Zoho moves up in functionality but continues to keep prices down.
Posted Apr 21, 2008
Companies are running out of excuses not to adopt a customer relationship management system (CRM) into their businesses. On-demand Web application provider Zoho launched its CRM Enterprise Edition last Friday. Undercutting the prices of Salesforce.com as well as Microsoft Dynamics CRM, Zoho aims to make CRM more affordable, especially to the underserved market of small businesses.
While the company is better known for developing a breadth of functionality, as opposed to depth, the release of CRM Enterprise Edition, says Raju Vegesna, an evangelist of Zoho, signifies the company's pursuit to be "the best" in each of its many categories of offerings. Vegesna believes that Zoho's main customers--small companies--actually prefer breadth over depth. Its primary competitor, Salesforce.com, on the other hand, is focused on fewer business processes, but more sophisticated functionalities, and therefore, more suitable for serve large enterprises, who are already running multiple business processes internally anyway.
The highlight of Zoho CRM Enterprise Edition is its role-based security offering. As soon as a companies set up the system, it is able to establish a permission-based system based on the corporate hierarchy. These roles, Zoho says in its video tutorial, play an important part in terms of defining who can access what information. This feature, Vegesna adds, also differentiates Zoho's product offering from other CRM applications currently available.
The announcement comes just days after Google and Salesforce.com's integration announcement and days before Microsoft's announcement of its Microsoft Dynamics CRM Online 4.0. Vegesna says, however, that Zoho's release occurred independently, but admits that it was good timing. Analysts agree that if it wasn't intentional, it's certainly advantageous on Zoho's part. "Whenever Microsoft announces something," says Laurie McCabe, vice president for SMB insights and business solutions at Access Markets International (AMI) Partners, "...it brings a lot of attention to the area. Microsoft is focusing the spotlight on CRM and online CRM, and Zoho will be there."
Without a doubt, Salesforce.com is still the leading market share holder in the CRM space. But Salesforce, even with its 41,000 customers, is still missing the 6 million small businesses in the U.S. alone, McCabe notes. Zoho, therefore, is not only exerting price pressure into the CRM space, but giving the underpenetrated market of small and mid-sized businesses more alternatives than what was previously available.
The interesting thing to know about Zoho, notes Zoli Erdos, program chair of Silicon Valley Association of Startup Entrepreneurs (SVASE) and an advisor for Zoho, is its unique management process that ultimately contributes to keeping costs low for the user. "Salesforce is really a wonderful marketing and deal making machine. It's not an engineering company," Erdos says. "Zoho is the extreme opposite. Sales and marketing are a luxury expense, so they cut it out as much as they can. They have more engineers than Salesforce," he adds.
By staying in line with this business philosophy, Vegesna claims that Zoho would never increase product prices in order to compensate for the company's marketing spend. He explains that Salesforce.com's product is so much more expensive precisely because it spends eight times more on marketing than it does on coding and terms it, a "business model bloat." If prices do rise, Vegesna says that it will be because of improved and increased functionality.
Salesforce.com declined to comment.
Salesforce does deserve a lot of credit in terms of bringing on-demand CRM into the mainstream, but there is still plenty of room for competition as vendors have yet to conquer the entire span of businesses, McCabe says. Nevertheless, she adds, "we're past the point of proving [on-demand CRM] is a fad. It's definitely not a fad."
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