Zoho's bold new pitch: Run your entire business for $1 a day per user

Zoho's bold new pitch: Run your entire business for $1 a day per user

Zoho's new offering, Zoho One, brings together all of the company's 30+ apps

Zoho wants to be the operating system for your business. That's how the company puts it, and what it means is that you can now get just about any application you need to run a business using Zoho One, which gathers all of Zoho's applications for $30 a month per user.

Zoho One, announced and available Tuesday,  includes all 38 Zoho cloud-based applications, plus about a half dozen native apps as well more than 40 mobile apps. It offers centralized administrative control through an Admin Panel, which lets companies manage applications and define administrative groups as well as security and access privileges.

In the cloud era, the price of productivity applications in particular has come down. For example, Google offers G Suite applications for $5 per user a month. But Zoho's applications span the spectrum of sales and marketing, including CRM; operations, including finance, recruiting and HR software; collaboration and productivity, including an office suite, email, and project management; and IT and help desk apps. Zoho also offers Creator, to build custom applications.

Zoho has up to now offered applications bundles including CRM Plus, Workplace for office productivity and Finance Plus, but this is the first time it's offered all of its software for one price and tied together through the new Admin Panel. The price of Zoho One is actually less than what Zoho charges for some of its applications and bundles.

A new approach to software licensing

Zoho wants to change the current software licensing model for business, said Zoho Chief Evangelist Raju Vegesna. "If you look at business software today,  it’s pretty rationed -- you have to select which users you have to license  to because it's extremely expensive and what that did is it kind of shrunk the size of the business software market itself," Vegesna said. "We're starting to de-ration software."

This approach is similar to what Amazon and Facebook have done, said Brent Leary,  co-founder and partner at management and advisory firm CRM Essentials. "They're looking to have millions of customers on their platform, allowing them to have the scale to make something like this pay off."

There are about 2 billion consumer cloud users, compared to 20 million or 30 million enterprise cloud users, said Leary. So there's an opportunity for growth in the enterprise cloud and as that user base grows, Leary noted, Zoho sees an opportunity to operate more like Facebook and Amazon -- withsmall margins but big  revenue opportunities over a huge user base.

Expanding the market for the enterprise cloud

Not everyone in a company will use all Zoho One applications, but that's not the point, said Vegesna, who compared its licensing model to a cable subscription. "We may not watch every single channel that we have but there are a few channels that we may be watching frequently and the price is low enough so that it justifies paying for the subscription and not worrying about going and licensing every single channel and managing subscription and contract cycles," Vegesna said.

So it is with Zoho One. "Your accounting department may not be using the CRM and the sales department may not be using the accounting applications but as long as the price is low and everything is accessible then it all gets broad adoption," Vegesna said

Up to now, most Zoho users are SMBs (small and medium-size businesses) and though the company's offerings may not have all the bells and whistles offered by enterprise heavyweights like Oracle, Salesforce and SAP, the functionality is very competitive, said Esteban Kolsky, principal and founder of ThinkJar, an advisory and research think-tank.

"At the basic functionality level, plus extended functionality, everybody can compete," said Kolsky. "If you can't compete at that level you're not in the market so it comes down to who a company will trust as far as having the best platform, the best infrastructure, the best best extensibility, customization -- things like that. A company with 10,000 or 15,000 employees could very well run on Zoho."

CRM Essentials' Leary agreed that Zoho competes well on "meat and potatoes" functionality though it does not go as deep as, for example, Oracle or Salesforce for more-complex needs for companies that need advanced forecasting, multiple sales processes or configure, price and quote software that helps  define the price of products across a range of variables.

Competing with the software titans

For workplace productivity apps, Zoho competes with Google and Microsoft. Overall, Microsoft may be its most direct competitor since Microsoft offers not only office applications but the Dynamics business apps as well, Leary noted.

Zoho's main competitors have built up extensive ecosystems of third-party developers, Leary noted. For its part, Zoho offers its Creator software to build custom apps and is trying to build out a network of third-party developers.

Underneath the covers, the Zoho One apps are integrated via the new Zoho Directory, Vegesna said. "Think of it like an Active Directory for the cloud" he said. Zoho has been working on the directory for four years, Vegesna noted. It allows users to, for example, use the Admin Panel to define groups of workers who want to collaborate. "The directory defines the code structure and makes sure all the apps adhere to that code structure," Vegesna said.

The directory also allows for integration with Microsoft Active Directory, Vegesna said. In effect, users can log in to Zoho One via Microsoft Active Directory, he said. Zoho also offers G Suite integration.

Ultimately, Zoho One may allow the company to not only build out its stronghold in the SMB market, but get larger companies that may have tried out some of its apps in particular departments to use it more broadly.

"It will be interesting to see how the big competitors respond," noted Leary.

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