Zoho Brings Another Application to the Cloud

Those who prefer to keep business in the family received some heartening news today when on-demand application provider Zoho rolled out Zoho Invoice, a new addition to its Zoho Suite collection of online office-productivity offerings. The announcement of Invoice's release comes hard on the heels of Zoho's earlier March release, Zoho People, an application for managing recruitment and human resources. The two new members of the Zoho family join their "in-the-cloud" siblings and extended family:

• Zoho CRM, an on-demand CRM application (free for three users);
• Zoho Writer, an online word processor
• Zoho Projects, project management software (free for one project);
• Zoho Sheet, online spreadsheets
• Zoho Show, an online presentation tool (like PowerPoint);
• Zoho Notebook, online note-taker;
• Zoho Meeting, Web conferencing;
• Zoho Wiki, a full-featured wiki;
• Zoho DB & Reports, an online database capable of generating reports
• Zoho Creator, a creator of database applications;
• Zoho Planner, an online organizer;
• Zoho Chat;
• Zoho Start, a start-page dashboard for Zoho documents

Additional solutions are listed on the Zoho Web site as being in either public or private beta:

• Zoho Mobile, a Web application for Windows Mobile and Apple's iPhone;
• Zoho Business, online business solutions;
• Zoho Mail, collaboration groupware.

The company also lists the following utilities:

• Site 24x7, a Web-site monitoring service;
• Zoho Viewer, for viewing and sharing documents online;
• Zoho Polls, online polls in a snap; and
• Zoho Challenge, a way to evaluate candidates.

When Zoho was launched in 1996 by its privately held parent company, AdventNet, the initial offerings were simple Web-based applications such as Writer and Sheet; the CRM application launched in June 2007. Nick Gall, an analyst at Gartner -- which last March named Zoho as one of its "Cool Vendors" -- has strong praise for what he calls Zoho's what-you-see-is-what-you-get functionality. "Even though Microsoft Office is a de facto corporate standard, many users are using Zoho to collaborate with colleagues and clients more easily," Gall writes, adding that Microsoft Office's collaboration capabilities are often perceived as "too complex to use." In the sense of a productivity suite that resides "in the cloud" -- an industry reference to Web-based applications and software -- Zoho is often compared to Google, with whom Zoho shares a preference for a simple, clean interface, primary colors, and lots of white space. (Zoho also signed onto Google's open standard for Google Gears, allowing users to have offline access to their information.) Google, however, does not offer the breadth of financial applications or CRM offerings that Zoho has built. Zoho says that its goal is to provide an inexpensive, easily adaptable, low-maintenance software-as-a-service (SaaS) solution. Jim Holincheck, a Gartner research vice president, points out that a suite such as Zoho's is a solid alternative for small and midsize businesses (SMBs) that have organized employee data in spreadsheets. Because it is SaaS-based, the solution is more affordable and less risky for SMBs -- an advantage Zoho intends to exploit. "We are trying to be the IT department for SMBs," says Raju Vegesna, the evangelist for Zoho. In fact, even by SaaS standards, Zoho seems to be competing on price -- even undercutting other SaaS vendors. Zoho CRM -- which was launched nearly two years ago, and extends the traditional CRM offering with procurement and inventory functions, as well as some accounting capabilities -- is free for up to three users, and costs just $12 a month for each additional user. (Salesforce.com, by comparison, costs $65 per user per month.) The upcoming integration with Invoice will take the CRM application to a higher level, allowing users to create and send out invoices to customers. Users will also be able to generate estimates. The success of Web-based applications that are low in cost and wide in breadth such as Zoho has not gone unnoticed. In fact, there have been reports that the company has already spurned at least one acquisition offer, from Salesforce.com. "It wouldn't surprise me to see an acquisition happening at some point," Holincheck says. "But I don't think they are necessarily out there shopping themselves. I think they are organically trying to grow the business." Holincheck points out that there is a decent amount of industry competition in the individual functions that Zoho has targeted. Many of those roles are outsourced by midmarket companies or often tackled in-house -- opting instead for an entire office suite such as Zoho's is a relatively new notion. By providing an entire suite of options, Zoho will be competing against SMBs' desire to outsource single areas such as human resources or accounting. It's about volume, Holincheck says: Zoho's success rests on ints ability to garner significant attention and a large volume of customers. Zoho will also have to continue with the integration of formerly siloed applications. "It's not the [same old] online office market anymore, where initially there wasn't a whole lot of competition," Holincheck says. "There's a relatively robust competitive landscape that they will have to find their way to fit in and make a name for themselves and integrate to provide the complete solution." Affordability is one of Zoho's key differentiators. Take for example the newest Invoice application: For an "elite" package, Zoho allows users to create up to 1,500 invoices a month for $35. To gain attention for its People application, Zoho offers free trials for up to 10 employees. Vegesna estimates that from there, People may cost close to $4 per employee. As for the future, Vegesna says that Zoho intends to expand its desktop- and Web-based applications and has plans to integrate all of them. (In fact, he promises another Zoho application launch is on the short-term horizon, but declines to divulge further details.) Zoho may be small, but it's dreams certainly aren't: The company, Vegesna says, envisions itself becoming the go-to business application for the entire SMB market.

Related articles: Feature: It's All Coming 2.0gether As 2007 ends, and 2008 looms ahead of us, patterns are beginning to emerge: The future of business may not be in the hands of the executives, but those of the customer instead. And yet, hasn't it always been that way? Big Changes in Solutions for Small Businesses Consumerization, software-as-a-service, and several other industry developments are affecting how application vendors approach smaller organizations. Feature: Always On The new generation of consumers, clients, and customers is perpetually connected -- to the Internet, to you, and to each other. What can Web 2.0 do for you? Salesforce.com Uncouples Apps from CRM The company introduces Salesforce Platform Edition, a version that allows application development and sharing without a CRM subscription. SaaS Will Outpace the Rest of the Market A recent forecast predicts software-as-a-service will be the dominant source of the market's revenue growth.

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