Cloud software suite provider Zoho looks to add to differentiated value – and values

Zoho, which has expanded its CRM application into a suite of over 40 applications that sells for $30 per user per month, is proud of some elements of their business and product set that they acknowledge are somewhat offbeat.

Cloud software suite vendor Zoho is gearing up for their Zoholics annual user conference, which this year is in Austin from April 9-11. The company, originally founded in Chennai India, but whose head office is now in Pleasanton CA, has multiple features which set it apart from its competition. While they started out as a CRM vendor, and that remains their best-known application, their flagship offering, Zoho One, offers 40 plus separate applications for a flat fee of $30 per user per month. That’s a price the company insists it won’t change, even as it continues to add new applications. The company has some unconventional ideas for this industry about financing and debt. And in a sector which likes to emphasize commitment to social responsibility, Zoho has some differentiating features as well.

Zoho started out as a CRM vendor focused on the SMB and parts of the midmarket, but Zoho One has dynamically expanded their addressable market, from very large companies to the very small. However, Raju Vegesna, Chief Evangelist at Zoho, says the company is really not that well-known.

“There’s a lot of moving pieces,” he said. “Zoho for a lot of people has been a mystery.”

Zoho, the cloud software company, is one of three companies owned by Zoho Corporation.

“This is our 23rd year in business,” Vegesna said. “We originally started as WebNMS [Network Management Framework], which makes software for telcos. One of our biggest customers used to be Nortel. That was the first evolution of the company Then we added a second company, ManageEngine, which makes enterprise IT management software and has close to 100,000 customers. Zoho is the third company.” The parent corporation, which was originally called AdventNet, renamed itself after the Zoho suite in 2009, joining the ranks of companies which renamed themselves after their best-known product.

“In 2000, we were a Salesforce customer,” Vegesna said. “They raised the price, so we developed Zoho.”

Vegesna acknowledged that Zoho is a highly unusual company with some highly unusual ideas.

“Who we are as a company influences what we do as a product,” he said. “We challenge conventional wisdom in a lot of ways. We take a philosophical stance on a few things – like debt. We do not like debt. As a company we have zero debt. If we buy or build something, we do it with cash. We are able to do this because we have no investors. We were bootstrapped by the founders. We knew we weren’t ever going to be acquired. We didn’t go public, believing it would mess the company up. We built it out for the long run.”

One conclusion Zoho reached, given their philosophical objection to debt, is that it was problematic to have the company’s future riding on university graduates who could only get to that position by taking on debt.

“As a result, in 2004 we decided we would not mandate a college degree, since it involved taking on debt. Instead, we established Zoho University. It takes kids right out of high school, usually from underprivileged backgrounds, who may not otherwise have taken on higher education. We train them for a year and a half and offer them a job. A year or two in, their performance is about the same as kids who went to college.”

Today about 1500 of Zoho employees came through Zoho University, with most of the initial cohorts – 320 of 350 – still being with the company.

“We couldn’t do this if we were a public company or if we had investors,” Vegesna said. “It lets us maintain the values and culture of the company as we grow, which is the most important thing. Some other companies are trying to follow this model, and we have them to follow it.

“Another crazy thing we do is our own construction for our buildings,” Vegesna said. “We believe there is a correlation between collaboration and how building is shaped. The shape of the building influences how people collaborate. There’s no way a third-party building company could do that.”

Vegesna stressed that Zoho’s unusual philosophy extends to their software.

“On software as well, we think bold,” he said. “Our suite creates all the software you need to run your business. That was odd ten years ago when we started it. Now we have Zoho One, with over 40 different applications for $30 per employee per month. We also run our own business on Zoho One, in over 180 countries.”

None of these applications was acquired. Each was designed from scratch, built on the same platform, and designed to work with the other applications.

“The toughest part of an integration is cultural integration – more than technology integration,” Vegesna said. “We find a challenge with two teams from our own company. Imagine doing that with an acquisition. It would become exponentially harder.”

While Zoho has an enormous number of products of their own, they also design their products to work with competitors.

“With our suite, a customer doesn’t have to enable each of them, if they like other products,” Vegesna said. “We are designed to work with others. Given that we compete with every different application provider, we have to do that. We also work with a good number even though we compete with them. We have about 15 integrations with Microsoft. We have over 100,000 customers using a combination of Google G Suite and Zoho. We compete with Quickbooks on the accounting side, but we work with them with other applications, so we have many customers who use both Quickbooks and us.”

Ultimately, Vegesna said, Zoho has four core strengths.

“First is our breadth of applications,” he said. “Salesforce has less than half of what we do. Second is the depth of these applications. Third is their seamless integration, with all built on the same platform. Fourth is the value, with 40 plus applications playing well together,  and at a price no one else can match.”

With Zoholics taking place in two weeks, Zoho users can expect to see some new applications joining the platform.

“I can say that it is very likely that we will be announcing something new there at our upcoming event,” Vegesna noted.

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