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Image of Sridhar Iyengar, MD of Zoho Europe, at the company's Zoholics UK 2022 event
Zoho

Can Zoho thrive in the UK’s age of resilience?

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Cloud operators Zoho have signalled a renewed push into the UK market, with a strong focus on price and cost-saving efficiencies. But when it comes to UK businesses, will this be enough to win over a fast-maturing market for cloud tools?

13th Sep 2022
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“Did you bet on the right tech partner for your digital journey?” Sridhar Iyengar (above), MD of Zoho Europe, asked attendees at the recent Zoholics event in London – the first in-person conference held by the company in the UK since 2019.

Iyengar’s keynote was heavy on the current business environment. Alluding to competitors in the software space, he outlined his opinion that loose fiscal policies, financial indiscipline and all-time high debts have built unprofitable, unsustainable tech companies; “fragile businesses not geared up for tough times”.

“In the SaaS [software as a service] world, companies are unprofitable because their cost structures are bloated. There’s likely to be a painful consolidation ahead,” he added, “which doesn’t work well for customers of these companies.”

In the past, Zoho was perhaps best known as a customer database or customer relationship management (CRM) tool. However, its ecosystem has expanded to more than 50 apps across web-building, communication tools, HR and, perhaps most pertinently for finance professionals, Zoho Books, Expense, Invoice and Analytics. The Chennai-based developer turns over $1bn in revenue and has grown with no external funding from provate equity or the stock market.

“Being a private company allows us the freedom to shape our destiny,” said Iyengar. “We answer to employees and customers, not financial markets.”

To that end, Iyengar told attendees that Zoho had “taken the road less travelled” in terms of its growth trajectory. “We have no fancy offices in prime locations, no excessive sales and marketing spend, and we use our own software for everything – no Microsoft or Oracle,” he said. As the UK and much of the world enter a new “age of resilience”, these cost savings are passed on to customers, he added. 

Going beyond accounting

In terms of its UK accountant community, Zoho has a small footprint, partially due to a lack of activity on these shores but also because it currently has no accountant portal, with businesses using an external firm currently required to invite their accountant as an individual user. 

There are plans to rectify this, with an accountant edition of the software currently under development, with the standard client dashboard and task management functions, and also the ability to “contextually chat” with clients from within Zoho’s software rather than communicate externally via email, phone or video.

Zoho also has a new UK lead and a permanent UK base about to open in Bletchley, with further plans to expand.

The majority of users AccountingWEB spoke with at the conference use Zoho One, a suite that bundles 35 of the software’s apps together – including finance, HR, productivity, sales and marketing. This is available for an “all employee” price of £30 a month or a “flexible user” price (where you do not have to buy a licence for all employees) of £80 (pricing page here). 

Val Steed, director of Zoho’s Accountants channel, told AccountingWEB that the vendor’s major advantage in the UK market – particularly with its target market of small to medium-sized businesses – lies beyond accounting.

“If we’re just looked at by users on accounting we’ll be compared with the likes of Xero, QuickBooks and Sage,” he said. “But where we make sense is in the integrations, improving efficiency, streamlining workflows. 

“Britain has thousands of small businesses that could benefit from systems like Zoho One. They’re looking to grow and aren’t held back by larger legacy systems. In the current economic climate, the last thing businesses need is to be saddled with subscriptions that often run into their hundreds for things like web hosting, communications and back-office functionality,” continued Steed.

Ed Wray, director of Zoho implementation partner CloudPerfect, told AccountingWEB that until recently Zoho was “the biggest software company UK businesses had never heard of”. However, its recent growth hasn’t gone unnoticed in the tech community, and he also backed it to grow in the UK based on price and functionality.

“The average UK business has seven or eight apps,” said Wray. “Office 365 for email, Squarespace for a website, Zoom for video calls, Sage or Xero for accounts and so on, most of which these days are subscription businesses. These subscriptions add up, and none of the apps talk to each other unless you use something like Zapier to pull them together.”

AccountingWEB view

Any player looking to expand its reach into a fast-maturing UK market for cloud accounting tools will find it tough, with an established core of products (many of which don’t share Zoho’s reservations about marketing spend) not keen to cede any ground to competitors.

However, as a technology company with a heavy focus on product and integration, Zoho’s strategy of emphasising its differences, rather than wading into thought leadership or joining the accounting influencer arms race, seems a like sound one.

It would be nice to think that a well-built, competitively priced and integrated product would be able to establish a decent foothold in the UK, particularly when there’s a need for it in the SME community in these straightened times, but the world of business sometimes doesn’t always work like that. 

Timing may prove crucial, and this could be Zoho’s best chance of cracking the UK given the current software trend towards consolidation, with users buying more from multi-product companies and eliminating single solutions in an effort to reduce spending.

 

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