Zoho – Running A Software Enterprise From A Village

By Patrick Moorhead - February 16, 2023

If you have read my articles, you will know I like many things about Zoho; the company, the product approach, and innovation. Zoho has a track record of recognizing opportunities and getting there first. Zoho led the full stack effort for software-as-a-service (SaaS). Zoho grew the stack organically, as many large SaaS providers are struggling today because growth came from acquisitions.

Zoho was embracing remote work before it was cool. Zoho expands by building offices outside big cities and helping employees enjoy a more affordable lifestyle while growing local economies. Environmental, social, and governance (ESG) is a mandate for most companies, but Zoho gave back to communities long before it was fashionable. Recently, I had the opportunity to speak with Sridhar Vembu, Zoho CEO, via Zoho Meeting. True to form, Sridhar was talking to me from a remote village about 650 kilometers southwest of Chennai, the capital city of Tamil Nadu, the southernmost Indian state.

Zoho, Sridhar Vembu – founder and CEO of ZohoZOHO

Zoho’s cloud suite - the operating system for business

Zoho’s cloud suite has everything from productivity, collaboration, sales, and marketing, to back-office accounting. Zoho has seen a 30% compound annual growth rate (CAGR) over the last five years and recently passed the 80 million user mark. Zoho's results are unique and impressive, especially since the competition is from industry giants Microsoft and Salesforce. Sridhar Vembu, CEO and founder, has led the privately held company for twenty-four years shunning conventional wisdom, such as accepting VC money.

Think globally, act locally

Transnational localism is Zoho's secret sauce for building software that meets the needs of individual markets. Zoho brings opportunities to people in small towns and villages. The additional benefit is that the current workforce issues of inflation, long commutes, and general life/work imbalances are alleviated.

Transnational localism is a solution for creating a healthy balance between being at home with the family and in the office - an issue every human resource department is wrestling with today.

Today there are many small Zoho offices located across India. These offices function as spoke locations where employees collaborate across departments and work areas. New relationships with colleagues have formed, and employees can continue to support the local communities. Employees sometimes visit a central campus, but the local network and business tools help the remote offices. In essence, Zoho has created a hub and spoke model with a significant population center as the hub and rural areas as the spoke.

In my backyard in Austin, Texas, Zoho has established a hub. Last year, the first spoke office opened in New Braunfels, Texas, an hour outside downtown Austin. Soon after onboarding the team in New Braunfels, Zoho opened another spoke office in Bastrop, a rural town around 40 minutes southeast of Austin. These two locations have proven that talent is everywhere and that many young people in small towns around the US are just looking for an opportunity.

A full stack approach that includes everything

Zoho recognized early on that providing a seamless customer experience across a suite of applications required ownership of all the components from the applications, services, middleware, hardware infrastructure, and data centers.

This approach is unique as others have leveraged functionality from public cloud providers such as Microsoft (Azure) and Amazon. However, it is now interesting to see some of the largest enterprise SaaS companies repatriating workloads onto on-premises private clouds.

Zoho applications run on hardware owned and managed by Zoho in one of several Zoho data centers worldwide. Additionally, the network is also controlled and operated by Zoho. One of the main reasons Zoho has shunned the public cloud is privacy.

A bold stance on privacy

Today, Business-to-Consumer (B2C) companies collect every detail about our lives, from what we buy to where we shop and read, and then sell it to third parties. Business-to-Business (B2B) companies are doing the same, and it is common for SaaS vendors to add cookies to monitor and collect customer data for sale to third parties.

It is refreshing that Zoho has taken a bold stance on privacy and is also against collecting and selling customer data, only collecting the information it needs from clients. Zoho has gone one step further in blocking adjunct surveillance to protect users.

Zillum - a family-friendly offering

Our lives are becoming increasingly digital, from bank to mortgage to brokerage accounts. It has family implications; multiple people in the family need access. Zoho saw the need for a digital service that is both secure and privacy-conscious. Zoho has made the whole cloud portfolio into a family-friendly offering called Zillum.

Building critical technology expertise in India

Zoho Corp. has strategically invested in startups to build critical technology expertise in India. The focus has been on automotive, robotics, and healthcare technology.

Investments include Voxelgrids, a Bengaluru-based startup that builds magnetic resonance imaging (MRI) scanners; Boson, which focuses on light utility vehicles with an initial focus on farming; Genrobotics, an Indian startup building robotics and AI-powered solutions for social issues such as hazardous working conditions.

https://youtu.be/i4g0DzSn7qQ

Wrapping up

 Zoho spends three times its marketing spend on R&D, resulting in 25 patents in the last three years. The result is an incredible portfolio of applications from traditional enterprise to productivity applications.

If you are running on legacy systems with "spaghetti" code tying systems together and want to move to the world of SaaS but are concerned about data privacy – Zoho is worth considering.

The beauty of Zoho is the ability to start small and try a few applications; with SaaS, you will receive a steady stream of new solutions and continual improvements.

Even with a crazy schedule, Sridhar turns off his gadgets and walks around the village in the morning and evening. Perhaps that is a lesson for all of us.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.