Techaisle Blog

The accounting industry stands at a critical juncture. Small and mid-sized businesses (SMBs) and the accountants and bookkeepers who serve them are navigating a complex landscape defined by talent shortages, mounting regulatory pressures, and persistent economic uncertainty. In this environment, the traditional role of accounting software as a mere system of record is no longer sufficient. The market demands a shift towards a system of intelligence—one that not only records transactions but automates workflows, anticipates needs, and delivers actionable insights.

At its recent Xerocon Brisbane event, Xero articulated its response to this demand with a series of announcements that signal a profound strategic evolution. Moving beyond incremental feature updates, Xero unveiled a cohesive vision centered on a supercharged AI financial agent, a unified partner platform, and strategic acquisitions to bolster its payments ecosystem. This is not just about making accounting easier; it is about fundamentally reimagining the nature of financial management for SMBs and redefining the value proposition for their advisors.

The AI Superagent: JAX's Evolution from 'Just Ask' to 'Just Done'

The centerpiece of Xero's future vision is the evolution of JAX (‘Just Ask Xero’), its AI business companion. Xero is moving JAX from a "just ask" tool to a "just done" financial superagent, built on an agentic AI platform. This is a critical distinction. While many vendors are adding conversational AI interfaces, Xero's ambition is to create a system that proactively automates manual, repetitive tasks across bookkeeping, tax, payments, and reporting.

As an industry analyst, I attend numerous briefings where vendors discuss their commitment to the small and midsize business (SMB) market. The narrative is often similar, focusing on simplified features or tiered pricing. However, Zoho's recent SMZ analyst event offered a perspective that was profoundly different. It was not just about selling software; it was a cohesive, long-term philosophy for empowering businesses from the moment of conception. With a staggering 40% year-over-year growth in its global customer base in the first half of 2025, it is clear this philosophy is not just resonating – it is thriving. Zoho is proving that to truly serve the SMB market, one must be a partner in their entire lifecycle, from a simple idea to a flourishing enterprise.

The "SOHO" Soul of a Global Powerhouse

To understand Zoho's strategy today, one must look at its origin. The name "Zoho" itself is a nod to "SOHO," or Small Office/Home Office. This was not just a clever marketing acronym; it was the foundational principle of the company. From its earliest days, Zoho has focused on building tools for the smallest of businesses, understanding their unique constraints and aspirations. While the company has grown into a global technology giant with a vast portfolio of enterprise-grade applications, it has never lost this SOHO soul. This heritage provides Zoho with an authenticity that few competitors can claim. It is not an enterprise company scaling down; it is an SMB-focused company scaling up, and that distinction is critical to its success.

The Four Pillars of a Resonating Strategy

During his keynote, Raju Vegesna, Zoho's Global Chief Evangelist, articulated the strategy that is driving this impressive growth. It is a strategy built on four core tenets that align perfectly with the needs of modern SMBs.

The narrative surrounding Generative AI has been one of explosive, almost chaotic, adoption. Businesses, particularly in the agile small and mid-market segments, have been scrambling to incorporate AI into their operations, lest they be left behind. However, as the initial dust settles, a more mature and sophisticated picture of AI adoption is emerging. The conversation is shifting from "if" to "how," and more importantly, "why." New research from Techaisle, based on a comprehensive study of 2,400 SMB and mid-market firms, reveals that the dominant need isn't just for AI tools, but for a deep bench of services that span the entire lifecycle from strategy to complex integration.

The findings paint a clear picture: businesses are looking for partners who can help them navigate the strategic complexities of AI and then execute on that vision with technical precision. The demand landscape is bifurcating into two critical, yet deeply interconnected, domains: GenAI Consulting & Strategy and GenAI Solution Development & Integration. This signals a significant market maturation, where the pursuit of AI is becoming less about speculative experimentation and more about driving tangible, strategic business outcomes.

The GenAI conversation is often dominated by the immense scale of cloud-based models from hyperscalers and tech giants. But for midmarket businesses, a far more strategic and tangible opportunity lies within their own four walls. Despite the undeniable shift to the cloud, a significant portion of valuable corporate data remains tethered to on-premise infrastructure. This is not a sign of being behind the curve; it is an untapped reservoir of unique competitive advantage.

At Techaisle, my team and I spend our time with midmarket firms, and the question we hear is not about replicating OpenAI's foundational model; it is, "How can we use our data to build a GenAI model that gives us an edge?" This is the sweet spot for vendors and their channel partners: helping these businesses unlock the power of their internal data to create a custom GenAI capability. This is a market where midmarket firms have a primary impetus to maximize value from existing data assets and unlock deeper insights. In our recent Techaisle study, 77% of Upper Midmarket firms and 66% of Core Midmarket firms stated this as a top priority.