A highly scalable application network appliance is described herein. According to one embodiment, a network element includes a switch fabric, a first service module coupled to the switch fabric, and a second service module coupled to the first service module over the switch fabric. In response to packets of a network transaction received from a client over a first network to access a server of a data center having multiple servers over a second network, the first service module is configured to perform a first portion of OSI (open system interconnection) compatible layers of network processes on the packets while the second service module is configured to perform a second portion of the OSI compatible layers of network processes on the packets. The first portion includes at least one OSI compatible layer that is not included in the second portion. Other methods and apparatuses are also described.