Zoho’s plans to put data centres in Canada to appeal to both larger organizations with stricter data sovereignty rules and smaller ones with regulatory requirements was delayed for several years, but now the company is confident it will open new markets for them.
Today, Zoho Corporation is announcing that it has opened their first two Canadian-based data centres. They are located in Toronto and in Montreal, and represent the company’s first data centres designed to appeal to customers for whom Canadian-based data is fundamental for regulatory or privacy concerns, and who have not been able to consider Zoho in the past.
When Zoho started its business in Canada, data sovereignty was less of an issue than it is today, as were concerns about privacy. As a result, few customers and prospects objected to their data being stored outside Canada.
“Previously, we gave customers a choice,” said Chandrashekar LSP, Managing Director of Zoho Canada. “They could elect to have their data stored in an American data centre, or a data centre in Europe. Some companies, especially in the legal area, wanted their data to be in Europe rather than in the U.S.”
With the gradual increase in support by Canadian organizations to have their data stored in Canada, Zoho made plans to bring this about several years back, but their plans were overtaken by events.
“This should have happened three years ago – but the pandemic and supply chain issues got in the way,” LSP said. “It was actually late 2019 when we decided to go all in on the data centres, but that was not to be.”
Once the decision to proceed finally took place, even though the data centres are space in a colo hotel, it still takes time to set it all up.
“We rent all the communication, power and other requirements to operate a data centre, but that still takes time to configure, even though they have people on the ground who can help us with installs and stuff like that,” LSP stated.
Zoho lost a significant number of potential customers when the data centres were delayed.
“It wasn’t just large businesses who walked away,” LSP said. “It was a broad variety of customer types and sizes who were impacted by regulations in their specific business. For example, we had health care and legal and accounting firms who loved Zoho, but who couldn’t go with us because of regulations in their industry.”
Zoho has still being doing well in Canada despite this problem. Their Canadian momentum includes a five-year Compound Annual Growth Rate [CAGR] of 36% for mid-sized enterprises and an overall Canadian customer base increase of 24%, with Zoho Workplace customers growing 32% over the same period.
“The strong CAGR rates for growth in the enterprise and midmarket is interesting, and the data centre launch will benefit us with those customers because we can now address their needs,” LSP said. “SMBs were not a problem unless they were in a regulated industry, but now we will be able to close on more larger opportunities.”
Partners who serve those areas will naturally benefit as well.
“We are looking forward to our ability to leverage our focus on partners who address those specific markets we are looking forward to growing,” LSP stated. “With certain sectors, we could not participate as effectively before.”
The two new data centres in Canada gives Zoho a total of 14 globally, a number which will certainly increase as Zoho increases their support for other local geos.
“It depends on regulations in certain regions and the degree to which data can be taken out of the country,” LSP said. “Ultimately the number of data centres could be in the 30s or higher. As more countries adopt GDPR or similar legislation, it will be mandatory for vendors to invest in local data centres.”