Zoho, Where Engineers Reign, Rewrites the Rules of Office Software

10/21/10Follow @wroush

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a comfortable, $40-million-a-year revenue stream from its established enterprise software products, the widely used network management tools WebNMS and ManageEngine. The maturity of those products means the company’s developers don’t have to spend all their time maintaining and improving them. Also, Zoho stands somewhat apart from the mainstream of U.S. business software market: its entire software development effort is focused in Chennai, India, far from the shadow of Redmond or Mountain View.

And down at the level of the software code, the company made an important decision back in 2003 that cleared the way for many of its subsequent innovations. “From the beginning we built a framework, middleware if you will, that predated Zoho,” says Vembu. “We knew that we would be building a lot of applications, but we didn’t know what.” The middleware, in essence, insulates the company’s applications from the files they work with; it means all of Zoho’s apps have access to disparate underlying resources, and on the back end, it means the company has an easier time scaling up its SaaS infrastructure to meet demand.

But none of this was deliberately planned. In fact, the company’s very first cloud application, Zoho Writer, got started over a lunch conversation in mid-2005.

Vembu recounts: “One of my senior engineers and I were talking, and he said, ‘You know, all of this AJAX stuff, this client-side browser software, is getting more powerful. Is it time to look at things like office suites on the Web?’ I said ‘I’m a little dubious, I don’t know.’ He said, ‘I have a couple of engineers in my group, why don’t we pull together a prototype?’ They had other responsibilities, but their products were mature, there weren’t a lot of challenges. And by the fall we had launched the word processor. That is really how it all got started.”

Zoho WriterThat led pretty quickly to e-mail and calendar apps, followed by online discussion boards and a Salesforce-style CRM system. In many cases, the online apps evolved directly from systems the company had built for internal use.

“We meet our own needs,” says Zoho evangelist Ragu Vegesna. “We have a very active discussion forum internally, and we used to use some open source forum software, but spent a lot of time just keeping that up. So it was easier to create one ourselves, and that’s how we ended up building Zoho Discussions. The same with third-party CRM tools. We were a SalesForce customer but it was becoming expensive. We decided to do it in-house, and we found that it was so valuable that we decided to offer it to our own customers.”

All of Zoho’s apps are free for personal use and for teams of up to three people. For four people or more, companies that want access to the basic “Business Suite” of Zoho apps, including e-mail hosting, calendaring, word processing, spreadsheets, presentations, chat, discussions, and collaboration features, pay $50 per user per year (the same price as Google Apps). Additional applications like CRM are available for smaller add-on fees; whatever your business is using, Zoho will send you a consolidated bill at the end of every month.

Zoho’s fees can add up fast for organizations with lots of users. But you have to compare them to the retail prices for Microsoft’s Office Home and Business ($199 per user) and Office Professional ($349 per user) or for Salesforce.com’s CRM Suite ($65 to $125 per user per month, compared to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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