In the software space, there are always flurries of product announcements in late Fall. The trick in parsing through these is to determine which ones really matter, which ones will never matter, and, which ones are only interesting to the vendor’s lifelong customers.
Zoho recently unfurled a passel of updates to its upstream product: Zoho One. The updates are definitely noteworthy.
Zoho One and Zoho background
Zoho has two main product lines: Zoho for small businesses and modest functionality needs, and, Zoho One which is targeted for firms with more complex operations, accounting requirements, etc. Zoho One has been growing substantially since the pandemic broke (i.e., 60% growth year over year).
Since its release in 2017, Zoho One has won over 40,000 organizations as customers. Marketed as a ‘business operating system’, Zoho One customers have access to approximately 50 applications with most firms using about 21 of them. The application coverage is quite broad with solutions in many back office (e.g., Finance/Accounting, HR), CRM, online commerce, and other functions. Interestingly, Zoho has a number of very solid collaboration and workforce productivity applications as part of its suites.
Zoho, the company, is atypical of many of the software vendors that North American and European software buyers encounter. The firm is quite large and has over 10,000 employees and more than 70 million users around the world. These users cross hundreds of thousands of companies. Zoho is also one of its own users of its cloud apps.
Zoho goes out of its way to find, hire and train developers in rural markets globally. The company has its headquarters in Austin, Texas now. It has significant operations in Chennai, India as well as additional offices in the United States, India, Japan, China, Canada, Singapore, Mexico, Australia, the Netherlands, Brazil, Saudi Arabia and the United Arab Emirates.
Zoho is interesting on several levels:
- Privacy Pledge – While some vendors shamelessly scrape every piece of transaction data, search queries, website info, etc. to put into their databases for resale, Zoho has its Privacy Pledge. Zoho respects user privacy and does not have an ad-revenue model in any part of its business, including its free products.
- Super low-cost software – Zoho’s products, its technical infrastructure and product platform are built on low/no-cost open-source solutions or its own custom code. Because the products contain virtually no third-party components that must be licensed, the cost to instantiate a new customer is virtually nil.
- Low sales overhead – Zoho uses the web to promote, demonstrate and complete deals. It isn’t paying high salaried (or high commission earning sales professionals) to close deals with prospects. As a result, their cost of sales is very low.
- Low friction contracting – Zoho’s customer agreements are extremely short, easy to comprehend and easy to administer. Zoho is looking to create long-term relationships with customers based on providing a pleasant and economically fair cost structure for customers. It is playing the long-game and not trying to satisfy some short-term quarterly numbers game that many of its publicly-traded competitors are fixated with.
The business issues Zoho One addresses
The target customer of Zoho One is often an organization with champagne tastes and a beer budget. Many of these firms started with the initial Zoho (or other starter ERP or accounting/CRM) solution and have simply outgrown things. Zoho One is the next, material technology evolution for these businesses.
These customers now want things like:
- Better online website experiences for their online stores and the people who transact through them (e.g., support for numerous payment methods, languages, etc.).
- More sophisticated accounting capabilities (e.g., ASC606 support).
- Sophisticated web metrics.
- Greater intra-organization coordination, collaboration and execution.
- All transaction, customer, financial, HR and other information in a single solution/database.
- Ability to connect financial, operational, sales and external data together.
- Ability to peruse this consolidated and diverse data to identify new sales opportunities, insights into buyers’ behaviors, etc.
- Access to advanced technology (like chatbots, machine learning (ML) and smart analytics) without having to hire their own team of data scientists.
And, those are just some of the needs these firms have.
Like ants, these customers love being nimble firms that run between the legs of larger competitors. But they also want to scale quickly and grab big chunks of market share from larger competitors when opportunities present themselves. To scale, they need a solution that doesn’t break the bank. They need a solution that gives them the opportunity to manoeuvre around, and hopefully overtake, the big boys and girls in their space. In short, they need Zoho One to be:
- Inexpensive now and remain affordable for the long-term as the entity scales.
- Scalable and support the company into new markets, new business models, new geographies, etc.
- Focused on more than just internal transaction or accounting data – modern businesses mine and exploit data from all manner of outside entities (e.g., social media, search engines, customer polls/surveys, etc.) to grow their customer revenues, identify new market needs and innovate their offerings. You can’t get that from a payables subledger.
- Providing ever-more sophisticated capabilities that the user can activate when needed.
- Capable of fully exploiting advanced technologies.
- Freeing up the customers’ workforces from routine, tactical data entry tasks, bookkeeping activities, responding to phone/email inquiries from suppliers and employees, etc. They want a solution that lets people do the real work of growing the company instead of documenting past events.
The operating system for business
About 30 years ago, I heard a SMB-focused software firm make the claim that they had created a business operating system. It was an accounting suite of applications for small businesses. That claim, then, was aspirational and hyperbolic. And worse, the software wasn’t all that special save for some of its multi-currency and multi-lingual functionality.
To be a business operating system, a solution has to be more than a bunch of accounting modules. It must:
- Be cosmopolitan – To be cosmopolitan, one must be acutely aware of one’s environs. Businesses don’t need more navel gazing, inwardly focused, back-office technology. They need systems that connect with other internal systems/users as well as all manner of external data and non-accounting data. The insights one can get from strictly internal transaction data is just too limited.
- Serve more than the back office and front office – While many corporate accountants may have never met a journal entry they didn’t like, fewer of them really understand what’s going on in the markets where their firm competes, on the shop floor where their products are made or in social media where the fate of their firm’s products and its customer service capabilities are being discussed at length. In fact, a business operating system should support all manner of suppliers, customers, jobseekers, alumni, retirees, local governments, tax authorities, shareholders and more. The day when a functional solution (e.g., accounts payable) only served the personnel within that department is over.
- Quickly serve insights to all manner of constituents inside and outside of the firm – While ERP vendors have been quite chatty over the last decade re: analytics or insights, their track record in producing analytics, dashboards and insights has been slow and spotty. Some vendors have pushed the responsibility for developing these to their implementation partners. But kicking the can down the road doesn’t absolve them of their hard to use tools.
Zoho announced that its Zoho One suite:
now features embedded and conversational analytics enabling decision makers to drill down into their data and glean cross-departmental insights, all through natural language commands using Zia Insights. By providing 1,500+ pre-built analytics reports and dashboards, critical business decisions can be made with greater precision and speed.
- Be boundary-less – To be boundary-less, a business operating system should have capabilities that go beyond the four walls of the enterprise. Some ERP solutions stop at the edges of Finance and HR. Some go a bit further into CRM or manufacturing. But, regardless of the vendor, few ERP systems are designed to consume external data and service both internal and external users well. To be boundaryless, a solution must have dedicated apps/applets/portals that serve other constituents. Better still these applications are not only self-service but also possess the smarts that pre-fill fields, suggest next actions, work in real-time, are tied to knowledge bases, etc. Done right, these applications take a lot of the workload off of existing internal employees thus allowing them to focus on higher value-added tasks.
Zoho One already has ChatBot capabilities to provide much of this.
- Make Insights as real-time as transaction entry was decades ago – Waiting until month-end for someone to ‘massage’ and join data in an Access DB or Excel spreadsheet is no longer competitively viable. If your competitors move in seconds and your firm’s reaction time is measured in weeks or months, you have a problem.
Full, robust, native (not acquired) suites of products and a common data dictionary have the edge here as data manipulation should not be a required activity. Zoho One’s suite is all home grown.
- Make insights, not transactions or journal entries, the internal business currency employees and executives use – Presenting the owners/executive team with balanced books is still desirable but it isn’t the end goal. Today’s executives don’t want old news. They want you to identify current and upcoming issues, share findings with appropriate colleagues ahead of time and annotate these insights with potential solutions. The executive committee doesn’t want to play hunt and peck with data. They expect you or your systems to spot the anomalies for them and suggest new courses of action for the firm.
Zoho recently announced that:
Zoho One aims to resolve operational, digitization, and retention challenges that businesses encounter. Enhancement categories include: Unified, Real-time Insights for Critical Business Decisions Businesses now have stronger real-time, organization-wide analytics, connecting the dots between data previously lost across departments, teams, and accounts. Powered by Zia, Zoho's AI assistant, and Zoho's BI and Analytics Platform, Zoho One allows users to predict and provide insights across the organization enabling confident decision-making
- Accept, access and incorporate all kinds of information – Yes, it was a simpler time years ago. Business data was often kept in spreadsheets and relational databases. Now, businesses want to marry that data with information from big data sources (e.g., weather forecasts), graph databases, other big data stores, purchased databases, unstructured data, social sentiment data and much more.
The key to this is that a business operating system must consider all kinds of data, not just the information that goes on the financial statements, paychecks and customer orders. To wit, a business operating system must be able to accommodate data from operations (i.e., OT), from banks, from customers, from online marketplaces, from weather technology, from social sentiment sources, etc. People don’t make business decisions solely based on financial data. That’s even more true when you consider that most financial accounting data represents events that already happened (maybe a month or more ago) and not what is happening now or will soon happen.
Businesses need tools that permit quick connections to third-party and non-structured data as well as data storage/access mechanisms to make sense of this data. No or Low-Code tools are preferrable for this so that users are not dependent on the vendor or their IT staff to make and maintain these connections. This is crucial for smaller firms.
According to Zoho, Zoho One now provides a:
self-service data preparation and management tool. Whether users are preparing data from third-party apps or other sources, DataPrep, powered by machine learning, can help business users integrate, model, cleanse, transform, enrich, and catalog data, as well as integrate with Analytics or a third party for new-found insights.
Zoho One also includes a comprehensive platform for developers and business users to create, extend, and integrate. The platform includes newly released no-code tool, Canvas, low-code tool, Zoho Creator, and pro-code platform, Catalyst.
- Support current and future business models – The pandemic clearly reminded firms that being beholden to a single business model could be detrimental to the firm’s fortunes. Companies everywhere changed from brick-and-mortar stores to online retailers. Full-service restaurants recast their operations to a take-out model. Some firms completely changed their product mix (e.g., to manufacture PPE). It is this need to flex business models fast that is driving a lot of interest in new technologies for SMB’s.
Zoho One already possessed an online commerce set of capabilities. They’ve recently added these to their Zoho One product line. According to Zoho:
The addition of Zoho Commerce enables retailers to easily build online shops with the tools needed to construct a website, accept orders, track inventory, process payments, manage shipping, market their brand, and analyze data. Zoho Commerce also integrates with third party payment gateways.
- Take collaboration to a new level – Work From Home (WFH) is obviously changing the business world and companies must create new ways of connecting employees and leaders, one-to-another. While many firms are embracing an internal collaboration tool, there are other constituents that need to be connected to the enterprise as they may be able to contribute new ideas, partnering opportunities, innovations, new hire referrals, etc. Businesses need to embrace customers, suppliers, jobseekers, alumni, etc. in a seamless manner that feels like a part of their business operating system and not another standalone business productivity application.
Work Graph: Zoho's new back-end service, an industry-first for business software, maps interactions between people, resources, systems and processes by studying signals and their strength across the board to build a business-wide work graph that is specific to each individual within the organization. The result of a work graph will be seen in the day-to-day productivity of users across various apps.
Zoho Lens: To facilitate better communication and collaboration in a remote-work environment, Zoho Lens provides remote assistance and guidance to employees through augmented reality(AR) via real-time AR annotation, VoIP and text chat, and more.
- Support the professional growth of employees, business partners, contractors, etc. – As companies have grown more virtual and come to rely on more third-parties and specialists, and, as technologies and businesses continue to change at an ever-increasing clip, the skills of those we rely upon face ever more rapid obsolescence. A core HRMS is no longer sufficient as firms, even small ones, need access to virtual, low cost and relevant training. This training must be available at time of need and be consumable via smart phones, tablets, etc.
Zoho Learn: Organizations now have a learning management tool that enables interactive training programs and assessments with Zoho's course builder. Online centralization of company information, training programs, and more, gives businesses a better way to nurture employee growth.
While my definition for a business operating system may be more ambitious or expansive than Zoho’s, there’s no denying that they are well along the way to delivering to that fuller vision. More impressive is that Zoho One is a mid-market solution priced like a small business product (pricing starts at $37 USD per employee). See: https://www.zoho.com/one/pricing/Zoho
The presence of analytics, AI/ML tools, integration tools, support for other data types, ‘smart’ logic (e.g., in the search tool), etc. shows that Zoho One is no longer an ERP of the old definition. It has made a step change into a new kind of solution that is smarter, more cosmopolitan and capable of delivering a very different value proposition than its competitors. Specifically, Zoho One should have no problem delivering a solid ROI (not just a low TCO) and one that will make competitors wince.
SMBs undergoing high growth and/or increasing business complexity really should look at this.