Building The African SaaS Industry – Exploring Through Zoho’s Lens

By  |  June 4, 2024

Imagine having all the tools you need to run your business efficiently, right at your fingertips, without the hassle of installing software or managing complex systems. That’s the magic of Software-as-a-Service (SaaS), a game-changer in the digital world.

SaaS is like subscribing to your favourite streaming service—instead of owning physical copies of movies or music, you access a vast library of content instantly, whenever you need it. Similarly, with SaaS, businesses can access a wide range of software applications over the internet, paying only for what they use, without the burden of owning or maintaining costly infrastructure.

In Africa’s rapidly evolving tech landscape, SaaS is revolutionising how businesses operate, empowering them to streamline processes, boost productivity, and stay competitive in a global marketplace.

Against this backdrop, India-born Zoho Corporation, a notable player in the global technology industry that was founded in 1996, has turned its attention to Africa, aiming to tap into the region’s burgeoning digital market with its suite of integrated applications that cater to various business needs, including customer relationship management, office productivity, finance, human resources, and more.

With a diverse array of sectors—from finance and transport to commerce and agriculture—embracing digital solutions, the demand for scalable and accessible software is on the rise and Africa’s SaaS market is estimated to see an annual growth rate of 9.56% between 2024 and 2028.

Zoho’s story is just one chapter in the larger narrative of the continent’s tech evolution—a story still unfolding, filled with challenges, opportunities, and untapped potential.

WT recently sat down with Veerakumar “Veera” Natarajan, Zoho’s Country Manager for East Africa, to gain insights into the company’s strategy and aspirations on the continent. From the challenges of market entry to the opportunities for growth, Veera provides a candid look at Zoho’s journey in Africa thus far.

Through insider views and firsthand accounts, we explore Zoho’s impact on the local tech scene, examining its efforts to engage with African businesses and communities. From strategic partnerships to localised pricing models, we uncover the nuances of Zoho’s approach and its implications for Africa’s digital future in this exclusive interview.

Join us as we navigate the complexities of Africa’s SaaS landscape, guided by the experiences and perspectives of those at the forefront of innovation.

WT: What does the SaaS adoption look like in your market currently?

Veera: I have experience in the hardware and solutions industry, including managed services’, in the East African region.

Many established customers in the region do not want their data stored in a remote data centre and instead prefer having a local data centre within the country or their premises. This way, they have better control and assurance over the security of their data.

If you look at SACCOs or self-help groups, which are typically small in scale, or a non-banking financial corporation that operates within a specific community, it’s important to note that while they may have thousands of customers, their services are often limited to the local area and not offered outside those boundaries.

Customers have been using SaaS unconsciously. The situation changed when a popular office suite vendor changed their offering from on prem to cloud, turning it into a SaaS product. This shift led to larger corporations in our region adopting more flexible solutions to some extent because now they understood that all along it was SaaS that they needed.

We found the opportunity to explain to our customers in easier terms as they became well-versed in SaaS features. We told our customers that Zoho not only has an email hosting solution, but also a accounting software, CRM , and even HRMS.

Our selling efforts made it very clear to me that making customers aware of the scope and functionalities of SaaS takes time.

WT: Has the remote working culture had any effect on SaaS adoption?

Veera: In the post-COVID period, most offices worked remotely. During that period, I noticed two visible trends: most customers did not want to spend on new technology, or if they did, they didn’t want to invest big.

We offered both monthly and yearly packages based on the number of users, allowing customers to pay only for what they used. As a result, it became very popular, even among the largest companies, as minimal convincing was needed for customers to adopt our SaaS solution.

Interestingly, customers know their limitations and to what extent they can use SaaS products, at least in East Africa.

For example, banking customers in Kenya want nothing except the office suite and don’t want to use cloud-based solutions for their core operations.

I believe that the SaaS industry has come a long way in terms of acceptance. Now, the focus is on providing the right product and customising it according to the customer’s needs.

WT: Which Zoho products have gained significant traction in the African markets over the years?

Veera: Zoho is known for its SME products as much as we have our enterprise customers. So I’ll give you two scenarios:

The first is, if you look at the number of organisations using our products, our top-seller is Zoho Books followed by Workplace.

Secondly, if you’re looking at the revenue earner, the top-selling product is Zoho One, which has about 45 products, including Office suite. It includes finance, sales, marketing, and HRM solutions. Zoho One is our biggest revenue maker, followed by Zoho CRM.

When the team size is small and customers want to digitise every sector, they opt for Zoho One, as it’s cost-effective compared to using one or two products.

WT: Which type of companies are Zoho product users in the African market?

Veera: The primary users are in the fintech industry, particularly in Africa; fintech is prevalent no matter where you go.

If you consider East Africa, South Africa, and Nigeria, the major players in fintech, such as DPO Group and Pesapal, are our customers.

I realised that most IT adoptions or projects go to the IT admins, not the procurement guys, and not the end user. It has always been the IT guys who manage it, whether it is a Microsoft or G-suite product. IT administrators with little to no knowledge of functional requirements for a company of 50 people may be unable to shortlist the right products.

But more companies are opening up to the importance of data and information management and are participating in shortlisting tools that will help them achieve their targets.

Our product doesn’t require much of IT intervention for smaller companies. It can be easily used by a sales manager who understands what they want from a CRM. They can also use a partner or vertical solutions available on Zoho Marketplace to jumpstart their journey. .

WT: How much customisation is demanded by your users locally?

Veera: It is no longer SaaS defining a process; the processes define SaaS flow. Our modules are well-customisable and mostly ready to use out-of-the-box. There is a lot that customers can change to suit their process / workflow & their environment.

We also engage directly with key accounts to offer them custom-made training for the users within the organisation.

Speaking about SaaS in general, Zoho has made significant progress. We are one of the few big companies with a local presence in Africa that offers out-of-the-box solutions.

You only need customisation if it’s a workflow, integrating with third parties, or any other application. For example, a customer may be using CRM but want to integrate with telephony, which requires a third-party tool. In this case, they will need our support.

In Kenya, the Kenya Revenue Authority (KRA) has established specific requirements on eInvoicing. Our accounting package integrates VAT and other necessary elements, enabling you to begin e-invoicing in accordance with local regulations. Customers using Zoho Books will also be able to meet the KRA’s request promptly. We try and ensure that our product is tailored to local needs.

We customise our services to meet local requirements, just as we have done with some regional payment gateways. Any of our customers who wish to collect payments using local gateways are able to do so. Our accounting package product also natively supports MPESA in Kenya.

WT: What does the Zoho market expansion strategy look like?

Veera: Zoho started focusing on the Middle East and Africa region from 2018, and our first resource started in 2018 in Dubai.

For growth and expansion, Zoho follows an approach called transnational localism, wherein we endeavor to be locally rooted to a region through local offices, team, and collaborations, while staying globally connected through shared culture and knowledge. 

From Dubai, we expanded into different countries such as Saudi Arabia, Qatar, Nigeria, Kenya, South Africa, and Egypt.

We aim to have a presence across the entire African continent and the Middle East. Kenya will serve as our hub for East Africa, allowing us to cater to the market. Additionally, our team in Nigeria will become the hub for countries in the West African region. The same goes for South Africa and North Africa.

We aimed to achieve this in the first five years, and we have largely succeeded. Fortunately, our product was very well-received in the market, allowing us to set up quickly and grow in this market.

Within Africa, we aim to establish a local presence in as many countries as possible. Once we reach that level, we will scale it up entirely, so each region can be on their own to a larger extent.

WT: What’s next for Zoho in the African SaaS industry?

Veera: The potential for SaaS is still huge, but we have only just begun. We have a long journey ahead.

As a company, we regularly assess our competition, but we primarily focus on our strengths.

One of our main focus is research and development and engineering. We prioritise, and invest in product R&D and customer support more than sales and marketing because we strongly believe that’s the best way to deliver choice and value to our customers. We strive to enhance the product wherever we go to suit local requirements rather than just sell as it is.

One significant change we’ve made for Africa is offering products at local prices, which is not the case with many other vendors.

Most multinational vendors that have come to Africa have yet to offer anything in local currency despite having a local company, local billing, and a local entity. They still only offer in dollars. It was one of our biggest game changers.

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