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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 Mid-Market and Up-Market Powerhouse - Examining its Suitability and Strengths

In an era of globalization, businesses often pursue economies of scale and standardized solutions. Zoho, a global software behemoth with Indian origins, is carving a distinctive path. It has embraced a unique business strategy known as “transnational localism.” This approach intertwines global connectivity and local grounding, fostering local economies while partaking in the exchange of knowledge and culture. Transnational localism, as defined by Zoho, is a decentralized strategy that harnesses the benefits of a global scale while maintaining deep roots in local communities. It transcends the conventional “think global, act local” mantra, offering a more nuanced and influential method to tackle today’s complexities. This strategy is implemented through a tripartite approach:

  • Developing a Global Technology Stack: Zoho creates its software products suite, ensuring total control and adaptability.
  • Empowering Local Teams: Zoho sets up regional offices staffed with local talent, enabling them to tailor solutions to specific market requirements.
  • Prioritizing Local Communities: Zoho invests in local talent development, infrastructure, and social initiatives, nurturing a sense of collective responsibility and growth.

Transnational localism strikes a balance between global outreach and local engagement. It involves establishing offices in less affluent locations globally, injecting investment, expenditure, and job creation into these areas. The company stays globally connected, not just digitally, but also through a shared ethos and culture, while remaining locally anchored.

Zoho’s CEO, Sridhar Vembu, characterizes transnational localism as a strategy that sources talent from regions often neglected by other companies. These are typically areas experiencing talent emigration, leading to hollow communities. Zoho strives to reintroduce opportunities into these regions, commonly drained into urban centers.

Zoho IMG 9649

Beyond the Numbers: Real-World Examples

Zoho’s dedication to transnational localism extends beyond mere theory. It has actualized this philosophy by setting up a global network of over 25 offices in rural areas. Many IT suppliers overlook these locations for opportunities compared to their metropolitan counterparts. For instance, Zoho has an office in McAllen, Texas, with nearly 150,000 residents within a metropolitan area housing over a million people.

Another notable instance is Tenkasi in India, where Zoho inaugurated its first rural office. Despite being a city of nearly 100,000 people, Tenkasi is considered rural compared to India’s major metropolitan areas. In Tenkasi, Zoho operates a remote farm and an elementary school, both flagship initiatives in its rural revival strategy.

Zoho demonstrates its commitment to social responsibility in several ways. It has invested in rural India through its "10,000 Schools" program, which bridges the digital divide by providing digital infrastructure and training to schools. Additionally, Zoho empowers local communities by establishing offices in smaller towns across the US and Europe, fostering diversity and creating local job opportunities. Finally, Zoho tailors its product suite to specific market needs, showcasing its commitment to global inclusivity by respecting cultural and regulatory contexts.

The Impact on Zoho's Business: A Multi-Faceted Success Story

Transnational localism has significantly influenced Zoho’s business, propelling its remarkable growth. By the end of 2021, Zoho had amassed 500,000 customers, over 70 million users, and 40,000 customers on Zoho One, a product launched in 2017. One of these customers had 32,000 employees utilizing Zoho One. Fast-forwarding to 2024, Zoho’s customer base has expanded to over 750,000, with over 100 million users across 150+ countries.

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2024 Top 10 SMB and Midmarket business issues, IT priorities and challenges

Focused on growth and committed to new solutions that expand business horizons – the SMB market is on the brink of a multi-year growth trajectory.

They are here - Techaisle's annual SMB, Core Midmarket and Upper Midmarket Top 10 IT Priorities, IT Challenges, and Business Issues infographics, 13th year of Techaisle tracking at a WW level, and is sought after by IT vendors, channel partners, and media. Techaisle surveyed nearly 5000 SMBs and Midmarket firms, quota sampled to ensure adequate coverage of four small businesses (1-9, 10-19, 20-49, and 50-99 employees), three core midmarket (100-249, 250-499, and 500-999 employees) and two upper midmarket (1000-2499, 2500-4999) segments. As a result, the data represents a robust and reliable sampling of the market segment for IT products and services.

Techaisle surveys thousands of small and midsized businesses (SMBs) to understand technology imperatives and directions. The annual survey establishes context by asking respondents to identify their top business goals, technology priorities, and IT challenges for the upcoming year.

2024 top10 smb it priorities business issues techaisle infographic

Redefining the art of the possible

The SMB market is a study in contrasts: the tension between boundless aspiration and a constrained reality. However, data shows that a market that has mastered the cloud and is excited by AI will dedicate itself to growth in 2024.

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Top 10 SMB and Midmarket business issues, IT priorities and challenges for 2023

They are here - Techaisle's annual SMB and Midmarket Top 10 IT Priorities, IT Challenges, and Business Issues infographics, 13th year of Techaisle tracking at a WW level, and is sought after by IT vendors, channel partners, and media. Techaisle surveyed over 5000 SMBs, quota sampled to ensure adequate coverage of four small businesses (1-9, 10-19, 20-49, and 50-99 employees), three midmarket (100-249, 250-499, and 500-999 employees) and two upper midmarket (1000-2499, 2500-4999) segments. As a result, the data represents a robust and reliable sampling of the market segment for IT products and services.

Significant changes in 2023 as compared to 2022 are:

  • Driving innovation and managing uncertainty, absent in 2022, are among the top 10 business issues in 2023.
  • Deploying customer experience solutions as an IT priority has moved to 4th place as compared to 9th in 2022. CCaaS is considered an integral component of customer experience solutions.
  • Implementing employee experience platforms and 5G-enabled devices/applications are new IT priorities within the top 10 list. UCaaS is one of the technology areas being investigated by SMBs.
  • Adopting collaboration technology solutions has move down from 3rd rank to 8th and hybrid workplace solutions as a priority ranks 10th as compared to 5th in 2022
  • Budget constraint has been a constant IT challenge fixture for over a decade. For 2023, it has been replaced by cloud cost management. Cloud optimization and cost management are the top IT challenges for SMBs, Core-Midmarket, and Upper Midmarket firms.
  • Preventing Cyberattacks, adopting Zero Trust, and moving to as-a-service technology acquisition for new IT challenges are among the top five.
  • Sustainability is increasingly becoming relevant and essential for the SMB segment, and there is no surprise that it is among the top challenges.
  • Integration, business process automation is now non-optional and a challenge, which is worsened because of the inability to find trained employees
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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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