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Corio gets a second round of cash

Application service provider Corio captures $21 million in a second round of funding that the start-up firm says it will use to help expand sales, marketing, and other operations.

Application service provider Corio captured $21 million in a second round of funding that the start-up firm said it will use to help expand sales, marketing, and other operations.

Backing Corio in this round are Kleiner, Perkins, Caufield & Byers, Norwest Venture Capital, Greylock, business partner PeopleSoft, and other venture capital firms and independent investors. As a result of this week's deal, PeopleSoft executive and Greylock partner Aneel Bhusri will join Corio's board.

Kleiner, Perkins, and Caufield & Byers and others are investing in Corio under the premise that midsize companies will be willing to pay a fixed fee to an application service provider (ASP) to remotely host their enterprise applications. Hiring an ASP eliminates the need for these firms to buy and manage applications themselves, experts say. Customers access enterprise resource planning (ERP) applications via the Internet, and need not support the applications since the ASP does that for them.

Last month, Pleasanton, California-based PeopleSoft made an equity investment in Redwood City, California-based Corio, naming the firm a preferred long-term vendor. Meanwhile, Corio rival USinternetworking has partnered with telecommunications firm USWest and front-office software leader Siebel Systems, among others.

Corio is now managing PeopleSoft applications for IP telephony firm Clarent, Web portal company Excite, and Vertical Networks.

In related news, midmarket ERP vendor Lawson Software today said it plans to outsource its core product, Lawson Insight II, which manages a company's financial, human resources, and manufacturing needs, through application service providers. The company announced support for Sun Microsystems' ServiceProvider.com initiative, which was detailed yesterday at a Sun press conference in New York.

Through ServiceProvider.com, Sun, which is also working with Corio to help the company build its network infrastructure, is offering a set of products, services, and business practices geared toward the needs of ASPs.

Other ERP vendors, including SAP and Oracle, are increasingly committing to applications outsourcing to capture new business from midtier customers. SAP is partnering with EDS and several other companies that have agreed to host the software giant's applications.

And through its software hosting service, called Oracle Business OnLine, Oracle yesterday announced completion of a pilot phase, during which the company hosted financial, manufacturing, or human resources software for the Core Technology Group, Robert Mondavi, and Triton Network Systems.