6/15/07 – Sarbanes-Oxley requirements have created challenges for companies of all types and 
sizes. And the management team at Irvine-based LogicalApps has turned those challenges into opportunity in helping companies automate the process of Sarbanes-Oxley, or SOX, compliance.
LogicalApps provides solutions that help companies automate the checks and balances that take place in organizations to ensure that business transactions and financial reports are accurate, meet corporate policies and adhere to government regulations.
According to Chris Capdevila, co-founder and current vice president of strategy and corporate development, LogicalApps was not originally started to address Sarbanes-Oxley specifically, but as corporate scandals like Enron and WorldCom unfolded, the demand for greater regulatory oversight grew exponentially, and the company’s evolution followed suit.
“I spent eight years helping companies to rip out custom financial applications that they spent millions of dollars on and that fit their business perfectly but they couldn’t scale,” said Capdevila, formerly a senior consultant at Price Waterhouse. “So they were replaced with commercial ERP (enterprise resource planning) applications that could handle massive workloads but couldn’t support their business processes without extensive customization. For all the functionality they had gained, they lost a lot of flexibility and control.”
Capdevila says that he and co-founder Paul Brunskow, saw this problem as a glaring hole in the ERP market and in 2000 established LogicalApps to address it. Since then, Capdevila and team have adapted to changing markets and established a solid business in an industry with huge growth potential.
John Hagerty, vice president and research fellow at AMR Research, says that the company has established a strong foundation for future growth, due to the two-pronged approach of its flagship ACTIVE Governance software.
“When LogicalApps originally introduced the ACTIVE Governance solution, it was significantly out in front of other vendors in the market because it was one of the first to deliver both a framework for scope of work as well as active monitory of security and process in one package,” said Hagerty. “Others have followed this path now, but LogicalApps’ execution is more mature.”
The company targets its marketing efforts to what it sees as the four key constituencies within an organization—internal audit, finance, IT and the chief compliance, or risk, office.
“Our marketing efforts are targeted to those four stakeholders, each of which shares a common goal to ensure that corporate and regulatory guidelines are being followed with the least possible burden to the business,” said Carla Fitzgerald, senior vice president of marketing. “There are a variety of industry events focused on compliance and risk, which we participate in as presenters and sponsors, and we also use vehicles such as webinars and seminars to educate the market on the value of embedding policy enforcement into their core business systems.”
The strategy seems to be working. LogicalApps currently counts more than 300 customers, which break down roughly as 60 percent public companies, 30 percent private and 10 percent government agencies, according to CEO Jim Zierick, who joined the firm in February.
“We’ve seen that our solution is embraced by large organizations such as the U.S. Department of Health and Human Services, Qualcomm, Visa and Fidelity National Financial, to name a few, as well as smaller organizations who really appreciate that they are able to derive business value from automating their governance initiatives,” said Zierick.
The company’s success has not gone unnoticed. In 2005, LogicalApps received the “Emerging Star” designation in the Deloitte & Touche Technology Fast 50 program, and Capdevila was named "Software Entrepreneur of the Year" by the Software Council of Southern California in the same year.
A key ongoing challenge for the company is to overcome the “let’s wait” option with potential clients or companies that either try to manage their compliance programs through inefficient office productivity tools like Excel and Word or simply suffer from institutional inertia. In addition, the company cites competition in the governance, risk and compliance, or GRC, market that comes not only from other smaller providers, but from the risk advisors with whom they partner.
But Capdevila sees opportunity in this situation. “A significant element of our marketing strategy is to partner with them—companies such as Price Waterhouse Coopers, KPMG, Ernst & Young—to expose the advantages of automation to our target audience,” he said. “These firms are building extensive practices around GRC, helping companies to improve business processes while meeting their compliance requirements, and they are often contracted to evaluate and implement automated solutions for GRC on behalf of the customers.”
Capdevila says that almost every leading risk advisory firm has identified LogicalApps as a premier offering for the Oracle market and are sending consultants at the rate of 30-to-40 per quarter to get trained on the company’s ACTIVE Governance software.
LogicalApps is backed by Sequoia Capital and Mission Ventures.
LogicalApps – www.logicalapps.com
