ISG Software Research Analyst Perspectives | Customers and CX

Zoho’s recent analyst conference was an opportunity to explore how the India-founded software company is faring in its efforts to extend its enterprise business, and to place AI at the center of its product portfolio. It appears the company is having some success on both fronts. Zoho’s software suite includes nearly 60 applications that extend into almost every facet of business activity, from front to back office. Of those, a significant number are relevant to customer experience professionals in sales, service and marketing. This group of professionals is engaged in work that is critical to company health, but at the same time underappreciated and often under-resourced. They are also operating at a moment when many of the basic processes and underlying assumptions of CX are being reconfigured and reevaluated. It is a strange time to be a CX professional, especially when it comes to contact centers and service delivery. Much of the uncertainty in today’s environment has to do with the development of tools that use AI for process automation. There have been significant productivity gains already in the contact center, with more expected as those centers become more closely connected with other siloed CX teams and processes across the enterprise. Zoho has been developing AI applications and incorporating them into the suite wherever practical, and our research finds these advancements are helping Zoho improve their overall performance, with the company achieving an Exemplary rating in our recent ISG Buyers Guide on advanced contact centers. It’s worth noting that their AI development pre-dates the current industry conversations around generative and agentic AI tools, and this gives them valuable perspective on these current conversations. In the analyst presentations, Zoho executives went out of their way to address the limitations of some approaches to AI in software apps. For example, they noted that introducing AI into certain tools raises issues of compliance—can an LLM be made to “forget” certain pieces of information once they have been learned? It has an impact on information retention policies. They also mentioned the idea of productivity, suggesting that there are subtle limits to the kinds of productivity increases AI can usher in. While 10x or 100x improvements in programming productivity are possible, they argue you can’t necessarily expect that kind of explosion from certain processes that require human intervention to verify the accuracy of unstructured AI output, like creating legal briefs or corporate annual reports. It’s fair to say that the kinds of processes being automated in CX and contact centers have more in common with those human-verifiable activities than with programming, suggesting something of a cap on the improvements to be seen from AI in CX. Assuming that those limitations can be overcome (which is likely), the boom in productivity has other downstream effects that need to be worked through. Zoho used the analogy of previous technology revolutions causing disruptions in ways that the business world at large has trouble digesting. When farm productivity increased massively due to automation and scale, more farmers had to leave the profession, and farm incomes did not keep up; farmers did not reap the benefits of their own productivity. Similarly, the textile industry is now so extremely productive that traditional weavers are effectively gone. Zoho uses these comparisons to suggest that because business models can undergo such radical change in a short period of time, businesses must look for new sources of value in their enterprise software. Zoho locates that value in providing privacy, trust and the assurance of compliance. In their telling, practical usage of Zoho’s AI applications will proceed in three stages. First, the tools are enhancing the user experience by surfacing and executing on contextual business data. That is where things stand so far. (I take “contextual” to mean ensuring that the technology understands the context of the interaction with the user, which requires a finer sense of the business relationship, data and actions while respecting the permissions necessary to have access to information and answers.) The second phase is in creating tools that enact “AI-enabled verifiable actions,” which is a way of describing AI agents and their ability to perform actions that don’t necessarily require human verification. This is where current work is being done. And the third stage, still to come, will ultimately be the aforementioned explosion of productivity, and its unforeseeable consequences. Zoho’s AI platform, Zia, is being described as a bridge that connects LLMs to applications, allowing customers to pick one and let it be the underlying LLM for a specific app. Zia Agent Studio then facilitates creation and deployment of comprehensive agents that live in a unified data platform leveraging a broad set of existing tools and a common trust layer. This suggests that over time, Zoho’s offering should be perceived less as a collection of point solutions, or apps for narrowly defined business functions, and more as a platform company with centralized data, tools for customers to innovate, and a common AI element cutting across the application set. This tracks with our ISG Research assertion that by 2028, enterprises will replace many CX point solutions with broad, interdepartmental, multifunction suites. Zoho’s stated goal is to move from the SMB and mid-markets towards becoming an enterprise software supplier. This has been a strategy since at least 2022. Clearly the company sees the opportunity to use AI as a catalyst to evolve the app collection into a cohesive platform, and to use the platform as a selling point in seizing enterprise-level opportunities. From the point of view of enterprise CX, Zoho can successfully make that argument. Their apps run the gamut from trouble ticketing and help desk to basic contact center voice services, messaging, many CRM functions, automated marketing, and the reporting and analytics needed to support enterprise CX. In short, it’s possible to assemble a bundle from Zoho that contains enough cross-functional, cross-departmental tools to support an enterprise-level effort to manage the customer lifecycle. That puts the Zoho suite on par with other competitive customer experience management toolkits such that in 2024, they were rated Exemplary in the ISG Buyers Guide on customer experience management. Zoho also presented details of the CX roadmap that indicate the company is putting significant investment into enhancing user productivity, communications capabilities, engagement tools and the analytics to support those functions. And the areas of investment appear to be balanced between developing AI capabilities and other aspects of the toolset outside of AI. This builds on top of its work in analytics which propelled the company to an Exemplary rating in the ISG Buyers Guide on Analytics and Data. In light of this, I think enterprise buyers should consider Zoho’s offering for many CX needs. The perception of Zoho as a collection of SMB-focused niche applications is somewhat unfair. Based on the continued evolution of the underlying platform, and the emphasis on tying the disparate components together through AI and data management, I believe the Zoho CX portfolio is well-suited to the needs of many mid-market-to-large enterprises, especially those that are just now taking steps to rationalize and harmonize tools and processes that span CX departments. Regards, Keith Dawson

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