It is all about Productivity

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Mike Gunderloy at WebWorkerDaily has a great post on continuous innovation in online office suites. Both Google & Zoho are moving at a rapid clip. The root cause of this faster pace of innovation? Software development productivity.

We have experience in both the traditional and cloud model of software delivery, so can say with confidence that the cloud computing model enables a quantum leap in software development productivity. Such productivity gains for producers translates into faster innovation and better quality. And as I argued in my previous post, the reduced friction of lower switching costs in the cloud computing model will work to reduce prices as well.

Projecting this productivity advantage forward, I am confident in predicting that within a year or two, online suites will overtake desktop software in terms of features and functions. It won’t just be the Zoho or Google suites that would get there, perhaps even new companies that are as yet unknown (I am assuming Microsoft already has its cloud service coming out!). Conventional wisdom holds that online suites will forever be a lightweight alternative, but I believe that will be turned on its head.

Where do these productivity gains come from? I will address that in a separate post – there are numerous disparate sources that aggregate into a vast gain.

This is great news for consumers, even for the ones that don’t switch to the cloud, simply because of the pricing pressure it will bring. Like the open source competition which preceded and even enabled the cloud computing revolution, this competitive dynamic is fundamentally different from the one that Microsoft has faced before.

Cloud Computing, Switching Costs & Software Prices

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Amazon is the most important software company in the world that does not think like a traditional software company, particularly of the “enterprise” or “business” software variety. I am talking about the Amazon Web Services platform. In any rational business, as scale goes up, per-unit costs go down. Competitive market dynamics ensure that prices go down. Sure enough, Amazon recently lowered prices of their services, as they gain scale, and lower their cost of operations. Compare that with what has happened in the business/enterprise software market.

In 1995, when I bought my first personal computer (a whopping 16 MB of RAM!) in San Diego, it cost me almost $3,000 and that was from a local white-box assembler who specialized in cheap. Windows 95 added about $50 to the cost. Microsoft Office came in around $250. Fast forward 13 years, and a perfectly serviceable PC can be had for $300-400. Vista probably will set me back about $80 assuming OEM pricing by the PC vendor. Microsoft Office will cost more than the PC itself, if I am a business user. Even a “generously” discounted student edition is about $120. As hardware costs plummet, software prices have actually gone up, so outfitting a PC with software now costs more than the hardware cost of the PC itself.

Contrary to what software sales and marketing types would have you believe, there is nothing rational about any of this. Throw away arguments like “Software is getting more complex, cost of development only goes up” and so on, because all of those things are true for hardware as well – a semiconductor chip is really hardwired-software. It is all too easy to blame sticky prices on “monopoly taxes” and while I believe there is some truth to the monopoly argument, there is something more fundamental going on. After all, Oracle is in a fairly competitive market, and still no one even expects Oracle to ever drop prices – perish the thought, that never happens. The clearest evidence of such an ingrained expectation is that no Internet company today would even consider Oracle for its database needs. On the flip side, Internet Explorer got itself into a near monopoly after the demise of Netscape, and yet, Firefox has stormed its way up to 20% market-share and climbing.

So the real explanation is elsewhere, and the Firefox example is illuminating: it is the friction of switching costs that keeps prices high. Switching from IE to Firefox is fairly easy – in fact, just last week, at the Web 2.0 Expo trade show floor, we discovered that the demo machines we had rented came only with IE, and the first thing we did was to download and install Firefox. That was almost an instinctive act, done without even much thinking. And a perfect illustration of almost zero switching costs.

That is also why cloud computing is so important to business and enterprise customers, even for those that don’t use cloud services. Switching from one web service to another is nowhere as complex as switching your operating system or even your desktop software. In any event, the vendor does most of the work. As one illustration, we frequently migrate Salesforce cusotmers to Zoho CRM, and the process is nearly fully automated, with human intervention mostly confined to perform quality assurance checks to ensure there are no glitches for the customer. As cloud services compete in a relatively low-friction market place and therefore prices fall along with unit costs, it is going to drive prices down even for conventional software.

Amazon is a perfect illustration of it. A lot of the code behind Zoho services was written before Amazon web services came on the scene, yet we have found that it is fairly easy to run our applications on the Amazon infrastructure – it took just a few days to test this out.

Lowered switching costs is going to dramatically alter the dynamics of the software industry. For all too long, vendors have hidden huge inefficiencies in their business model under the comforting cushion of high switching costs for customers. Not anymore. Watch for falling software prices ahead!

Baihui Distributes Zoho Apps in China

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We are happy to announce a new distribution partner in China – Baihui, a subsidiary of PC Stars – the largest Chinese online distributor with more than 2300 Resellers and over 1000 System Integrators.

With this partnership, Baihui hosts Zoho Applications in China for distribution in China (ofcourse, in Chinese language). These applications will be distributed under Baihui brand. To start with, Baihui will offer the following Zoho applications…

This list will expand going forward. All these applications are currently available @ www.baihui.com.

As with Zoho, Baihui plans to offer these applications free of charge for individuals. Zoho CRM does carry a price tag (99RMB/User/Month) beyond three free users.

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While I don’t understand any of the stuff in the above screenshot, we are certainly excited to see our apps up there. Almost 50% of our existing users are outside US which is a good sign. We think partnerships like these will extend our reach further.

There are more exciting stuff coming from Zoho. We’ll keep you posted.

Zoho Projects Update : Task Dependency & more

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One of the most asked for functionalities in Zoho Projects is finally here. Dependency of tasks! And the current update brings in a few more useful features as well. The update in detail :

Task Dependency : You can now set dependency among tasks. A Task can now be made dependent on one or more tasks being completed.

Assigning a Task to Multiple Users : This is another much asked for feature from our customers. Zoho Projects now lets you split & assign a Task among multiple users.

Uniform Date format : Set a date format under ‘Settings’ -> ‘Company Settings’ -> ‘Date/Time Format’. And this format gets reflected throughout the rest of the Zoho Projects UI screens.

Clear Task date : It’s now easy to clear the start or end dates of a Task in case you have decided to reassign dates at a later point of time. Previously, you’d to delete the Task and add it again without dates.

Delete Forum category : This extends the forum post deletion function. Now, entire forum categories can be deleted.

Delete Project : An extension to ‘Clear Project’ that deletes the whole project. Be cautious while using forum & project deletion. The data can’t be retrieved.

Other than the above, a few bugs have been fixed too. Try Zoho Projects & do post your comments below.

Zoho a la carte

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We get asked frequently about integration of some Zoho service or another with a third party service, often with that of a competitor. As one recent example, see this thread on Zoho CRM integration with GMail/GTalk. The question often is “Is Zoho all or nothing? If we like and use one Zoho service, would we be forced to use all of them as a bundle?”

The categorical answer is “No, Zoho is not an all or nothing proposition. We fully respect user choice and will fully support mixing and matching Zoho services with competing services.” We have intentionally architected the Zoho suite so that each service stands on its own, and can be mixed and matched with third party services. This “depth-first” architectural strategy, whereby each service is useful by itself (independent of integration with other Zoho services), enables a style of loose-coupled – RESTful, in the technical lingo – integration that makes it just as easy to integrate a Zoho service with a third party as it is with another Zoho service. We believe in customer choice, interoperability and data portability, and we do not want to lock-in any user. And we fully recognize the reality, particularly as a smaller vendor, but even true for very large vendors, that customers do not want to put all their eggs in one basket.

Specifically, to answer the specific question asked in our forums, Zoho CRM will interwork with the Google suite – including the all-important GMail, but with other Googe Apps components as well. But this extends beyond Zoho CRM – all of Zoho services will interwork with third party vendors wherever it makes sense, regardless of whether Zoho competes with that vendor in one aspect or another. As an example, if 37Signals would let us, we would be happy to integrate our Zoho Invoice or Zoho Wiki with their Basecamp project management offering, in spite of the fact that Basecamp competes directly with Zoho Projects.

It is that philosophy that guided us in our integration of the Zoho productivity applications with Salesforce AppExchange – an integration we nearly completed when they decided it wasn’t in their interest, something I actually disagree with; I believe it would actually make the Salesforce ecosystem stronger to let Zoho services in, but then again, perhaps it is in our best interest that they won’t let in Zoho! It is a different matter, of course, that it is their customers who lose.

Zoho a la carte is a fundamental guiding philosophy for us, not just a tactical competitive move. It brings numerous architectural benefits to us, enabling us to move faster in our own development.

Introducing Zoho ‘Affordable’ CRM – Enterprise Edition

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Zoho CRM which is part of our Business Applications set (Zoho Invoice, Zoho Projects, Zoho Meeting, Zoho People, Zoho DB, Zoho Creator etc) is now going one step further with the launch of Zoho CRM – Enterprise Edition.

This new release comes with a broad set of new capabilities making it easier for medium to large organizations to implement Zoho CRM. Some of the enhancements to the update include…

  • Introduction of Role-based Security Administration
  • Enhancements in product Customiation & Data Administration
  • Multi-language Support (11 Languages)
  • SSL Support for Professional & Enterprise Versions
  • Integration with Zoho Sheet
  • and lot more as mentioned here.

The key enhancement is the introduction of the Role-based Security Administration which makes it easier for managing the access permissions of users in an organization with multiple levels of hierarchy. In this Role-based Security module we introduced Roles, Profiles and Groups concept providing greater flexibility in access-control and customization.

The image below summarizes the new Role-based Security Administration section. Existing users: Please look at this document to understand how these changes compare to our previous version.




This video gives a quick introduction to this functionality. An online demo of the application is availble here.

Pricing:

As with other Zoho applications, Zoho CRM is very affordable. Here is the pricing information.

  1. Personal Edition – Free for 3 Users
  2. Professional Edition – $12/User/Month
  3. Enterprise Edition – $25/User/Month

Professional and Enterprise Editions are also free for the first 3 users. Detailed information on Pricing (along with feature separation between these three editions) is available here.

Zoho CRM Integration with Zoho Productivity Suite:

Zoho Sheet is now integrated into Zoho CRM which lets users edit Zoho CRM data on a spreadsheet using the ‘Zoho Sheet View’ option available in most of the modules. This provides an easy way of editing your form-based relational content in a spreadsheet view and saving the changes back to the CRM Database.

This is just a starting point and we plan to do an extended integration with our productivity suite once Zoho CRM is part of our Single Sign-on System (currently in the works).


Competition:

It is a well known fact that Zoho CRM competes with Salesforce. But the unknown fact is that the functionality of Zoho CRM is more broader for Personal and Professional Editions. Here is a quick comparison between these two applications. You’ll notice that ‘Affordable Apps’ doesn’t necessarily mean less-featured apps. All this functionality is available at fraction of the cost. To give you a quick example, for a 5 person organization, the savings with Zoho CRM are 3x and 8x (per year) with our Personal and Professional Editions respectively against the competition.

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More information on this update and the application is available on our new Zoho Wiki-based help. As always, we’d love to hear your feedback on this release.