Zoho’s master plan under new CEO Manikandan Vembu: Disrupting the enterprise game, one client at a time

In late January this year, when Sridhar Vembu, co-founder of SaaS company Zoho announced that he is stepping down as the CEO of the company on social media platform X, the decision came as a surprise. While he has now moved on to lead the company’s research and development activities, Manikandan Vembu, his younger brother, has taken over the company’s software business as its chief executive office, transitioning from his earlier role of chief operating office of Zoho Group. 

In 2017, Zoho launched its integrated business solutions platform Zoho One, targeting largely small and medium businesses for their business tech solutions needs. Now with over 50 plus applications, Zoho is now looking to offer standalone domain/ function specific applications, for instance CRM, HR, Finance, collaboration among others, which are built on its existing Gen AI-infused technology architecture.

Currently the company counts its reach in 150 countries with 900,000 customers, and India is its fastest growing market and also the second-biggest market after the United States. However, one of the biggest reasons for the enterprise pivot has come from the successful implementation in India which has given the confidence to evolve and take this product global, said Mani in an interview with Fortune India.

“If you look at the evolution we started focusing on SMB because the GTM is easier there, but around 2016-17, we started seeing interest from India from larger businesses” he said. With India as its test market, and initial focus on areas like auto, BFSI, real estate, the company partnered with some customers to cocreate products.

“We have seen what works, what doesn't work, and we also learned and now we want to replicate this success across different geographies” he adds.

Among its enterprise clients in India, the company counts the like the TAFE , Mercedez Benz , Union Bank of India among others. 

In the enterprise solutions space, Zoho faces competition not just from IT services companies but also from niche startups which focus on similar standalone solutions in HR, customer experience, sales and other functions. Here the company believes two key factors can work in their favour. One, the ability to integrate Zoho’s offering into existing software application architecture of clients, as well as their pricing models. While the company doesn't offer entire ERP solutions suite to large clients, like for instance an Oracle, SAP or Salesforce does, Zoho says it has seen good traction where customers are looking at legacy modernization and data migration.

“In terms of ERP we integrate with them (existing platform), we complement their offering and then we offer right tools to modernize them and build new journeys in that forward,” Mani said.

On the aspect of pricing, he explains that each of the domain offerings comes with different pricing models and allows the customers to buy either individual point products or any domain specific platforms or mix and match the offering allowing flexibility. “If some customer has a good HMS system and then all that they are looking for is the payroll software, we offer payroll at a separate pricing and then the entry could be through the payroll and then the customers could buy our recruitment platform." 

To the question if enterprise play would hurt the company’s profitability, Mani says: “See as a private company, we have a freedom. We don't look at maximizing profit or investment in terms of opportunities and challenges. if we have to invest, double down our investment in some markets we do that”. 

As per Capitaline data on a standalone basis, at the end of March 2022 Zoho made net sales of ₹589 crore and its profit after tax stood at ₹21.3 crore. Following its amalgamation, Zoho's consolidated financial numbers at the end of March 2023 stated a net operating income of ₹8703.6 crore, up from ₹6710.78 crore in FY22 with net profit growing by nearly Rs100 crore. 

According to Mani, the recent changes in leadership roles at Zoho have been more a function addressing challenges and opportunities and having the leadership split the existing team on focus areas.

In the company, currently Sridhar Vembu’s focus is on artificial intelligence, with an aim to intensifying its adoption internally as well as chalking out the next phase of agentic AI use by the Manageengine and Zoho.

“He is more active now with the teams, and discussions are going on in terms of building this new stuff. So it's exciting for him in that sense.” Mani said.