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ZohoDay 2024 - how customers overcome industry challenges with the Zoho platform

Jon Reed Profile picture for user jreed February 12, 2024
ZohoDay 2024 brought plenty of customer interactions - and field lessons. One theme that stood out: verticalizing Zoho, and why today's enterprises need to move past the limitations of horizontal enterprise apps.

ZohoDay 2024 - vertical challenges panel
(ZohoDay 2024 - vertical solutions panel)

ZohoDay has a big advantage over other vendor analyst days. To learn why, check my satirical take on where analyst days go wrong. Too often, the best insights from these events remain behind closed doors.

Why does this matter to diginomica readers? Because Zoho is aytpically restrained about their use of NDA content during these events - so we can bring you the latest developments, along with customer lessons.

And there were plenty of customers at ZohoDay 24 - another underutilized/winning approach. Expect more posts from Phil Wainewright, diginomica contributor Brian Sommer, and yours truly.

Yes, there was plenty of candid talk with Zoho leadership about AI:

We went further into Zoho's plans to incorporate generative AI into their product line, without crossing their own lines in the sand on customer cost and data privacy - and the inevitable challenges of doing that. Since my spring 2023 post, Zoho unveils its generative AI news, but does it co-exist with customer data privacy?, Zoho has advanced that AI discussion considerably. Expect a post on that soon. But for now, I want to revisit another stomping ground: the verticalization of enterprise applications.

The era of horizontal enterprise apps is winding down

Constellation's Dion Hinchliffe captured the moment:

The era of generic/horizontal enterprise applications is winding down. Extensibility platforms and no-code/low-code make it much more feasible for domain experts, inside and outside of the customer base, to build so-called "micro-vertical" solutions to fill in missing gaps in core applications.

Six criteria for industry-tailored apps

A busy marketplace of add-on apps is vastly superior to thousands of one-off customizations, but there is more to consider. If you don't need to build out extensions to get the functionality you need, you shouldn't. Industry-specific apps should be dictated by ease and speed of enhancements:

1. Vendor ships rich industry functionality with the core solution (e.g. industry editions), and has expert partners in that industry available - for consult on optimal/custom configuration.

2. Vendor's functionality isn't necessarily built for a particular micro-vertical, but is easily adapted to that micro-vertical through configuration tweaks (I ran into this scenario frequently at ZohoDay, talking to ZohoDay customers).

3. UI and role-based adjustments are made easily by business users on their own screens and workflows (an area all vendors need to improve upon; this is true no-code)

4. Low-code changes, preferably initiated by business users, who "build" their own workflows and reports with limited reliance on IT (a strong IT-business partnership helps to make this work, which my colleague Phil Wainewright calls co-code.) AI-powered application builders could, in the future, enable business users to specify their functional needs, and generate code for IT to modify/test/implement. Yes, Zoho is already talking about this internally.

5. Extending the core application platform, via internal or partner/vendor coding teams.

6. One-off custom-code solutions to meet unique business requirements.

Of these six sequential options, #5 and #6 are obviously less desirable from a cost and maintenance perspective. With #6 in particular, special care must be taken to ensure eligibility for future SaaS functionality - without grueling integration testing cycles. This is the tech debt trap/tradeoff. Proper extensions from the core platform, using APIs and tooling supported by the vendor, can mitigate those risks - while making new functionality easier to absorb.

ZohoDay - how do customer solve industry challenges?

At ZohoDay, we had the chance to find out where Zoho customers land. During a day one panel, "Solving Complex Vertical Challenges through Customizations," moderator Prashanth Krishnaswami (PVK), Head of Market Strategy, Zoho CX, introduced us to the vertical stories of three Zoho customers. He started with Salvador Caetano Hyundai, a European automobile distribution company, and one of the largest distributors for brands like Hyundai, Toyota Lexus and Honda (the company is based on Portugal, and has a presence in 40+ countries). As Krishnaswami told us:

They started off using Zoho CRM... Since then, they've added multiple Zoho products, and they essentially started rolling out the vertical solution that helps them manage dealer relationships - dozens of dealers for each of these brands - and essentially run the customer journey, from initial interest, all the way through the purchasing process and ongoing engagement.

What's interesting for me, in their business, is that after building a vertical solution on top of Zoho, the partner is taking the next step, which is to replace the incumbent solution, which they painstakingly built for over 20 years in that business - so they are taking a big leap of faith in Zoho, and I absolutely want to thank them for that.

Krishnaswami also shared the backstory from customer ManoMano, a European e-commerce marketplace for DIY gardening and home improvement:

What's interesting about their use case is that they built a seller-facing vertical solution on top of Zoho to manage the entire seller relationship - all the way from recruitment through prospecting, contracting, scrutiny and catalogue management, into ongoing engagement.

Zoho customers share their vertical application stories

Melissa Gordon, Executive Vice President, Tidal Basin Group, said they obtained project capabilities for their disaster recovery services via Zoho One:

I started with the company in 2019. At that time, we had already actually purchased Zoho CRM. On my first day, our CEO said, 'Hey, we need a project management solution. We'd like it to be Zoho but I need you to build a use or cost benefit analysis to prove that case.' In doing that cost-benefit analysis, we stumbled upon Zoho One. We were actually able to put together a cost-benefit that we should likely purchase Zoho One, and that with purchasing the platform, we could get the features we needed for projects. We could also get all these additional applications that would benefit us, and our long-term strategy.

During the Q/A session, I asked the aforementioned question from Hinchliffe's X post: "Of the Zoho apps you're using, which one most impressed you, in terms of your ability to adapt to your industry - and why?"

Alexandre Martin, Tools Specialist at ManoMano, answered first:

On my side, I would say Zoho Desk. When we started with Zoho Desk, it was just as a system of ticketing and being able to respond to our sellers' needs. They wanted a solution; we had to provide a solution. But at the end, we were able to customize it so much that we're giving a full experience to our seller.

Let me give you a concrete example. Through the help of the help center, the seller is able to connect directly to one of our systems which is a toolbox... Throughout this process, the seller is able to complete a form where we know who is the seller that is contacting us. Because we know who is the seller is, we are able to input different SLAs. We are able to respond to the seller based on what he has previously asked about us.

Melissa Gordon of Tidal Basin spoke to their use of custom workflows:

For our internal business management functions, Zoho CRM has been very flexible for us. We're using some of the pre-built functionality. But we also have built in a lot of custom functionality and workflows that worked for our business - and they were pretty simple and intuitive to build. I would say the biggest benefit we've seen for our company in terms of usage of Zoho is the ability to kind of piece different systems together.

So for example, we will take a Zoho site as a front-end facing website for a client. We're going to link in a third party application that isn't Zoho for, example, records management - but we're also going to link in Zoho Desk for either applicant concerns/complaints, and then most of our projects require a mechanism for recording and managing fraud and waste complaints.

One key takeaway from Gordon: whenever possible, hide your internal complexities from customers.

Where it's been beneficial is the ability to easily tie all these things together into what appears to the external user to be a cohesive system. Because you can put a common domain name across the application, and things like that. So it doesn't appear to be pieced together.

My take - Zoho One provokes a necessary industry conversation

Zoho's adaptability and ease of use stood out as a real differentiator during ZohoDay 2024. Hearing that directly from a parade of customers speaks louder than any marketing slogan could. I also heard a fair amount of customers extolling the virtues of the Zoho One experience, where the "all you can eat" aspect of Zoho One licensing allows for expansion of Zoho's footprint - without the typical licensing hassles. Other customers are working hard to build a Zoho One business case, after successful adoption of Zoho CRM, Desk or what have you. That will be an important topic for Zoho to flesh out further.

During his opening remarks on the state of Zoho, CEO Sridhar Vembu talked about the limitations of SaaS vendors (and software economics). Zoho believes it has some good answers to those problems - with the theme of transnational localism front and center (my colleague Phil Wainewright has a piece coming out on that soon). The discussion of how Zoho differentiates in a SaaS midmarket context, however, needs more attention. This kind of differentiation is not easy. In some important areas, such as HR, Zoho is playing catch up. Figuring out which applications to bear down on, and how to position against incumbents, is one of Zoho's biggest challenges - due to its product breadth.

As I see it, Zoho One provokes a necessary conversation on why so many customers are weary of the friction of enterprise software. Too often, we equate SaaS with modern business, but I believe most of the SaaS market is now "legacy SaaS." A defining aspect of legacy SaaS? The continued friction customers experience around software licensing, negotiation, integration, the rising costs of cloud services (wait until gen AI costs are piled on) - and the tensions around SaaS platform lock-in (data and app portability is still, more often than not, a fantasy).

Zoho could stand to turn up the volume on this topic; they are pressing the right issues, but mostly by going about the business of being Zoho. Practices like not charging premiums for gen AI pricing deserve amplification.

As Zoho looks to expand its footprint into larger (midmarket) companies, this industry functionality discussion will take on more and more relevance - as will the need to make Zoho as interoperable as possible. When Zoho talks midmarket, I want to hear less talk about "suites" and "unification," and more about a workplace platform with true interoperability with third party apps - including, at times, ERP, HR, and yes, in some cases, even CRM. Some Zoho customers continue to meet their industry requirements by building apps outside of Zoho. That's another area Zoho will want to bear down on, via richer Zoho One extensibility tooling.

But in the meantime, Zoho has a lot working in its favor. Customer morale is high. When I see the exceptional passion Zoho employees exhibit for the culture they are collective building, I see a big clue as to why. Of course, even a privately held company with a different set of economic values is still in the results business, and we heard good customer stories there too.

During the panel, Ricardo Costa of Salvador Caetano Hyundai told us when they tried to expand sales to the US in 2018, they were at 5,000 cars per year. Over the last three years, they are now up to 8,000. As he told us:

It was Zoho that helped us to get to that number. From the very beginning, we saw that it was really easy to adopt the solution.

If Zoho can retain that ease of adoption while expanding on its industry capabilities, they will bring a new way of consuming software - and a viable midmarket option - to more and more companies.

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