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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Zoho One promises to deliver unified contextual critical business insights for midmarket firms and SMBs

'Knowing what we don't know' is often the thorniest complication in decisions. A unified and contextual insights strategy mitigates this risk by ensuring that data from within the organization is aggregated, giving decision-makers the most complete and up-to-date information possible. Zoho One promises to deliver contextual critical business insights for Midmarket firms and SMBs.

Zoho has 500,000 customers, over 70 million users, and 40,000 customers on Zoho One, a product introduced to the market in 2017. One of the customers has 32,000 employees using Zoho One. What is Zoho One? It is a collection of 45 apps that span all primary business functions, with CRM, analytics, and communications being the most used, followed by accounting, helpdesk, and Sales IQ. Driven by the need for increased team collaboration and conversation in the last year, Zoho Cliq, a chat app, has become the third most used app within Zoho One. Having great success in the services vertical industry, Zoho is making quick inroads into the real estate, banking, and other financial services market segments.

Do businesses subscribe to Zoho One all at once or plod and pedal from one app to many? The answer lies in the market segment. Small businesses adopt and use all apps simultaneously, mainly because they see Zoho One as a path to transformation and digitalization with the least friction. It is relatively easy to adopt a single app, connecting its inputs and outputs to relevant internal systems and processes. Likewise, it is possible to adopt a handful of apps, hand-wiring the interconnections between them and adjacent applications. But this craft-built approach to digitalization is not aligned with longer-term visions of scale, flexibility, and agility. It creates management overhead and performance and security risks for small businesses. Zoho One, an integrated platform, quickly offers a cohesive approach to addressing several business pain points concurrently.

Midmarket firms often explore multiple apps before committing to Zoho One. Either through experience and education, one or several Zoho application parleys to adopt Zoho One or many midmarket firms prefer to work with only a few apps. Zoho's integration with its competitors helps the midmarket firms immensely, making it a more straightforward decision than identifying resources for automation and integration.

While we generally consider "SMB" as a single segment, there are often differences between the "S" and "M" segments – and their approach to cloud business application adoption illustrates one such difference. Midmarket businesses usually have complex deployments. The most common midmarket cloud application workloads provide a technology platform for enabling processes rather than an application platform for expanding the depth of specific tasks within the organization. Small businesses look to the cloud to primarily enable agility, while midmarket firms are also interested in improving IT efficiency.

What is next for Zoho One? There are five new apps, three new services, and seven platform enhancements to help "businesses unify systems, data, and teams." Two announcements interest me the most because they are universally applicable to all small and midmarket businesses regardless of cloud maturity, size, and vertical industry.

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Zoho business analytics platform is knocking on the doors of more established players

Techaisle SMB and Midmarket AI and Analytics adoption trend research shows tremendous analytics scope to deliver more forward-looking predictive or prescriptive perspectives. In addition, there is a need to support the development of evidence-based corporate cultures that value positions and decisions based on data. Still, there are a mix of technology, organizational and cultural issues that businesses need to address along the journey to this future point.

Zoho is on a quest to enable the future point. One of Zoho's primary goals has been to offer end-to-end business applications that allow businesses of all sizes to automate business workflows. But it is not enough to enable companies to automate the workflows or collect data. It is also vital to have a platform, which gives businesses the capability to understand the data, analyze it and drive insights. If analytics is the key to connecting data to executive objectives, the cloud is the platform on which analytics and data – and digitalization and many other impactful solutions – will reside. With 13,000 paying cloud customers, separate from 50,000 who are using Zoho bundles (Zoho one – a collection of 45 apps), the Zoho analytics platform is knocking on the doors of established players.

Zoho has built its analytics platform vision on four pillars providing an end-to-end solution:

1. Self-service data preparation and management:

Zoho DataPrep, an AI and machine-learning driven self-service application, enables users to retrieve data from a wide range of sources, smartly cleanse, transform, enrich and prepare the data for practical analysis. It includes auto modeling and ML-based enrichment. Because of its popularity and ease of use, Zoho also offers its DataPrep tool as a stand-alone service.

2. Visualization and analysis leading to data stories:

An integrated enterprise portal builder (Zoho Sites) and presentation software (Zoho Show) enables business users to analyze data through self-service interfaces like drag and drop interface or natural language processing as well as other automated analysis for developing insights.

3. Augmented analytics for insights and actions:

Augmented analytics component enables business users to get both prescriptive and predictive insights from data. What-if analysis and forecasting models are a core component of augmented analytics.

4. Marketplace apps:

Developers and partners can develop analytical apps and publish them on Zoho's marketplace. Applications such as Jira, ServiceNow, and Shopify have seen the highest uptake within Zoho Analytics customers.

AI and ML seamlessly embed into all the components of the analytics platform. A crucial part of analytics initiatives in any business is preparing the data for insights. Marc Fishman, Director of Sales and Marketing, Call Center Sales Pro, could not contain his excitement when speaking with Techaisle about Zoho's DataPrep tool. He said, "the recent release of DataPrep honestly blew us away, causing us to explore that potential sharing of call center data. Depending largely on the toolset available to us after successful import, we have many options to consider — both internally and potentially externally for our customer base. It's beyond exciting!"

Many lenses can assess the importance of analytics and AI in the SMB and midmarket segments. One that illustrates the pace of these segments is the often-cited 'hype cycle,' which begins with a "technology trigger," soars to a "peak of inflated expectations," crashes down to the "trough of disillusionment," and then rises through a "slope of enlightenment" to a "plateau of productivity." Analytics and AI provide excellent examples of how this process plays out in the IT-centric world. As a concept, AI has lived at the peak of inflated expectations for many years, borne aloft by an amorphous vision of systems that will automatically know what's needed next. This is because, based on some elixir that combines a large quantity of data with fuzzy algorithms, supported by computational capacity delivered by Moore's Law, the rising quantum, or some combination of future breakthroughs. Meanwhile, analytics has followed a more gradual path, showing both real current benefit and the promise of additional value in the future – at which point, naturally, it will become a sidekick to AI.

Unfortunately, this is not an entirely apt description of the evolution of analytics and AI in the real world, especially in the midmarket segment. Despite bold claims to the contrary, businesses have primarily deployed analytics applications to consolidate data from diverse sources into an intelligible whole. Analytics as a discipline has been mainly concerned with using that data to create dashboards that illustrate current status and immediate or potential problem points. That is, as a descriptive or diagnostic tool. Techaisle research shows that 53% of US midmarket firms use analytics to provide a diagnostic view of the business, and 39% use analytics to recommend actions, in other words, prescriptive.

Zoho's unified business analytics platform may well change the adoption from diagnostic to prescriptive. Zoho's simple, cost-effective BI tool enables collaborative analytics and quickly provides 360-degree views of customers or the entire organization.

So what do SMBs and midmarket firms require of an analytics solution, and does Zoho meet those needs? Techaisle's survey respondents provided a definitive perspective that surprisingly reinforces the pillars of Zoho's analytics vision. "Solutions that enable self-service for non-technical users" is at the top of the requirements list for both small and midmarket organizations. It is a wise point of emphasis, given that research has found that utilization rates, satisfaction, and ROI increase if users can access analytics systems without IT support. As a result, Zoho has developed its platform for non-technical users. The following most frequently cited attribute, "platform technologies that integrate analytics and presentation," is ranked second by small businesses and midmarket firms. This focus reflects frustration in trying to integrate different tools to meet parts of the overall analytics requirement. For example, the Zoho Show platform integrates with Zoho analytics to create a slide deck and seamlessly embed reports and dashboards to make an interactive and immersive presentation. The third-ranked component in the midmarket findings, "big data designed and enabled database," reflects an immediate need. Similarly, "well-defined security and privacy implementation" reflects a segment-specific need for supplier assistance in ensuring that security is applied to the system of insight, ensuring that data analysis doesn't lead to data leakage. Of course, we all know that Zoho zealously protects user privacy.

Zoho is hitting on all the requirements of midmarket firms, and businesses are noticing. As Marc Fishman, Director of Sales and Marketing, Call Center Sales Pro, said, "We selected Zoho because of the ease of data sharing and integrated Desk, CRM, and connectivity applications. No other suite compared — both in price and breadth — that offered us so many tools we could immediately use."

Zoho analytics platform is built for non-technical, non-analytic users but has the depth and capabilities for technical staff and data analysts. Its best feature is data preparation, which alone is enough to justify using Zoho analytics platform. The platform delivers rapid time to value.

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We do not sell, customers purchase - Raju Vegesna reflects on 25 years of Zoho

Zoho was founded in 1996, twenty-five years ago, with a mission to deliver easy-to-use and deploy CRM solutions to the SOHO market segment (Small Office, Home Office). Even the Zoho name was a spin from SOHO. In the last 25 years, Zoho has transformed from a fledgling startup to an enterprise serving small, midsized, large, and public sector organizations. In contrast, Salesforce was founded 22 years ago. It is a similar timeframe as Zoho, but each is at different levels – revenue, awareness, customers, and employees. How does Zoho keep itself grounded with such a lopsided competition? Today's business world admires Unicorns, applauds valuations, overlooks SaaS suppliers' profitability. Not that there is anything detrimental about chasing unicorn status with little to show profitability, Zoho founders have been tracking employee empowerment and customer success. In the last 25 years, Zoho has become well-known for its easily deployable, easy to use, full-featured applications. Recently Zoho is being recognized for its top-down driven, empathetic culture.

What is more critical to Zoho, delivering customer success or empowering organizational culture? Each organization goes through several essential points of decision in its journey. What were some of those decision points? Would a different decision have changed the trajectory of Zoho and on a collision course with Salesforce? Did Zoho ever reach a crossroad, break-it, or make-it stage? Many questions had been swirling in my mind, which I decided to address to Raju Vegesna, Chief Strategy Officer, Zoho.

True to the initial mission of empowering employees, Raju has no regrets. Instead, he describes Zoho's achievements as fulfilling. He has great admiration for Salesforce but quips that Zoho does not sell, customers purchase, and he is thrilled to be on the path Zoho has chosen.

Read on, excerpts from my very detailed interview with Raju Vegesna.

Fulfillment is the name for Zoho's 25-year journey

Can you describe Zoho's 25-year journey in one word? What is that word?
It's tough to describe our journey in one word. There is an internal perspective which is fulfillment. If we do not have that, we cannot have confidence in what we are doing and satisfaction with what we are doing. The feeling of fulfillment started early on and has continued. Even on Zoho's website's homepage, we showcase it as a life's work which is only possible if we inner fulfillment.

Customer success vs. organizational culture

What is more critical to Zoho, delivering customer success or empowering organizational culture?
We cannot separate customer success and organizational culture. They are two sides of the same coin. If we do not have organizational empathy and that culture right, then it will show up on the customer side. And if we do not have one side right then, the other side is not going to work. We often say, when you have a customer problem, it means you also have an employee problem. These are interlinked - one is external facing, and the other is internal facing. And if you have that inner empathy to humility, it will show up as a positive impact when servicing a customer. And this is ingrained and built into the organization. It is a simple mandate. If it is an employee's responsibility to keep the customer happy, the employee should have the freedom to think and act, and so it has to be built into the organization's DNA.

Chasing Unicorns

How do you keep yourself grounded?
We do not pay too much attention to valuations. We do not think about it. We have been through multiple bubbles, up and down cycles, so they do not bother as much. Then we also realize that the market, to some extent, is biased towards public companies. How often do you hear about private companies? For example, Tableau versus SAS, which is a private company. Or Walmart versus Aldi. There is an inherent bias in the market. Bias puts private companies at a disadvantage because they don't have the mindshare. Why didn't someone hear about Zoho earlier, partly because private companies do not get enough exposure? They are not talked about it because there's no inherent gain for other people. But then there are also a few things that are on our side that public companies don't. So, what, how do we play the advantages. For example, we don't have a timeline and a time horizon to operate. Now we can plan out a decade in advance. Some projects have been in the last 6-9 years in Zoho that haven't seen the light of the day. And when you have a public company running on a quarter-by-quarter basis, they don't have the advantage to plan it out. We try to focus on the process and what is in our control and do it the right way.

Critical decision points

What were critical decision points? Do you think those decisions changed the trajectory of Zoho? What would have happened if you did not make those decisions?
I'd say some early lessons helped a lot. Initially, our primary customers were optical companies. When the telecom bubble burst. We had about 305 customers, of which 300 or 301 of them died. Over a year or two, imagine that when 99% of your customers vanish, you might as well. We had zero debt, and we had some savings. And we had very hungry engineers. We took all the savings and invested in the engineers, and pivoted. Even from the beginning, we always believed in zero debt, which is a crucial reason for survival. Another lesson we learned was that diversification becomes vital for the product. Now we are fully diversified - product portfolio, regions, countries. We don't have a customer that is contributing to more than 1% of our revenue. The exciting thing is that not all the products we created back then exist today, but most of the employees who made the products still exist and are just creating new products. One hundred people have been with the company for at least 20 years, and they are just creating new things.

Deciding product roadmap

How did you decide to develop which apps and in which order?
It's one of the extremely simplest ways to decide. What are the apps that we do not use to run our business? What are the apps that we need to run our own business? And, and if there is a missing piece, we build it. So we believe that if we run our entire business on our own products and benefit from it, other companies will have the same benefits. We have 50 apps now, but I look at the road ahead and say we still have a long way to go. More importantly, can we make the boundaries between these applications disappear and appear as a single application? Why should users pick and choose the apps they want? Why can't everything contextually tie together? Why are there walls? A business may not have segregation between a front office or a back office. Why should there be a separation in software, support, sales system, marketing system, and several vendors that serve the needs? As simple as that. And that segregation has to, and separation has to go away. And that is one of the walls. So, it's a journey, but our tools and the missing pieces define our roadmap.

Surviving and thriving

Did you ever reach a crossroad, break-it, or make-it stage?
Survival instinct comes immediately after the break or make moment. I vividly remember when we pivoted, we created a product to address the IP market. And we demonstrated the product at a Vegas show. We were so tense because our future was dependent on that product. As we kept on demoing the product, more and more people started liking it. And that is when we said; now we have a future. Survival was a priority. And then, later, we started focusing on expansion and thriving.

Mentors and learnings

Who do you turn to for learning and mentoring?
We have a tightly-knit team. The management team has been sitting next to each other for a couple of decades. We go through the journey together. We also learn a lot from external companies. We study companies. How did all the private companies become one of the top leaders, for example, Aldi? Or the makers of M&Ms, which have been around for 100 years. Or how has Marvin Window been successful for the last 115 years? Or take a company like Bata. If you grew up in India, it is ingrained in you but is not an Indian company. It is a company out of the Czech Republic.

Salesforce admiration – purchasing vs. selling, small and enterprise customers

Salesforce started with a focus on small businesses but pivoted to enterprise customers. Now it is re-engaging with SMBs. Did you ever want to become a Salesforce?
There is one area that I admire in Salesforce. It educated the market about SaS. I have respect for the Salesforce platform on the technology front because they lead the way. But on the sales and distribution model, we decided to take a different approach. We are primarily an engineering-centric company, so and won't be a sales and marketing-centric company—money matters. We instead re-invest the money in our engineers than on sales and marketing. We like the bottom-up approach, where we started selling to small businesses. We named Zoho itself after Soho, small office, home office market. Slowly, we started serving larger companies. It is the customers pulling us into their organizations and not Zoho selling to those organizations. It's a subtle but essential difference. In other words, in a lot of cases, our products are chased, not sold. And that changes the dynamics. We see lately an increase in mid to large size customers adopting Zoho. If you look at our sister division ManageEngine the target market is mid-sized to large enterprises, and 60% of fortune 500 companies are our customers.

Respect for competition

Do we ever want to become a Salesforce or SAP? We are not sales-focused. We have a good number of salespeople, but it is a tiny percentage of the total workforce. We will continue to be an R&D company. We understand that there is competition, and we respect them. But then we respect our customers a lot more. We will build products, focus on R&D, and have these local, transnational teams, which will be on the ground, looking at customers developing solutions to meet their needs. Our business model is relatively simple, mainly because we are a private company. We only worry about two sets of people – customers and employees - because the third set, investors, are no longer at play.

Next 25 year changes – transnational localism

What will you change in your evolution for the next 25 years?
There are a few things that won't change - culture, values, people, and the investment in R&D. What will change is what we call transnational localism, which means we will have local teams available in multiple countries, geographically. We are strengthening our local presence in every country we are present in to serve the local customers. And that's an important strategy. We are present in about 20 countries, and we will see our team expanding in each of these countries, and that team will be solving the local customer's problems.

 raju vegesna headshot

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Culture is the strongest foundation of Zoho and applications are its biggest strength

Five years ago, I flew in from Newark into Mineta San Jose International Airport. At the baggage claim carousel, I noticed a massive advertisement of Zoho with the tag line – operating system for the business. I was both intrigued and non-committal. It was my first introduction to the company. Before that day, I had either not paid attention or had not come across the name. When I reached home, I sent an email to my team with a question, does Zoho appear in any of the surveys as a cloud business application that SMBs and midmarket firms are using. Two hours later, nearly midnight, I was pinged by my overseas team with an answer. Zoho's penetration had been increasing since 2009. I still did not give Zoho the serious consideration that it deserved. In 2019, during my several visits to Dell Technologies' events, I began noticing the remarkably colorful Zoho banners at the Austin, TX airport. During the same timeframe, the number of inquiries from our SMB panel of respondents seeking our take on Zoho increased. I knew I had to call Zoho's analyst relations, and I did. It was a turning point. I contacted a company where customers come for the products and get enriched by Zoho's ethos.

I first met Sridhar Vembu, CEO, Zoho, in January 2020. Unassuming, unpretentious, and unassertive, he was standing in his "chappals" and "bush shirt." He poured out his passion for building a company that cares for the underserved communities, hires, educates, and develops talent from underprivileged families. He is committed to keeping Zoho private and debt-free, fiercely protect its customers' privacy and security, and spread its offices in the rural areas of India, the US, Europe, and Japan. I knew I had to learn more. Soon enough, I also got swept up into Zoho's product portfolio. A collection of 50+ apps running on single database architecture and purpose-built on Zoho technology stack consisting of services, software infrastructure, network infrastructure, and hardware infrastructure deployed on Zoho's data centers to ensure performance availability, security, and privacy. It is not for small businesses only. Zoho's fastest-growing market segment is the midmarket. Salesforce, Microsoft, and SAP are the established brands within the midmarket; Zoho is the challenger, not by deliberate design but by a sheer and silent commitment to customer success. I have interacted with many Zoho senior executives, product evangelists, and customers in the last year. The pervasiveness of genuine fondness to learn, desire to challenge the status quo, develop themselves as great human beings and develop solutions that exceed customer expectations is palpable. Zoho has as many micro-cultures as there are apps, fifty.

Zoho has been 25 years in the making. With 9000+ employees, 60+ million users in 180+ countries, annualized 5-year revenue growth of 34%, and a 97% customer retention rate, Zoho seems to be just getting started. Using a hub and spoke model – major city and adjacent rural areas – Zoho has opened 15+ small offices in the past six months to support local economies and partnerships. Sridhar Vembu, the recipient of Padma Shri, one of India's highest civilian honors, calls the model a cloud-enabled rural revival. He returned to India from the US in September 2019 and has settled in a small rural village, Tenkasi, where even the street lights are non-existent.

Sridhar is setting the tone for the next 25 years. He aims to continue enhancing a vertically integrated technology stack (from the data center to applications) and building horizontal integration where different groups, micro-cultures, and departments feel empowered and collaborate seamlessly. The deep-seated culture is evident in the enthusiasm of Zoho's empathy and responsiveness to the pandemic. It instituted a 6-month subscription waiver for small businesses. To meet remote workers' needs, it launched Remotely, a suite of 11 free productivity tools. To enable workplace re-opening, it has announced the BackToWork app, free for a year. For Zoho, free does not mean using customer data for monetization. Zoho does not run on public clouds, has removed all adjunct surveillance, and does not collect or store any customer data.

Zoho's latest versions of Zoho Projects and Zoho Analytics (with 1500 built-in dashboards) are comprehensive, customizable, secure, scalable, and intelligent. Zoho's universal NLP (Natural Language Processing) search – across all apps and data pillars - provides contextual answers, processes 16 million search requests a day, and performs 150 million indexing jobs a day. Zoho's offering is the Low-code platform to empower citizen developers with last-mile customizations. It incorporates many new functionalities, including Zia (Zoho's AI platform), assisted development, and sandboxing. Zoho's other recent notable offerings include the Employee experience platform and Marketing platform.

Agility is essential to managing business uncertainties. It also translates into business process automation and rapid deployment, and enhancements to business applications. Specifically, the smaller a business is, the less likely it is to have dedicated staff developing custom applications to support unique processes. From pro-code to low code to no-code, Zoho Creator Platform can appeal to a broad swath of citizen and professional developers. For citizen developers, it reduces complex functions to one-click or drag-and-drop actions. For experienced developers, Zoho has added controls to build customized applications and services from the ground up. Like everything Zoho, the platform has been 15 years in development, rendering the learning from organizations of all sizes to better user experience and scalability. For specific vertical industries for whom governance is a vital issue, the platform is SOC2 Type II and GDPR compliant. It also provides authentication, encrypted data storage, and full lifecycle management. Zoho's low code platform, Zoho Creator Platform, currently has 13,000+ paying customers, which is up by approximately 30% during the pandemic year. A testament to how the platform empowered businesses to pivot with agility to respond to employee and customer needs.

Although Zoho is known for its focus on the small business segment, which continues to grow, it also gains traction within the enterprise segment. Zoho's largest customer is IIFL, with 28,000 employees using 45 of the 50 apps. Zoho is a genuine one-of-a-kind visionary firm. It is the complete CRM platform and has the most comprehensive toolsets for hybrid, co-modal work. Its flagship, Zoho One, has over 50 products designed for multiple business needs across productivity, finance, marketing, HR solutions, etc. I am glad I made the call to Zoho analyst relations. Zoho will continue to be within Techaisle's vendor research radar for a long time. It should be on the evaluation map for SMBs, mid-market firms, and enterprise customers.

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