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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 – A Great Bet for Mid-Market firms

In October 2022, Zoho reached US$1 billion in revenue. Zoho was founded in 1996 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. Zoho has transformed from a fledgling startup to an enterprise serving small, midsized, large, and public sector organizations globally. In recent years, Zoho has successfully moved upmarket from helping small businesses to midmarket firms and enterprise customers. Mid-market firms are measured, thoughtful, agile, and rapidly digitally transforming, focusing on cloud cost optimization and business process automation. These firms are building a longer-term strategy for an integrated, flexible approach to incremental cloud expansion. In direct contrast, small businesses move from point to point, working first on one discrete solution and then on the next. This dichotomous approach is a real challenge for suppliers as they need to differentiate solutions for the small business market and demonstrate that their offerings are essential components of broader strategies for mid-market firms while attracting attention to their products and building brand preference in both segments. While the expectations of mid-market buyers about SaaS providers are similar to large enterprises, the budgetary limitations create challenges in supplier selection, deployment, and management.

Techaisle research shows that midmarket firms invest in their employees and are social responsibility advocates. As a result, they want their vendors to share these characteristics and mindsets. Therefore, serving the mid-market segment necessitates a distinct culture that is not characterized by high prices and lengthy sale cycles.

Midmarket technology DNA and role of Zoho

The positioning of the solutions within the midmarket is essential. It requires in-depth information on business benefits and the process steps needed to capture those benefits targeted at BDMs, and information on how to assemble, deploy, integrate, and support/optimize these solutions targeted at ITDMs – and an understanding of how to position and convey the messages to each audience.

Its extensive portfolio of cloud business applications includes 50+ products, ranging from traditional office suites to analytics, finance, sales and marketing, collaboration, customer service, HR, and many more business processes at competitive pricing. Zoho has a deep engineering culture immersed in R&D, along with maintaining its cultural ethos without having to cope with any interference from either external investors or the public market. Zoho believes that instead of spending heavily on sales and marketing, it would instead invest in software development efforts or let its potential customers access the limited-feature platform for free. This strategy has proved to be very successful for Zoho and its customers.

Simplicity, flexibility, and value for midmarket firms

Zoho One, the flagship product, is designed for mid-market businesses. With Zoho One, customers have access to 45 business, collaboration, and productivity applications, of which over 20 applications (across functions) are used by more than half of Zoho’s customers. The solutions are a part of a unified technology platform with built-in search, messaging, and AI services. It runs on a unified database with a unified data model with data pillars that enable seamless integration to deliver single truth for the business empowering users with a unified experience. The collection of apps running on a single database architecture and purpose-built on Zoho technology stack - services, software, hardware, and network infrastructure - deployed on Zoho’s own global data centers ensures performance, availability, security, and privacy. All these solutions and features come at an affordable price, which makes the package suitable for mid-market firms as it significantly reduces the total cost of ownership, deployment, and integration timeframes.

Raju Vegesna, Chief Evangelist, Zoho, once said, “the market is littered with features masquerading as products.” Zoho One provides single sign-on, single subscription, and a fully integrated platform. It is common knowledge that app-specific experiences drive infrastructure-level optimization steeped in Zero Trust, AI, distributed file structure, and data center expansion driven by market dynamics.

More than 60% of Zoho’s workforce is devoted to engineering, developing new technologies, and keeping these technologies updated. Since the launch of Zoho One in 2017, Zoho has been innovating and updating its applications. With the evolution and maturing of newer technologies, Zoho has been adding AI/ML functionalities and improving user experiences.

In the past five years, Zoho One has grown considerably and has acquired over 50,000 businesses as customers in 160+ countries. Over the past two years, the platform has grown 150%, with 37.5% of new customers from mid-market and enterprise segments. License upgrades have increased by 92%. These figures spotlight the strategic commitment by Zoho to deliver end-to-end solutions that empower organizations to be agile, scalable, and adaptive to changes in their industries. Even the midmarket developers are taking notice as they can access Zoho Tables, RPA, and Test automation tools. Zoho Finance suite has seen tremendous growth. As per Zoho, it is processing 100M invoices per year.

Zoho One is wholly developed in-house on a single technology stack and is a unified, end-to-end platform that offers plenty of integration points across applications. Well-grounded unification enables organizations to link functions such as sales, marketing, customer support, accounting, human resources, and others. Moreover, the platform can be easily integrated with third-party solutions, allowing organizations (especially mid-market enterprises) the flexibility to manage complex systems, large amounts of data, and dispersed teams.

Techaisle’s latest midmarket research shows that 42% of firms are increasing their spending through cloud marketplaces. Over 500K Zoho users use 1500+ apps from the Zoho marketplace (e.g., Twilio for Zoho CRM). Recognizing the need for verticalization, Zoho has purpose-built industry apps such as real estate CRM, travel agencies, IT services, field services, and many others. Most importantly, Zoho enables midmarket firms to develop and deploy custom apps.

zoho unified dashboards widgets

Zoho addresses the need for high-velocity custom apps

It is relatively easy to adopt a single SaaS solution, connecting its inputs and outputs to relevant internal systems and processes. It is possible to adopt a handful of cloud applications, hand-wiring the interconnections between them and adjacent applications. But this craft-built approach to the cloud differs from longer-term visions of scale, flexibility, and agility. It creates IT management overhead and performance and security risks. Even worse, disconnected systems affect relationships between companies and their customers: workflows that lack cohesion create unnecessary gaps in service. Unable to link all inputs to achieve a single view of the business reduces visibility into individual customer preferences and broader market opportunities. Zoho One provides midmarket firms with tools they can use to develop their applications and automate their business processes by creating workflows. For example:

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Zoho Creator Low-code platform blurring the IT-business divide to build, integrate applications, and analyze data

Coding is not everyone's inclination, yet there is a need to rapidly automate new workflows, generate new insights from scattered datasets, drive competitive advantage, improve customer interactions and make operational improvements. Low-code/no-code platforms such as Quickbase, Airtable, Microsoft Power platform, and Salesforce Lightning aim to equip and empower business users to be self-sufficient and agile to achieve their business objectives. But Zoho Creator Platform is different. It effortlessly enables both business and IT users to pursue their individual interests and is very well suited for the SMB and midmarket segments. It replaces the band-aiding of work processes with a permanent yet elastic fix to improve organizational efficiency. Business users can spin up applications. If IT needs to add additional complexity, the IT team can develop that through custom capabilities. Developers can write, store, and execute reusable code blocks in the Zoho Creator Platform using Deluge or Java or Node.js. These functions encourage IT and business teams to work together to build scalable and easily maintainable enterprise-ready apps faster. Developers can now launch solutions in different environments of choice—development, staging, or production, with a single click based on the application's readiness.

Most people associate Low-code with spreadsheet replacement, email replacement, automating, and digitizing them. Instead, the Zoho Creator Platform aims to help recreate processes to leverage everything a local platform can do in mobile, analytics, and governance.

Zoho Creator was introduced 15 years ago as an online database. Its latest version, Zoho Creator Platform, announced on March 3, 2022, aims to empower everyone to build applications solutions with a unified platform quickly. Specifically in the SMB and midmarket firms, IT is overloaded and has less time to codify new processes and modernize existing ones. Regardless, most organizations do not have well-defined business processes and want flexibility.

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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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