On this episode of the Futurum Tech Webcast – Interview Series, I am joined by Raju Vegesna, Chief Evangelist for Zoho, for a conversation around the growth of Zoho’s finance platform, Zoho Books.
In our conversation, we discussed the following:
- An overview of Zoho Books
- The exciting opportunities for Zoho Books
- An exploration into where Zoho Books operates
- The unification of Zoho Books and Zoho One
It was a great conversation on an incredibly important topic, and one you won’t want to miss. To learn more about Zoho, Zoho One, and Zoho Books, check out their website here. To learn more about Zoho Book’s exciting year-over-year growth, read the full press release from Zoho here.
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Transcript:
Daniel Newman: Hey, everyone. Welcome back to another episode of the Futurum Tech Podcast. I’m your host today, Daniel Newman, principal analyst, founding partner at Futurum Research. Excited for this interview series we have today. I’m going to be talking to Zoho’s Raju Vegesna. He’s the chief evangelist over there. We’re going to be talking about the challenges, opportunities, complexities of connecting the back office in the front office, the finance system and Zoho’s decision to lean in, go big with its impending or soon to be or now launch depending when you’re listening to this Zoho Books. Raju, it’s always good to see you. You are a regular here on the show. It’s been a few times. Good to be back. Good to see you.
Raju Vegesna: Good to be back, and always great chatting with you Daniel. Thank you. Thank you for inviting me.
Daniel Newman: I’ll call you an alumni. You’re a Futurum Tech Podcast alum. It’s good to have you here. It’s a bit of an interesting time out there in the marketplace. You got a great couple of years for Zoho one. Zoho as a company and you’ve been evangelizing this massive for all more than 50 apps. We’re a user, by the way, paid user for everyone out there of the platform and a lot of capabilities. Tying everything from project management to your marketing stack to collaboration and of course an area that has been always opportunistic with companies like QuickBooks, NetSuite has been the finance system. While I’ve been spending years working with the company Raju, it hasn’t been something that’s been talked about that much, but now it sounds like you’re leaning in. So why don’t we start there? Tell me what’s going on.
Raju Vegesna: Sure.
Daniel Newman: What’s the company focusing on at Zoho Books?
Raju Vegesna: On the finance side, Zoho Books really launched in 2011, so it’s been well over a decade. It’s been building up and gaining momentum over the years. Historically if you see in the market, there’s a lot of investment that went into the customer side of things and there’s not a lot of excitement on the back office side of things, particularly on the finance side because partly for some people it’s boring but necessary. Something like an accounting system, it may not be exciting, but you got to file your taxes every year. So it has been silently building up the platform has been broadening the course. Now it’s become one of our top five products in the Zoho suite, and people are grabbing it, and the market is showing interest, and the growth and the momentum is picking up. But we haven’t been talking about it much, but we thought it’s about time or long past time since we talked about it.
Raju Vegesna: So we have one of the strongest finance platforms in the market and that is globally entrenched in other. If you look at something like Zoho Books, it now supports about 13 initials and not a lot of vendors can claim that. We are talking maybe less than a handful of vendors that support 13 countries natively and that as an anchor product Books alone, but combine various aspects of it. This is one of the most comprehensive platforms out there and I believe you’re just getting started. I’m really excited about the finance platform and the opportunities it brings broadly and the innovation that we can bring as a company to that.
Daniel Newman: Well it seems like it’s been growing already. I think the revenue for Zoho Books is, I think it was something like 50% revenue year on year. It’s one of your highest grossing products if what I’m reading is correct. So what I said in the beginning about it not being talked about much, I want to be clear to everyone out there not to confuse that with meaning it hasn’t been a highly adopted product really. It sounds like what’s going on is this was a core product, it had really strong adoption, but because the finance system for lack of better terms maybe isn’t as sexy as some of the other cool marketing lab project management tools, data AI, it sometimes doesn’t get talked about as much. But what you’re really kind of saying is, hey, Zoho is in transition. We’re a company that’s moving from an almost entirely small business focus to moving to small mid to now moving up that stack to mid-enterprise. You realize that kind of rejuvenating interest, creating more awareness, creating more excitement about what the finance platform can do is becoming opportune at this moment in time.
Raju Vegesna: Totally, and the opportunity is also there. I mean on one side we have businesses doing expanding globally and the problem they run into is they add up one accounting system in one country and at a different one another country and more countries you operate in, you realize you’re dealing with three or four systems that don’t talk to each other. What if there is a single system that can work across countries across multiple countries and that’s one opportunity. But then more broadly, how does that tie into various other aspects of it? How does that tie into the customer facing systems? How does that pay your operational systems and whatnot? That’s a different angle, but within finance itself, you look at the various pieces that are needed because there are two sides to it, the payable side of it that is money you pay out and the receivable side of it, which is a money you receive in.
Raju Vegesna: There are various forms there and which requires ton of applications and there’s a lot of innovation there. We are actually raising the bar in some of those areas. We are probably the only vendor that does some of these innovations, and not every innovation happens in every country, but depending on the local aspects of it, we are growing. But there’s a lot more excitement here and there’s not a lot of investment happening in the market in general because it’s boring. But we are saying, wait, this is an exciting space that we want to double down in. So we are doubling down on the finance side.
Daniel Newman: You said something, Raju, that’s important, and it’s that there are a tremendous number of complexities and nuances in the finance system alone. Meaning systems tend to be everything from just your basic invoicing and bank tracking to much more greater levels of sophistication and granularity that come up. This again is of along your side as you grow your business. It starts off, you need very basic functionality, you grow your business, you start to take on debt, you start to allow customers different sets of terms, you start to need to have the ability to gain insights on risk factors with customers. You have credit scoring, you have, there’s a lot of different and what I’m saying is all of a sudden it kind of grows up and this amorphous large blob of complexity for an organization. So just finance alone, it’s a huge challenge.
Raju Vegesna: Totally, totally. It’s a huge challenge and there’s a lot of innovation possible there. To give you maybe an example on some of the things that we have innovated on in some countries with some, for example take, you’re talking about banks. We have integrated very tightly with some specific banks out there, and for example now users can load up the bank balance within Zoho Books and make the payments right from Zoho Books that is within Zoho Books. They see which account they want to pick from the bank and make the payment. They’ll see the live payments and whatnot. But the bank has done these too within the bank interface. They load up all the vendors and the payments you have pending pull from Zoho Books. From your bank account, you can make that payment too. This is not possible in the majority of the cases.
Raju Vegesna: We are taking it even one step further where within the context of Books you can apply for a loan. In fact, you can optionally choose to upload your last say a few years of Books and the bank will give you maybe a better interest rate because they have credible data. It’s coming to them right from your accounting system, you are applying for a loan. These are all innovations that historically weren’t possible for us. These things went live actually a year or two back in some countries and whatnot. So that is a simple example of innovation but there’s a lot more innovation coming on that front.
Daniel Newman: There’s something you just mentioned too that’s really important is the ability to do financials is very market dependent. It’s not like, oh, we create the software once and deploy it everywhere. It needs to be nuanced because there’s different accounting principles in every part of the world. Different financial rules, different revenue recognition requirements. These are all things that your system has been built to do in a large number of countries around the world. How many, can you tell me how many? I know it’s a lot. I just don’t know how many.
Raju Vegesna: About 13 countries we nearly support. 13th is launching I think the second week of November. That’ll be Mexico. We’ll be launching that couple of years. Sorry, a couple or a few weeks back we launched the Kenya edition. Of course we support US, Canada, UK, Australia, India, UAE and various other countries out there. We support about 13. But the depth of support is important. It’s not just taxes. You also have to adhere to the local legislations because there are these, some countries, there’s a concept of invoicing where you have to support that and integration with the local banks, integration with the local payment gateways and on and on. It’s a long list of things, and you have to natively support it. It’s not like you offer it to a customer, let them customize it. When it comes to accounting systems, you don’t want to take any chances. It has to be perfect.
Daniel Newman: Yeah, you make a great point. You’ve already infiltrated most of the major global markets and now you’re starting to work into some of the more specific markets where I’m sure where Zoho has a strong adoption rate. We started here, I kind of alluded to and I was holding up my finger because I had one more thought, but I wanted to give you a chance. The finance system creates tons of complexity. But let’s be realistic.
Daniel Newman: The company that’s moving from small to mid-size enterprise needs connectivity from back to front finance system operating disparately from CRM, from human capital, from project, from collab. I mean we’re seeing that the demand in the market is we want full insights. We want to be able to link our databases, we want to be able to link our customer service tools, we want to … and so the story here has to be moving in that direction. I mean if you want to compete with NetSuite, if you want to compete in parts of the sales force business, if you want to compete with Microsoft Dynamics where they’re serving that mid-market and larger enter enterprise, you have to be thinking about that. So talk about how that works Is this Zoho Books in Zoho One story going to be all about building comprehensive integration from the back office to all the front office tools?
Raju Vegesna: More importantly unification rather than integration. When I say unification, it is a super set office where you should not even have to, how to integrate it has to be there where it belongs and that’s a concept. But to do a good job, each of these pillars have to be really strong. We need to have a very strong finance suite or platform. We need to have a very strong customer-centric platform. We need to have a strong employee platform. You need a very strong collaboration, communication, productivity platform.
Raju Vegesna: We see all of these tying and very knit together well and unified well, and that is part of the plan. Each of these platforms are growing at a very strong pace and gaining its own adoption. From a customer’s point of view, they’re seeing a comprehensive platform where everything just works and is it going to get better? Absolutely. We are still in the early ins on this, it’s only going to get better.
Daniel Newman: So I like that choice of words, Raju. Unification more than integration. I think it’s probably an and a little bit more than at this point. Where is full unification going to be available across the entire stack right away or with these upgrades? Kind of like what’s the process? How are you thinking about making more and more of the Zoho portfolio fully unified so that those that are getting into Books?
Daniel Newman: Because I totally buy it by the way, you really can’t do CRM right without good accounting data. You really can’t do customer service without good accounting data. Because whether it’s enabling your team to tell somebody when something’s going to arrive or building an automation to do that, the two systems always have to be unified stratified in some way. Of course there’s calls and stuff. But it seems the idea would be to make it seamless.
Raju Vegesna: Totally, and that is the key. Where will it be ready right away? Well it is a multi-year project. We are talking about a massive complexity here and it is not just unification between the Zoho systems. It also has to work with third party systems. That is where the integration piece comes in. Where I agree with you, it’s unification and integration. Unification within the Zoho system and integration with the third party system.
Raju Vegesna: For example, if you take our finance suite, one of the key components finance and operation suite, key component is inventory management, inventory management, warehouse management and whatnot. It has to integrate with let’s say third party shipping providers like UPS or FedEx and DHL and what not. That is an integration. But when a customer place an order, if you go to the customer’s page in a CRM system, you know how much that customer has ordered in the lifetime value and it has to integrate with the back office finance system and you know where the current order is because it has to integrate with the operation system and when their latest order is expected to be delivered. That is all knitting together all of these pieces and these pieces are already in place in a lot of these cases and it is only going to get better. It’s not just going to be a proactive integration. It’s going to be a proactive unification and there are various things that are being put in place.
Daniel Newman: As I think about it’s going to come down to the ability for Zoho to A) capture existing customers upgrade, utilize and expand. The whole one platform has always been about land and expand it’s SAS at its finest. How do you talk about the broader goals about reaching market? So you’ve got a captive audience, you’ve got users that are on the platform already. I’m guessing A is get more of them to use the Zoho finance system. B though is you’re going to have some fierce competition, you’ve got really credible companies. I mentioned a few. I think continue as I hear about this thing, probably NetSuite is the most direct because it sits in that between large enterprise and really small business as in that intermediary accounting system that companies use. I mean what’s going to be the magic bullet, Raju, for catching market, capturing market?
Raju Vegesna: Yeah, I mean we’re not actually looking at it from a competitive point of view. We are looking at it from a simple point which is how can we address the customer’s needs? We are one of those customers. Zoho runs on Zoho. We have presence in now 20 countries. We sell customers from what 180 plus countries and both internal and external needs, and serving these needs is the key. The way I’m looking at it is it’s enterprise grade software available to all businesses, small, mid, large, but available at consumer prices.
Raju Vegesna: That is a holy grail. Can we create a comprehensive systems and make it available to all the way from a solo [inaudible 00:19:18] to the Fortune 500? Can we make it in such a way? We believe we can. It’s a challenge but we believe we can. But it’s not going to happen in a year or two. It’s a multiyear process. I mean we’ve come along, it’s been around 17 years since we started this journey. Maybe it may take another decade or so, hopefully not. But it’s an ongoing journey. But we are committed towards that. That’s where that long term commitment comes from, that organizational philosophy which drives this day to day innovation.
Daniel Newman: If I may say I wish you would argue more about competitive, but I understand why you don’t. I always say, who’s your biggest competitor? I always say, don’t know and do nothing or my two biggest competitors. Then of course every other company that’s trying to do the same thing we do. But the long and short is that as market potential candidates in the market are in the consideration process, they will go through a competitive intelligence exercise in some cases. Like I said, you’ll have a ton of natural gravity for people that are already using parts of your platform. For those that are sort of in that exploratory, hey we’ve been on QuickBooks a long time or we’re using Zero or some freebie tool and we’re where you’re going to run in and the assessment’s going to be. What I’ve always thought you guys have done a good job at, Raju, is getting your customers to talk about why they pick.
Daniel Newman: I think some of your stuff and how you handle data and privacy is very compelling. I think the ease of use is a story that deserves to be told more than one time. But I do think as you kind of go up that proverbial stack from smaller to larger, the consideration process gets harder. The competitive and the comparative becomes a more fierce challenged. Analysts like myself, our opinions become well, we like to believe more important. I believe they become more important. But I do think overall there’s a large mar market to catch, and it sounds like you guys are on a really good trajectory. I know with this announcement, what’s kind of the one big thing you want everyone that’s listening to this podcast to walk away? Is it that Zoho Books is in finance, is in focus or what can we leave the audience with?
Raju Vegesna: Objectively look at if you’re looking for some alternative, some standard platforms that you can rely on, look at our finance platform. It’s something we are really proud of. The way we have built, the way we have methodically expanded and we are only getting started though this is one of the most comprehensive suites out there. We are only getting started.
Raju Vegesna: If you look at the way the market is evolving and in the current stage there are vendors and competitors out there pulling out of some of these markets. We are entering and expanding the number of markets we support and deepening the platform on one side, but also broadening the suites and broadening the number of countries we support. It’s a very comprehensive suite of applications. There are in a lot of countries, US included, a lot of companies are still using desktop version of software, and they’re thinking about moving to the cloud. You might as well consider at least look at Zoho Books and you’ll be surprised at how comprehensive it is. So I think give it a try is what I would recommend. If you’re in the market for some of these and that is a good amount of usage in the product out there. If we take our finance platform alone, there are about half a million businesses using it. Free and paid combined, not users, half a million businesses using it globally. So this is a pretty comprehensive platform.
Daniel Newman: Yeah, it’s good place to leave. Good obvious consideration, Raju. These are interesting times with the market where it’s at. I think companies are going to need to think really strategically, make sure they have the right tools, deflationary tools that enable their businesses to perform and be successful in a tougher environment. The accounting system has to be right for any of those other systems to work. So congratulations, Raju, on the announcements and the advancement and the focus on this particular part of the business. Very interesting. Love this particular discussion and really encouraged by what you’re saying and look forward to seeing it put into action.
Daniel Newman: So have to have you back soon. Regular alumni here on the Futurum Tech Podcast. Raju, thanks for joining the show.
Raju Vegesna: Thank you, Daniel.
Daniel Newman: All right, everybody. You had it there. There you have it. Raju, chief evangelist at Zoho talking about the need for financial technology and tools from Zoho. Overall just a good story about a company that’s building out a quite comprehensive platform in the cloud space with some very usable tools. Like I said, I know this because we use them. Check out the show notes for links to learn more about all the things we talked about here on the show. Hit subscribe. Hope we can have you tune in again. But for now, I got to say goodbye and see y’all later.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
