Zoho has introduced a cloud suite that seeks to counter Microsoft Office 365, Google G Suite, Salesforce and other major SaaS applications. It sounds almost too good to be true: It claims to contain every application you need to run a business for the bargain price of about $1 per user per day.
The Zoho One bundle includes all 38 Zoho cloud apps, integrating sales, marketing, accounting, service, productivity functions and more under one account with a single login.
Apps include enterprise editions of CRM, campaign management, social media management, email, documents, spreadsheets, presentations, invoicing, billing, human resources and more, plus half a dozen native apps and more than 40 mobile apps.
But is there a catch to this all-in SaaS strategy?
Zoho One SaaS Strategy
Zoho is taking a page from the playbooks of tech giants like Amazon and Facebook with this latest venture, several tech analysts and consultants told ChannelE2E: Low profit margins but a huge volume of potential customers.
“They’re looking to have millions of customers on their platform, allowing them to have the scale to make a bold move like this pay off,” said Bradley Shaw, a Texas-based digital marketing consultant. “The plan appears to be small margins but big revenue opportunities over a huge user base.”
Brent Leary, a tech consultant and partner at CRM Essentials, told us Zoho has always operated with fairly low pricing and margins, and it has been profitable that way. Now, the company is using that same strategy to scale up, seeking to win over potentially millions of business users.
In a blog he published on LinkedIn, Leary said SMBs will have to consider this product just for the sheer value, while larger enterprises will be interested in seeing what expensive but less often used apps it might be able to replace.
“Zoho One is one of the most interesting business experiments I’ve seen in years,” he wrote. "Because when you look to the value prop on its face, it’s a no brainer to at least give it a try.”
Zoho One: Potential Drawbacks and Challenges
Zoho One is available now for $30 per month per user, if billed annually, or $35 per user per month on a month-to-month basis. Companies must pay for every employee they have, even if some won’t be using the apps.
One of the drawbacks, Leary said, is that you can’t expect a product offering more than 35 different apps to have the best and deepest functionality in every one of those apps.
Also, most companies have apps like Gmail or Outlook they’ve been using for years. They’re unlikely to just drop those and start using Zoho Mail right away, so some integration will still be required for most users, he said.
Steve Chipman, co-founder of software strategy and planning firm CRM Switch, pointed out that Zoho’s apps do not run on shared database schema. Each time Zoho releases a new app, it needs to be integrated with the 25 to 35 associated apps, he said.
The challenge for Zoho going forward, according to Leary, will be making sure it offers superior customer support. The low pricing is attention-getting, but if the apps are difficult to use and the support doesn’t meet expectations, users won’t stay.
And like Amazon, Leary said, Zoho must continue to come out with new features, functionalities and easier integrations to maintain the customer perception that the product is a no brainer in terms of value.
Impact on Channel Partners
For partners and resellers, Zoho One likely means less revenue from licensing but more opportunities for services revenue, according to Chipman.
Leary said partners can offer customized apps and integrations within the Zoho One framework or offer third-party integrations with apps that aren’t compatible with Zoho out of the box.
Zoho One might also open up opportunities for partners to work with new enterprise customers. Large enterprises aren’t likely to use all 38 Zoho One apps, Leary said, but those that buy the suite even to use just a few of the apps will most likely turn to a third-party MSP or reseller to manage the service.
