On the heels of Salesforce.com integrating with Google Apps, Zoho on Wednesday announced enhancements to its Zoho CRM Enterprise Edition, adding role-based security administration, SSL support, integration with Zoho's spreadsheet, custom fields, and other features.
The cost of the Zoho CRM Enterprise Edition is $25 per user per month, with the first three users free of charge. The Zoho CRM Professional Edition is $12 per user per month.
In a blog post this week, Sridhar Vembu, CEO of Zoho parent company AdventNet, took issue with Salesforce's business model, noting that his competitor spends nearly eight times as much on sales and marketing as it does on research and development.
"Sounds to me (like) a textbook definition of 'business model bloat.' If you are a customer of Salesforce, it makes you feel really happy that the company spends (eight times as much) on selling to you as (it does on) writing the code, right?," he wrote. He added that the Salesforce business model is "an evolutionary dead end" and cited the "silent popularity of Zoho CRM."
At this point, the Salesforce business model has generated nearly $1 billion in annual revenue and 41,000 customers. The operating margin isn't great, but the company has established itself as an industry force with a generous stock price.
At some point, Salesforce's cost of sale should decrease, and the Google alliance will legitimize the on-demand services of both companies. Zoho's development prowess and low cost, and the "silent popularity" of Zoho CRM, has not resulted in a business model breakthrough so far.
At one point, Salesforce was in talks to acquire Zoho, which Vembu recounted in his blog post. He said the two cultures would not mesh and claimed that Salesforce CEO Marc Benioff said Zoho could be part of his company's AppExchange, if it didn't pull the plug on Zoho CRM altogether.
Zoho has built an impressive set of cloud-based applications at a rapid pace. Following the enhancements to Zoho CRM, Zoho Sheet is slated to gain support for macros and pivot tables.
Word-of-mouth marketing isn't enough when you are competing with giant and innovative companies such as Google and Salesforce. But Zoho's small team is not lacking in focus, talent or desire.
Webware's Rafe Needleman and I interviewed Vembu in this video about how Zoho plans to compete against Microsoft and Google in the office suite space.
Following is a Zoho video about the new enterprise CRM functionality: