Zoho CEO Sridhar Vembu
Zoho CEO Sridhar Vembu has big plans for the company in the year ahead

Zoho is pushing its boundaries again. After bringing artificial intelligence (AI) to its enterprise suite at the end of February, earlier this week it announced a significant upgrade to Connect, its team collaboration app, designed to give users a centralized virtual space in which to work and share content.

The upgrades include the introduction of new features like Manuals, Boards and Forums, which enable teams to create their own knowledge base and manage their work plans.

In a statement about the upgrades, Raju Vegesna, Chief Evangelist of Zoho said the upgrades were a response to evidence which has shown that when business users are given social tools “in their context”, the productivity at the individual level and more importantly at the team level explodes.

The upgrades, though, are only a small part of what’s happening at Zoho, which is based in Chennai, India with headquarters in Pleasanton, Calif.

In fact, when the company introduced the AI sales assistants in February, Zoho entered what its CEO and co-founder Sridhar Vembu called its fourth phase of its evolution.

Productivity Who? An 'Operating System for Business'

More significantly for its future development Vembu described Zoho's apps not as a productivity suite — with 36 enterprise-focused apps it might well be described as such —  but as an “operating system for businesses.”

It’s an interesting catch-phrase, but what does it mean and where does it place Zoho in the business software landscape?

“It reflects the way we have always thought about the cloud in terms of how people work and how businesses are connected, how it [the cloud] is connected to the workplace, how enterprises connect with customers, how you do business and internal processes,” Vembu told CMSWire.

“It has only been possible to construct this vision because we have been working in the cloud for so long — we have been working there for the past 13 or 14 years now. The operating system is a concept that evolved over that time, it’s not just something that you can put in place overnight.”

Zoho’s Trajectory

Founded as AdventNet by Vembu and Tony Thomas in 1996, Zoho — which rebranded in 2009 — today offers a suite of online productivity tools and Software-as-a-Service (SaaS) applications.

Currently, it claims 25 million users worldwide, half of which can be found in the US. That is likely to change, though, with Vembu predicting a surge in international growth which will flip that percentage to 30 percent US clients and 70 percent outside of the US within five years. 

Vembu then described the four phases of Zoho’s evolution, the current AI offering representing the latest.

“Our first offering was a word processing app. During the first phase of our evolution we focused on the office suite. The second phase began in 2008 when we added the CRM business, then in 2009-2010 when we added email. The first six years were about developing products that addressed the needs of running a business,” Vembu said.

“At the same time, our company evolved at a rapid rate too. When we started, we had about 500 people and by 2010 we had reached more than 1000 [Vembu now claims the company has over 4000 employees]. More emerged in this second phase as the company itself grew and needed new products to carry on. The result is that we have now developed a recruitment app, we have CRM, email campaigns. It was an organic growth.”

However, while the apps all catered to specific productivity needs they still didn’t constitute a cohesive productivity suite. There was still one key element missing.

“In 2012, we started the third phase which we called contextual integration This was about integrating all the apps we had developed. While all these apps were built on the same platform they didn’t have any integration. So, we have focused on that for the last five years.

“We have now reached a point where they are all integrated into a single suite. That’s where the idea of a business operating system comes from and of course we keep adding more according to the needs of business.”

AI-Driven Zia Expands Beyond CRM

The introduction of the Zia AI offering into its CRM solution in February is the beginning of the fourth phase, which will see Zoho pushing AI into all of it apps. Vembu and Zoho are betting hard on Zia and its ability to “learn” from the data found within the apps.

“In the last year, we have gotten into AI in a deep way with Zia, our AI-driven sales assistant for Zoho CRM. That is now being expanded to other parts of the suite,” Vembu said.

“The beautiful things is that Zia can learn from all the context surrounding a customer — an inquiry, a purchase order, an email. It takes all the information from all the context from all the emails. So Zia learns from that,” Vembu said.

“The thing about AI is that it is very complicated but its purpose is simple. The first rule of AI is to make software less dumb. In other words, for software to be smart, we must teach it to be not dumb."

Vembu defined dumb software as contextually unaware software. A basic CRM doesn’t provide the overall context of a sales contact for example. It needs to be able to tell users if previous sales contacts have taken place and if so, what the context of that approach was. 

Zia is fully integrated into the Zoho CRM app and is working towards integration with the other apps in its suite. According to the company the next release to look for is AI-powered sentiment analysis.

Later this year, Zoho will unveil its sentiment analysis for email. With it, enterprises will be able to understand the sentiment contained in a collection of emails in order to predict the likelihood of a sale, anticipate the best time to call or even when to pitch to a customer.

Extending International Reach

Aside from its efforts in app development, Zoho is also expanding its business through the development of data centers across the world.

Last July it opened two data centers in Europe — one in Amsterdam and another in Dublin. The company already had two data centers in the US, two in China and will be opening another two in India later this year to cater to Zoho’s fastest growing market outside of the US. 

In all cases, the second center in each location has been developed to cater for redundancies.

The two sets of data centers in Europe — Dublin and Amsterdam — aim to manage the increasingly problematic issue of data storage inside country boundaries.

“European customers have expressed a very strong need for their data to be hosted in the European Union. It’s not just performance and technical reasons, it’s also legal reasons,” Vembu said.

“We also offer iron-clad guarantees that data will stay in the EU and that data that is generated in the EU stays in the EU and will not be replicated to a US data center. This gives them [customers] the confidence that data that is placed in the Dublin or Amsterdam centers will stay in the EU.

“Our Swiss and German customer, for example, have been very clear about this. They have told us that they don‘t want their data going anywhere near the US, or transiting to the US."

An Investment in Growth

According to Vembu, one final factor drives Zoho’s business: its substantial R&D budget. 

“A typical cloud company achieves its growth through 50 percent investment in sales and marketing. Our ratio is much slower, it’s more like 20 percent to 25 percent. This means we can grow at a faster rate. We have a more global mindset too.”

Zoho has a lot more in the works over the next six months, including the release of another four apps, bringing the total to 40 or more planned for next year. With more data centers and more apps on the way, we will definitely be hearing from Zoho again in 2017.