will Russia be able to become the leader in the IT sphere?

Alexey Katkov: No doubt, Russia is not just making progress, but it is already among the leaders.
As regards the unmanned marine transport, today Russia is among the leaders, if not the leader in the market.

Nikolay Pozhidaev: I think, in smart cities we are surely among the leaders, and the experience of Moscow is now studied by large global agglomerations, it is absolutely certain.

Alexey Katkov: With your permission, I’ll add this. Russia is an obvious and absolute leader in digitalization of state services for the general population, such as taxes, public services and so on. Ask anybody, everyone admires how it all works. Therefore, we should be proud of the areas where we achieved great results, and catch up with the rest. That is exactly what we are trying to do.

Thank you very much for the interview! Let’s hope that Russia will take the top spot!

Alexey Katkov: We hope so too. Thank you! We are sure of that!

Nikolay Pozhidaev: Thank you!

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