VOTE! For Your Choice for Top 2011 SMB Technology Trend

We hope you had a chance to read  the SMB Group’s Top 10 SMB Technology Predictions for 2011, which we published in  December. Now we’d like to hear what you think…what prediction do you think is the most likely to prove true?

Zoho Books: Big Plans for Small Business Accounting

I was just briefed yesterday by Raju Vegesna on the launch of Zoho Books, Zoho’s new on demand accounting solution for small businesses. With Zoho Books, Zoho fills in a critical application that has been missing in its portfolio of more than 25 cloud-based applications for small businesses.

The first version of Zoho Books will be a standalone accounting solution, but later this year, Zoho will add tight integration with some of it’s other apps, such as Zoho CRM and Zoho Support (see my recent post). According to Raju, Zoho wanted to get the accounting functionality right before focusing on integration and other extras. Some of the key takeaways from my briefing include:

  • Zoho has covered most of the accounting basics. The solution features a dashboard, with tabs from which you can create and send invoices, see profit/loss statements, look at income and expenses, etc. Once you create an invoice, you can email it to customers, and set up a link so customers can make direct payments to you online via PayPal, Google checkout, and You can set up automatic notifications, reminders and thank-you emails as well, and create recurring invoices. Snail mail is also an option.
  • Zoho Books will help users to manage bank accounts, and view bank and credit card statements. Right now, users need to enter third-party financial information manually via a .csv file, but later this year, Zoho plans to add direct connections to banks to automate the import process.
  • Zoho has also taken steps to reduce the fees that Zoho Books customers pay for PayPal transactions by teaming up with PayPal on the Business Payments on the PayPal X platform. This cuts PayPal transaction fees for Zoho Books users to a flat $0.50 per payment—instead of the standard 2% to 3% of each transaction. Since 70% to 80% of Zoho customers use PayPal as their primary payment method, this is a pretty big selling point for the solution.
  • Zoho Books was designed with non-accountants in mind. The interface uses terms such as “money in” and “money out” instead of accounting jargon. But small businesses that use an accountant to manage their financials can set their accountant up as a Zoho Books user. Accountants can also use the solution to manage multiple small business clients simultaneously, as separate organizations.
  • Zoho is addressing multi-currency needs. At launch, Zoho Books enables users to define multiple currency types. Initially, the user will need to supply the exchange rate manually, but later this year, Zoho intends to automate this through an integration with currency exchange.
  • The look and feel are very customizable. Users can configure logos, signatures, tax settings, email settings, etc. from the settings module.
  • Integration is basic today, but Zoho has big plans. As I noted, today, you can import data into Zoho Books from spreadsheets, Zoho CRM, Zoho mail, etc. You can also view every module of Zoho Books in Zoho Sheets as a spreadsheet, or export it to Excel. Zoho also has a data migration tool to migrate Intuit QuickBooks data to Zoho Books. Looking ahead, Zoho plans to tightly integrate Zoho Books and Zoho CRM to create a seamless order-to-cash workflow. Zoho also plans to integrate Zoho mail with Zoho Books.
  • Pricing starts at $24/month for 2 users, and $5 per user for additional users. If you sign up for an annual subscription (instead of paying monthly) you get two months free. The solution is launching with a 30-day free trial.

With Zoho Books, Zoho is taking aim at Intuit QuickBooks in the U.S., and similar entry-level accounting solutions in other countries. In its first iteration, Zoho Books maps to QuickBooks Online Essentials, but down the line, as Zoho adds more functionality, it could add a higher-end solution more comparable to QuickBooks Online Plus.

Interestingly, Zoho recently announced Zoho CRM integration with QuickBooks, and according to Raju, Zoho will continue to support this even as it introduces its QuickBooks rival. But coopetition is nothing new for Zoho. And, you don’t need to look any further than its relationship with Google to see that this is an area in which it excels. Although Google and Zoho have several competing applications, Zoho apps are a top seller on Google Apps Marketplace and integrate with Google Apps. Zoho Books, of course, will be in the Google Apps Marketplace from day one.

While many on demand accounting start-ups have set their sights on the QuickBooks market over the past few years, they haven’t really made much headway. Zoho, however, is a different animal and should give Intuit a bit more pause for concern. Not only does Zoho already have millions of free and paid users around the globe for it 25 solutions, Zoho is just one part of Zoho Corporation, which provides enterprise level business, network, and IT infrastructure management applications, and software maintenance and support services to some of the largest companies in the world. This not only gives Zoho a lot of expertise to draw on to add new functionality, but the financial staying power to be a serious contender.

SMBs Open a New Front Door with Mobile Web Sites

Ten years ago, SMBs were just beginning to understand the need for and value of building web sites and storefronts. Today, SMBs are at a similar point when it comes to building mobile web sites and enabling mobile transactions. Why is this important? 4.8 billion users browse the web via a mobile device compared to 1.7 billion users who browse the web via other means, such as a laptop of PC (source: ITU, October 2010).

SMB Adoption and Plans for Mobile Web Sites

Figure 1 – Plans for Mobile Websites

Our recently published SMB Group market study, “2010 Small and Medium Business Mobile Solutions Study,” reveals that SMBs understand the importance of mobile friendly websites and plan to invest in a mobile web presence in order to help fuel their growth. In the very small businesses (1-19 employees) segment, only 11% have some mobile web presence, while in companies with more than 500 employees,  44% have created a mobile-friendly site.

With interest and adoption of smartphones, tablets and mobile applications exploding, both small and medium business have very aggressive plans to ramp up activity and functionality on the mobile web site front. These businesses view mobile web sites as a key mechanism to attracting new customers, improving customer service and retention, and growing revenues.

From an industry perspective, financial services/banking and professional services firms are taking the lead in deploying mobile web sites today. Going forward, retail, non-governmental organizations (NGOs) and education have very aggressive plans to establish a mobile web presence within the next 12 months. Many startups are choosing to start by developing their web presence through a mobile design paradigm first, from which they can then create a traditional web site.

What Information and Transactions are SMBs Offering and Planning For on Their Mobile Web Sites?

The most common types of information that SMBs with mobile web sites provide today include business contact information, available from 79% of SMBs’ mobile web sites; product and service information, offered on 71% of these sites; operating hours, listed by 65%; location applications, available from 60%.

SMB use of mobile web sites for transactions is more nascent, but is picking up steam. Today, 28% of SMBs with mobile web sites offer customers capabilities to schedule appointments or make reservations; 10% use mobile advertisements; and 8% mobile coupons. SMBs that don’t currently offer these capabilities have very aggressive plans to ramp up these services in 2011–up to 53% for certain functions.

High-growth and market leading SMB companies already have a mobile web-presence or are planning one in the next 12 months. In addition to this, depending on the industry, these SMBs are also very aggressively looking at enabling mobile transactions on their mobile websites. With upwards of 29 million smartphone users and 3 to 4 million tablet users, SMBs see the urgency of having a mobile web presence.

More information and a Table of Contents is available for this study click here: 2010 Small and Medium Business Mobile Solutions Study.

SMB Mobile Spending Trends from SMB Group’s 2010 Mobile Solutions Study

As part of the recently completed SMB Group study “2010 Small and Medium Business Mobile Solutions Study,”
we performed a detailed analysis of U.S. small and medium business (SMB) spending on mobile devices, applications, and services. As explained in this study, SMBs (1-999 employees) spent approximately $26.1B on mobile solutions and services in 2010—an amount forecast to increase annual at a rate of 17 percent for the next few years, with some segments growing much faster than the others.

As indicated on Figure 1, voice and data services gobble up the biggest part of SMBs’ mobile budgets (69%), followed by mobile application (12%) spending, mobile devices (11%), and mobile device/application management (8%). In the U.S., mobile service providers typically subsidize mobile device costs as part of their two-year mobile service contract subscriptions, resulting in the lower spending for mobile devices–which would cost two to three times more if they weren’t subsidized.

Figure 1 – 2010 SMB Mobile Solutions Spending

Other important takeaways from the survey and our analysis include:

  • While SMBs currently spend more on devices than on mobile management, growth in spending for the latter is outpacing spending on the former by roughly 13%. This reflects the reality that as mobile adoption and business dependence on mobile solutions grows, SMBs will need to invest in solutions to more efficiently manage mobile services and solutions.
  • Although SMBs currently spend more on voice and data services than mobile applications, survey results indicate that spending for mobile applications grow about 30% faster than for voice and data services.
  • Very small businesses have the highest average spending per employee for mobile services, solutions and devices. Average mobile spending per employee decreases as company size increases. As companies grow, they have more formal mobile policies that encourage mobile plan sharing, and can take advantage of volume discounts to help cut spending. For example:
    • Very small businesses with 1-19 employees spend about $150 per year per employee on mobile devices, compared to $101 per employee for companies with 50-99 employees.
    • Expenditures for annual mobile voice and data service plans per employee rage from $1,056 for companies with 1-19 employees to $511 for small businesses with 50-99 employees.
    • Annual mobile application spending ranges from $416 per employee for companies with 1-19 employees to $292 per employee for companies with 50-99 employees.
  • The role of the user-management, sales, office manager, information worker, etc.–and the industry are key factors in determining what types of devices are selected. For example, Information workers in industries like health care, legal, real estate are adopting smartphones and tablets more rapidly than other types of users in other industries.

Mobile spending now accounts for almost 10% of all technology spending for U.S. small and medium businesses and is forecast to grow at a rapid pace for the foreseeable future. This presents very significant opportunities for vendors on several fronts, including:

  • Mobile device companies that develop new devices that tailored to specific user roles and industries.
  • Mobile web and mobile application providers to create innovative new applications that help SMBs perform business functions more easily and flexibly.
  • Service providers that go beyond voice and data service plans to offer higher value solution bundles.

However, the high cost of mobile service plans threatens to stall SMB adoption of smartphones and other devices that enable employees to take advantage of mobile business solutions. This is particularly true in very small businesses (1-19 employees), where 40% cite high voice and data costs as a top barrier to mobile solution adoption. Even when we look at the total small business group (1-99 employees), 37% say these costs are their top obstacle. As a result, 43% of small businesses currently provide voice-text only phones and plans to employees.

Of late, service providers are offering more limited choices for voice-text only phones, which will push some small businesses to invest in data service plans, smartphones and the applications they enable. But, small businesses will need more flexible and affordable data plans to take advantage of the mobile applications that can help their businesses grow. We’ll be watching closely to see what types and which vendors will try to shake up the status quo with new pricing schemes, bundles and incentives to help small businesses take better advantage of the mobile opportunity.

For more information and a Table of Contents is available for this study click here: 2010 Small and Medium Business Mobile Solutions Study.