By: Neil Ward-Dutton, Research Director, MWD Advisors
Published: 14th June 2013
This work is licensed under a Creative Commons License
A swaggering Pegasystems put on its annual customer event in Orlando last week. An audience of over 2,000 customers, partners and employees came together to dodge thunderstorms, play ping-pong and soak up some pretty compelling stories of large-scale business-technology transformation. With an eye to the future, though, some things at Pega are going to have to evolve…
PegaWORLD is always a great event for me. Why? Because a very big proportion of the presentations (and there were 7 or so parallel tracks for most of the conference, so that’s a lot of sessions) are from the company’s customers. What’s also great is that these customer presentations don’t just talk about technology – people talk about the business context, business results and the challenges they’ve faced along the way. If you’re a student of how businesses drive change with help from technology you’re going to be a happy bunny at PegaWORLD.
When it comes to the keynote sessions Pegasystems always pulls a couple of corkers out of the bag; stories that make you go “wow”. We heard from Lloyds Bank, which has invested in Pega technology to implement over 200 change projects; AIG, which is using Pega to transform its entire business model from federated (with 91 separate worldwide businesses) to hybrid (with increasing back-office consolidation); and Cisco, which is using Pega technology to help it quickly create new operating companies to help it do business more effectively around the world. The presenters talk about business models, transformation, capabilities, corporate governance approaches. The numbers they talk about have at least nine zeros on them.
The thing that’s curious is that when Pegasystems’ CEO Alan Trefler takes the stage, it’s like we’re at a completely different conference. Within a few minutes of taking the stage Trefler had run through ‘Direct Capture of Objectives’, the ‘Situational Layer Cake’ and ’6R Work Automation’. He’d made a geek joke about COBOL, Benedictine monks and Java. It’s worth remembering that Pegasystems is Alan Trefler’s baby, no doubt about it: he owns over 50% of the company’s shares.
Pegasystems is a really successful software company in the BPM segment it’s best known for today (though with the acquisition of Chordiant it’s also known as a CRM vendor, naturally). Its Pega 7 release brings some great improvements to the table that address some of the challenges that frustrated customers with previous versions – most particularly a much slicker (and cross-platform friendly) UI framework; a much more streamlined application security model; scalability and availability enhancements; and a new in-platform persistence layer to simplify the business of managing data within applications. It also brings a new ‘stage-based case management’ modeling approach that ties abstract modeling much more directly into technical development and so helps customers minimise the code they have to write and maintain (as long as they stay within the ‘guide rails’).
In many ways Pegasystems is well positioned to take advantage of the mainstream opportunities that BPM presents today as the market continues to mature and evolve. Its application-focused approach to selling and packaging its technology and the way it explains itself (referencing more general, mainstream development and architecture concepts like agile development, model-driven development, component reuse instead of focusing on how its tools deliver for BPM initiatives) means it can appeal to pragmatic businesses that never quite swallowed the BPM proposition. Its laser-focused account targeting and reference selling help it seek out the big, hairy transformation programs that it can address well with its very sophisticated, but also pretty expensive, technology platform.
Here’s the challenge, though, in a nutshell: how is Pegasystems going to grow towards and beyond $1bn in revenue?
The company doesn’t really do any marketing, certainly in the corporate sense. It does sales. It has some really really good salespeople who know their industries and can bring in big deals; they can talk to senior business leaders and make the case. But can this approach scale, particularly when the heart of the company is so strongly technology-led rather than marketing-led? Can this approach scale as the company continues to de-emphasise BPM and tries to explain a broader proposition to a broader marketplace? I think this is something Pegasystems needs to get its head around quite soon.
Now don’t get me wrong: I certainly don’t see Pegasystems going away or decreasing in its capability or market influence any time soon. But it has very big ambitions. Achieving them means creating a more rounded ‘centre’ in the company; dialing back the tech talk and finding a way to scale conversations to a much broader target market that link the technology to business problems and business value. It also probably means letting partners drive much more of the market conversations, rather than being primarily used as solution implementers.
We need to see slightly less talk about the ‘situational layer cake’. It would be a shame if the ping-pong tables went, though.
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