ERP 2.0? Zoho Open Product Review
Ever had an emerging trend sneak up on you? How about one that snuck up on 45 million users worldwide – what’s it mean to you? Could be big changes in how you Profit From ERP – – I’m Gene Hammons, Practice Director Software Selection and Implementation….
Welcome to ERPodcast, the small business edition – but even huge multinationals need to know – there’s a change in business software deployment – we’ll discuss.
We’re going to be taking a look at Zoho, if you don’t know, they started with a free CRM model and soon developed apps or modules extending functionality into other departments – From a 2001 initial launch into the Japanese market, Zoho has expanded worldwide and
- by 2014 – 15 million worldwide users,
- 20 million two years later
- by 2019, a reported 45m worldwide users. That kind of exponential growth means you should probably start paying attention
Not technically ERP, but a Business Operating System – as they refer to it, for predominately small to medium businesses. We’re not replacing SAP ERP with Zoho anytime soon.
But there’s a new approach we’re referring to as the Cloud Deployment Model – not just cloud based software, but how you implement cloud based software – Instead of teams of 200+ dollar onsite software consultants we’re seeing online business coaches, videos, tutorials and implementation exercises. We’ve seen this same model emerging in Project Management with WorkFront, in construction apps with BuilderTrend– and now some of the Microsoft resellers are picking up on it – it’s a huge change in both costs and approach to deploying business software.
So while you’re current ERP system still has a few years of life in it, you need to know that sooner or later, you’re more likely going to be deploying some types of business software using the new Cloud Deployment Model – one way or another the cloud deployment model is coming your way.
We’ll take you out to a recent Zoho Roadshow
But today is not just about entry level business software – it’s about the same theories you’ll follow whether your company just passed the 1million dollar revenue mark, the 10 million or the 100 million dollar signpost.
So no matter what your business size, you can continue to Profit, From ERP.
MFX Live room montage
It’s Thursday at the Phoenix road show for a software called Zoho – you may have seen them as a free CRM product a few years back – well, things have developed since then.
Zoho is a worldwide software provider with over 6,000 employees across the globe. Headquartered in India, with US HQ in Pleasanton California, Zoho started out 22 years ago as a free CRM product and they’re now in 180 countries with a reported 45+ million users. I’m always a little suspect of user counts from software companies – but the amazing thing with Zoho is the doubling of total users within a 2 year period. So even if they’re cooking the numbers – the same recipe that cooked up 20 million a couple of years ago is now cooking up 45+ million – and hey, since it’s all cloud based, they may be totally accurate.
The free starter model of CRM was popular with a few software publishers – you start out for free with basic functionality, and slowly as you grow and become more enamored with the software, and especially as you start making more money via better customer contact and service, you graduate to a paid version and become customers for life.
In any case, Zoho developed a pretty nice CRM offering – and they didn’t stop there. They moved into a project module, webpage building, hosting, social media management – and by about 2011 even launched a financials package.
Then we started hearing the references saying “Zoho ERP” – now that’s not Zoho marketing material – they still refer to themselves as ‘The Operating System for Business’ – however the ERP term kept being bandied about in the trade papers. Only here’s the thing about ERP – it’s very powerful, it runs entire companies, has modules for finance, operations, supply chain, purchasing, inventory – on and on – so calling yourself ERP is a large step above a ‘free CRM’ program.
So when the Zoho road show rolled into Phoenix, we showed up here to check it out.
Meanwhile back in the studio – The last time we evaluated Zoho, probably 4 years ago, we knew they had a global presence, we were checking them out for a client Evaluating CRM – and we pretty much focused on the core CRM functionality – yes, there were other modules available, Zoho project seemed interesting but our client needed a bit more in that area. There were also other modules, but the world is full of software companies trying to be all things to all people – and after a while it gets to be background noise.
We’d also set up a demo from Bitrix, remember another free CRM product – we set up a demo on their Project Module – and while it’s hard to judge software on a single demo, this one went so terribly wrong, was not well prepped and the demo team showing it was clearly inexperienced – so we probably made a wrong assumption and lumped every ‘free CRM’ extra module into the same wastebin – not saying that was a fair assessment – but when you’re juggling 7 or 8 software vendors early in a demo, a bad first demo is a quick way to narrow the list. But we learned an incredibly valuable lesson that we’ll get to later when we start talking about implementation.
Back to Zoho –
By 2019, Zoho has released 40 different modules – CRM of course, and Zoho Project, as well as Marketing, Desk, Analytics, Social Media Management, HR and Recruitment, Finance, Estimates, Invoices, Time Tracking, Bank Integration, Customer Portals, Inventory – the list goes on and on
And in the hands of the Zoho direct staff, you can quickly see that Zoho has a very intuitive, logical suite of products that far outstrip anything you can do with QuickBooks or other basic accounting software.
So, is it fair to call it ERP? Well, that starts to become a difference without much of a distinction.
Zoho, from what we can tell so far, is a great option where it fits. And that’s going to be mostly in the smaller offices – a company from 1- 30 people is probably the core demographic for Zoho – not that it couldn’t scale larger.
What it does, it does extremely well. But it doesn’t do everything.
Take for example, Websites – you could, as an end user, without having to be a graphic artist or web designer, set up and publish a relatively nice website with a lot of stock features – yet it wouldn’t look like a templated website, you may have seen Wix,Weebly, SiteBuilderor some of the others that look really nice, but look really like it came from a kit. Zoho goes beyond that.
You can set up your marketing to interact with the Website and capture web leads and feed them into CRM – you can capture web sales and feed directly in to financials. Tie back to social media – use chat – online credit card payments – all these things and more.
Then, as you get better at using the tools, run a heat map to track Analytical behavior of your audience – where do they lose interest in a page, when do they stop scrolling down and move off your site.
It’s all up to you.
But really advanced features? Well, Zoho Inventory tracks basic inventory levels really well. Does it forecast future sales, production orders, PO’s, sales commitments to tell me I have 650 widgets to sell next August? Likely not without some serious configuration but given the Custom Apps development environment, who knows?
Now is this a big recommendation that you ditch QuickBooks and run out and jump on the Zoho bandwagon?
No – no way – not at all.
As we always say, Business Requirements dictate the decision.
But what we would say is, that QuickBooks, even with it’s majority marketshare among US small businesses is not the defacto default anymore.
Remember how we talked about Zoho interfacing with QuickBooks, and WordPress, as well as MailChimp – and the list goes on – today’s small business has to operate in a lot of different technologies – and a modern, cloud based back office software needs to know how to operate in all these areas.
What we are saying is that there is a step between buying QuickBooks on Amazon.com for $200 and spending $100,000 on ERP – not to say there’s not lesser ERP offerings out there for $20 or $30 thousand. But Zoho One, the entire suite of products is $30 per user per month or $75 a seat for the flex user plan.
Now let’s take a step back before we cut that check to Zoho.
There are a lot of software offerings out there. Our consulting practice helps our client companies go through the selection process and the implementation process – getting everything configured and up and running. We’re not the software consultants who work on the technology – we’re the business consultants who help your internal team thorough the project.
As we mentioned before, how do you know when is the right time to invest in new technology to use efficiency and productivity to keep a lean staff with tight operations?
To us, it’s all driven by the business requirements.
We’ve told the story before of the client who told us they couldn’t spend more than $10 thousand on software – until we showed them how to cut back on a $10 thousand a month phone room labor by switching to online order entry.
We told you the story of Dell Computer – tripling the capacity of their phone operations by putting up one of the first online shopping carts and shifting transaction costs of orders from the company to the consumers.
So, we can save our clients an incredible amount of money – or rather help them do it themselves by increasing productivity through software technology.
But as a small business – can you afford a team of consultants for months at a time?
The answer is no.
For our larger clients, we have a team of business analysts who carefully map out each workflow, each supply chain segment, each cost channel. We have software architects design and scope the properly scaled applications needed. We may spend months onsite with teams visiting every offsite office and facility.
However, for smaller clients, that’s overkill. That’s why we’ve also developed a starter approach for smaller businesses. We don’t do a one size fits all package, but we do work to design a two – week limited scope project to help get you through the process.
We define and determine your requirements. We shortlist the available vendors. We keep tabs on what’s out there – just like our visit to the Zoho roadshow.
We’ll set up the online demos – making sure you’re seeing a good, representative demonstration of the products you’re considering. All for a flat fee, one time, no cost overrun package.
Finally, we help define your selection criteria and get you into the right software, whether that’s Zoho, Bitrix, even Quickbooks, a Microsoft product, project management like WorkFrontor Smartsheets– CRM, WMS, – or even tell you that a larger ERP package would quickly pay for itself in your case.
Look, imagine if you’d gone through this type of business software evaluation a few hundred times – we’re well past 400+ projects over the last 25 years. Can’t you imagine you’d have a different outcome after a few projects? And over the years, many of those projects have been with huge multinational companies with IT teams in the 40 – 80 people range – so we picked up a few tricks from some really smart people that we can bring to bear on your project.
And the whole idea is to make it fit a budget you can work with and a software that makes sure you Profit From ERP – that’s the idea.
Lastly, remember that ‘incredibly valuable lesson’ we learned from that failed Bitrix demo?
There’s been a really important software shift in the last few years – I’m sure you’ve heard all the talk about cloud software – it’s no longer on premise – it’s accessed through the internet. It’s brought about some pretty big changes.
Well, that brings us to two items – #1 is Cloud Implementations and #2 is Cloud Business Partners or Resellers.
First of all, Cloud Implementations.
In the past, when you bought enterprise software, a team of implementation consultants came on site – configured your servers – set up the software for your business model – for a mid sized company, it could take 6 to 9 months to get everything up and running.
Software was more complex, kludgy-er and took quite a bit to get it running.
Now, we talk about the ‘consumerization’ of business software. It’s like an app on your phone. You don’t get some ‘consultant’ to help you install that app, you just push a button at the app store and boom, it’s on your phone, and push a button and boom, you open it up, and boom, you’re using it in seconds. No training. No Users Manual. Just Boom it works. That’s the consumer experience.
Well, with business software that was designed in this century things have changed. If you think about cloud software itself, it’s only been viable since SalesForcewas the pioneering successful launch in the early 2000’s but didn’t really catch on until the 2005-2006 timeframe – so you have all this cloud based software developed since then.
The design parameters for software has changed. If you look at traditional ERP you’ll see a Windows XP era entry screen that has like 30 or 40 different fields that you could enter information. Looking at a Zoho screen yesterday, you’re usually seeing just 3 or 4 entry points. Of course the entries you make may take you to another screen where some of those same variables found in that 40 field Traditional ERP entry screen are – you end up with the same data entered, it’s just far simpler for the users.
And today, with made for cloud software, you’re lucky to see consultants onsite for more than one or two days at the project kickoff – and sometimes for training. Everything else is remote web meetings and training sessions.
That’s for full blown ERP.
For a product like Zoho, it goes a step further. Which is good and bad – you download Zoho and then you’re watching training videos, looking at online reference materials and configuring everything yourself.
Pretty easy when it was just Zoho CRM – if you’d used CRM before it went pretty quickly.
But look, now, the success of your software is in your company’s ability to develop your people to be able to learn and use the new software.
There are some partner companies that you can enlist to help, much like the old software consulting model but that brings us to Cloud Business Partners – point #2.
Remember the bad Bitrix demo?
It wasn’t the software – it was the partner.
Here’s the deal. In the old days – last century – to become a software consultant you started with a background in accounting or IT and then you studied and went to intensive training and became certified – but now – we’re in the cloud era.
In the Bitrix, Zoho, QuickBooks, level software, partners are simply former users who’ve decided to become full time consultants. Those guys learned it from the same videos online you will be watching. It’s not like there are million dollar Zoho implementations to justify the level of training, education and certification from days gone by.
The good news is the software is simpler.
I don’t mean to disparage every Zoho partner – there are some great ones out there and some that we trust implicitly – because we’ve used them with client companies before and we know the capabilities – you don’t – and when you get down in the average cloud based partners, and remember, someone has to make up the bottom half and it’s really hard to tell the difference unless you have experience.
And that’s the incredibly valuable lesson we learned from a bad Bitrix demo.
Which brings us to the final point.
When you go with any one of these business operational systems – the initial entry cost is low. But it takes time and effort for your people to become great using the software. Plan to send them to the annual conferences and advanced training opportunities.
Software cost is low, but total cost of ownership is higher – in that, your staff is going to have to take on the responsibility of learning to become proficient – scratch that – learning to become an expert in the new program.
I can’t tell you how many of the ERP systems we’ve replaced – we go in and the client will tell us they’re running BizProMax ERP – but they admit, they’re not fully utilizing everything BizProMax can do, and it probably wasn’t implemented right in the first place – in other words, the fault lies with a bad implementation – maybe because the client wanted to cut corners and get it in sooner or with a smaller consulting budget – maybe because the 1980’s BizMaxPro code base was so stupidly complex it took three times longer to deploy than it should have – maybe this, maybe that
(MFX Fade in)
You can no longer afford to run your business on poorly deployed software and the new Cloud Deployment Model is shifting responsibility for deploying this software onto your staff. Which is where the ultimate responsibility has always been – I don’t care which outdated, badly designed, technologically obsolete ERP system you’re talking about, I can find you one company somewhere that has embraced that old behemoth and is running a very tight ship using the same ERP that your people say ‘it just doesn’t work’.
So today, whether it’s the new Cloud Deployment Model – or a traditional Oraclerollout with 18 outside software consultants onsite for 2 years – you need a change management projectrunning alongside your ERP software project– but only if you want to succeed.
You may be an emerging small business growing at a rapid rate. Zoho may be a great let’s get off of QuickBooks while we still can escape strategy. But also know you need to do a comprehensive analysis of growth projections and future ERP strategy. You need to factor in what you’re going to spend in terms of the labor and time your staff is investing in this project. And if you see you may outgrow Zoho within 3 years, you may want to consider going a little higher up the food chain into a more traditional ERP.
Many companies see the cost involved and immediately balk – but end up paying the price in the long run.
Another strategy the Profit From ERP team employs is the use of creative financing – we’ll get into software leasing in more depth in a future episode, but while cash flow advantages of the SaaS model of software do help, you still pay a year’s subscription up front plus all the implementation pricing – we can show you how to approach a software lease that doesn’t tie up your current lines of credit and gives you a single, lower monthly payment from day one that never changes and we can develop your Cost Revenue Model to show a much quicker breakeven that makes financial sense for many of our growing client companies.
In any case – whether you’re looking to decide if Zoho One is the right option for your emerging business or you’re or trying to determine if a creative financing option gets you the ERP of tomorrow today – don’t go it alone – give us a call and take the experience of 400+ ERP projects into the transformation of your company – and really, Profit, From ERP