CRM set to be a commodity? Interview with Raju Vegesna at Zoho

January 14, 2010 Richard Boardman

The following is an interview I did with Raju Vegesna at Zoho Corporation. Some interesting thoughts, particularly on CRM software as a commodity:

[RB] Could you give us an introduction to Zoho Corporation and your role?

[RAJU] Zoho Corporation (formerly AdventNet Inc) was founded in 1996. The company is headquartered in Pleasanton, CA and also has offices in Austin & New Jersey in US. Zoho also has offices in India, Japan, China & UK. The company has over 1200 employees, is private, profitable and never raised any external capital. Zoho is a comprehensive suite of award-winning online collaboration and productivity applications for small and medium-sized businesses, as well as consumers. I am currently the Evangelist for Zoho.

[RB] What’s the typical profile of one of your CRM customers, in terms of things like size of organization, number of users, geography etc?

[RAJU] Companies with tens or hundreds of users use our CRM app. We also have many free users using the free version of our app. Our users are geographically well distributed. 50% are from US and 50% from rest of the world. The usage is high from countries that have good broadband connection.

[RB] What lead you to enter the CRM market-place?

[RAJU] We initially built an installable product to meet our own needs. It eventually evolved as a SaaS App which we use along with many users. We wanted to provide a good set of feature-rich apps for SMBs to run their business online at an affordable price. Obviously, CRM is an important part along with other apps we offer. When all these apps knit together well, it can be a compelling offering to SMBs. That is our vision and our CRM app is one key component in our application portfolio.

[RB] You’ve been pretty visibly targeting Salesforce.com users with your Zwitch programme, do you consider them your main competition?

[RAJU] Yes, Salesforce is our main competitor when it comes to CRM application. Customers are starting to see the value we bring to the table with a rich set of features, a good price, and integration with our broad set of apps.

[RB] How does Zoho CRM differentiate itself from other CRM vendors?

[RAJU] Our Zoho CRM differentiates in three key areas – features, integration and price. The application has breadth and depth at very attractive price points. Given the fact that users can start using a fully featured app for free is a great plus (the app is free for the first 3 users). Also, its integration with our other applications (Like Mail, Meeting, Writer, Sheet, Show etc) is unique.

From my own review work I found Zoho CRM had a surprisingly comprehensive set of functionality, you’ve also got a very broad suite of other applications, how do you as a company maintain that sort of rate of development?

[RAJU] Every application has a dedicated and passionate team focused on that market. The mandate for each team is to be the best in that category. In CRM, we want to be the best CRM out there for SMBs. This is the case for every single app. We have frameworks that take care of underlying plumbing so that individual teams focus on the application and features. Once an app reaches a certain level of maturity, teams work together to integrate them to work harmoniously.

[RB] The use of CRM technology to harness social media seems to be the hot topic of the moment. Are you releasing functionality in that area?

[RAJU] We are working on some improvements to CRM which will also include integration with social media. Unfortunately, I cannot provide additional details on this at this time.

[RB] Is there news you can share about your roadmap for Zoho CRM with us?

[RAJU] Zoho CRM will continue to improve as an application with additional features and improvements. Integration (with other Zoho apps) is going to be an important theme for CRM this year. We will also integrate CRM with external apps as well. We might launch a new application complementing CRM this year.

[RB] Other than Zoho perhaps, who do you see as the winners and losers in the CRM market over the next few years?

[RAJU] I don’t want to name any vendors, but as general themes, I see CRM becoming a commodity app for businesses. This means, vendors charging an arm and a leg will bleed users. Vendors that integrate with other existing systems will win. Mobile will play an important role in CRM and vendors will have to embrace it. I expect CRM will continue to be an active market in coming years and we will see many vendors succeed.

Where do you see Zoho as a company in five years time?

[RAJU] Five years is eternity and it is tough to see where we will be. The fact that Zoho itself didn’t exist 5 years back shows the rapid evolution in the market. We think SaaS will commoditize software and we will no longer see the margins we see today. We want to be one of the important companies around, innovating and serving our customers well.