UPDATED 13:01 EDT / FEBRUARY 13 2024


Rethinking the business of software at ZohoDay 2024

Enterprise software is a winner-take-all game, where also-rans are acquired or run out of business by a few dominant vendors that can lock in customers, demand their own price and grow at a disproportionate rate to the economies they serve.

At ZohoDay 2024 near Zoho Corp.’s latest tech center in McAllen, Texas, an audience of more than 100 analysts and influencers was humbly presented with artificial intelligence-driven process design and integration capabilities that could propel this software-as-a-service productivity vendor from its leadership in small to medium-sized business market into larger enterprises in several vertical markets.

Now that India’s government requires private companies to submit financials, we find that Zoho reported more than US$1.1 billion revenue in 2023. Although that may not be a blip on the radar of Salesforce Inc., much less Microsoft Corp., it is certainly impressive for the firm’s first disclosure, demonstrating a fast-growing user base for the company’s low-priced application suite.

Playing the long game

Zoho Chief Executive Sridhar Vembu (pictured, center, with Vijay Sundaram, left, and Raju Vegesna) kicked things off with an explanation of Zoho’s long game, a strategic reset of the typical sales-driven growth mentality of a software business.

As the story goes, much of the success of our current megalithic technology companies isn’t the result of innovation – it’s thanks to an imbalance between consumption and production. Governments and households are accruing more debt, while profitable tech companies are acquiring competitors, locking in customers and basically printing money for their shareholders and creditors, without reinvesting proportionally in innovation, or supporting the communities they live and work in.

The technology industry has made incredible strides in automation, data management and AI. Are these advances improving productivity and economic conditions, or simply cutting skilled labor costs and creating tedious administrative jobs? By enabling both technical and nontechnical resources to get involved in innovation, they are betting that having all hands on deck will keep software moving forward sustainably.

“Programmers have worked like artisans of old weaving code painstakingly by hand,” Vembu said in his presentation. “Machine looms are coming.”

To prove this, we heard from several customer panels, representing multiple industry verticals such as finance, consumer goods, utilities and professional services about how they generated return in investment on their inexpensively adopted automation investments in the Zoho One suite.

Thanks to the low learning curve for tools such as its Creator no-code app designer and its Catalyst integration and deployment platform, small teams can create dozens of specialized apps that would be impossible to hand code without a deep developer bench, and impossible to support if generated by another low-code or code generation tool.

Consistently, Zoho’s approach still offers a suite of most of the tools you can think of to run a business or equip employees, while avoiding lock-in by offering integration modules to existing tools. Customers can use them all under the Zoho One suite, or keep using their own customer relationship management, chat, email, analytics, accounting, automation, data stores, marketing and authentication services.

Rightsizing AI with contextual intelligence

Zoho also takes a different approach to AI that predates the hype of ChatGPT, taking process intelligence from specific verticals, and applying that corpus of business data in a private way for machine learning in a process it has dubbed Contextual Intelligence.

“What is the best AI implementation?” said Raju Vegesna, chief technology evangelist at Zoho. “When the customers don’t even know they are using AI.”

Vegesna presented a live AI-driven demo, building an application on the fly and generating relevant data tables with just a prompt to “Generate an Analyst Relations management app” to its Zia AI assistant atop Zoho Creator, using the context of its analyst contact data. Having managed analyst relations as a vendor in my own past, I found the resulting instant app looked surprisingly workable, containing the parameters I’d expect for organizing this complex relationship-centric process.

The firm also presented a unique strategy for rightsizing AI workloads. Rather than applying a massive large language model for every query, its AI can instead make inferences against medium and small language models with reduced training data sets for very specific problems with fewer variables, enabling workloads that can run on lower-powered central processing units, or even on airgapped servers or devices with smaller, specialized training data sets.

Betting on the proposition of transnational localism

The killer app on display here wasn’t an app at all. It was Zoho’s philosophy of “transnational localism,” in which its establishes innovation centers within often overlooked cities and rural areas around the world.

The “localism” part of its practice started years ago as Zoho established or funded farms, schools, clinics and renewable energy facilities alongside tech centers in provincial communities around its Chennai, India headquarters. Now they are establishing several new transnational tech centers in far-flung corners of every continent (except Antarctica, of course).

“We have to master the production technology that creates local jobs,” said Vembu. “We have an R&D team right now, a team of engineers who are creating new production technology, highly sophisticated technology, but politically affordable. So that it can make a rural work economy, and the production and consumption are more locally balanced.”

By investing in areas where land or capital is inexpensive and cultivating local economies that encourage talent to learn and stay, it is hoping to create a sustainable and diverse set of global innovation centers that can cater to regional businesses and encourage startups — in a way that no other tech company beholden to investors would dare to try.

The Intellyx take

Our event concluded with a field trip to the southern tip of Texas, where SpaceX builds and tests massive stainless-steel rocket boosters and reusable spacecraft with the ambitious goal of one day opening human travel routes to Mars.

Maybe there was a reason why we were brought to this site that has seen so many launches and failures, and therefore, so many successful engineering breakthroughs that could someday make spaceflight a sustainable reality.

No other company operates exactly like Zoho. It is willing to take chances, fail and correct course, but not at the expense of its employees. There are no salespeople, and its customers are the evangelists. There’s no need for big gala marketing events and promotions to generate leads.

This event gave me a glimpse into another way of running a transnational software business — one that is both focused on customer needs and conscious of its impact on local economies.

Jason English is director and principal analyst at Intellyx. He wrote this article for SiliconANGLE. Intellyx B.V. Intellyx is solely responsible for the content of this article. At the time of writing, Zoho is an Intellyx subscriber, and they covered costs for the analyst to attend, a common industry practice.

Photo: Jason English

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