April - 2003 issue > Cover Story

By Karthik Sundaram

WHEN OUR TECHNICAL TEAM CALLS THE Oracle helpdesk, they know that the situation warrants total, immediate attention,” claims Ravi Kulasekaran, co-founder and CEO of Fremont, CA-based Appshop, probably the largest independent ASP focused solely on Oracle E-Business Suite. Prashant Prahlad, the other co-founder, likes to fondly portray their success story as “two men with a fax machine who left the comforts of consulting jobs to venture out on their own.”

Oracle founder-CEO, Larry Ellison once declared that his product suite would be ASP-enabled only over his dead body. And only recently, in March 2002, did Oracle officially launch it’s new avatar. To achieve this objective, the software giant has had to reinvent itself from the inside. This type of repositioning is no small feat for a once nimble company grown fat on literally hundreds-of-thousands of customers worldwide. While all this was in progress, Appshop was up, away and running, implementing over a hundred projects, yet staying very clear of the Oracle channel sales. “Customers don’t need Ellison’s permission to ask us to manage their enterprise application,” says the duo.

In 1999, Prashant Prahlad and Ravi Kulasekaran quit Oracle and put up their shingle in the Valley, Simplify Inc. Soon, projects flowed in from the middle market. As Prahlad recalls, “One of our clients looked at our business model and recommended that we seek some funding and expand.” The duo was quick to found another company, Appshop, and brought in good seed funding. Simplify merged with Appshop.

What began as a small consulting shop in 1999 has flourished into a 150-strong team, with data centers in Colorado and California, and a 24x7 development, support and service center in India. Successful? Yes. Smart? Yes. Strategy? Now you ask. “Focus, focus, focus,” says Kulasekaran. “In the starting days, clients couldn’t get enough manpower to meet their needs. It would have been very easy to become a bodyshopping outfit. We steered wide and clear of that model, and persisted in offering a total implementation solution. Clients quickly called us back to offer us the management and maintenance jobs, post-implementation.”

Both Prahlad and Kulasekaran came with strong Oracle experience. “We began with offering Oracle implementation solutions, and now offer only that. On the one hand, you had the big five firms who threw bodies at implementation projects and clocked big time fees, and on the other hand you had these small-to-big players who were finding immigration loopholes and building bodyshops.” As a two-team firm off the street, says Kulasekaran, they offered fixed bids on implementation projects, confident that their expertise and domain knowledge would pay off. “This was like Bechtel offering a fixed bid on an oil refinery!” says Prahlad. “Many clients hadn’t heard of this before and were quick to take us up on our offer.” And pay off it did. Today, Appshop is probably one of the five largest independent Oracle ASP. While many of the ASPs in the market are floundering without a viable business model, Appshop has managed to grow, and grow steadily. In November 2001, the company closed a second round of funding, with $15 million. New investor, 3i,led the round that included previous investors, El Dorado Ventures, Menlo Ventures, Osprey Ventures, RSA Security and Walden TDF. “We were one of the few companies in the U.S. who managed to close a second round of funding in the fourth quarter of 2001, post the 9-11 tragedy,” recalls Kulasekaran. While the valuation was flat, the second round managed to attract new investors.

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