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Pegasystems keeps on truckin’, and fast – but down which road?

Neil Ward-Dutton

Thursday, June 9, 2011 by

I’ve just returned from another lightning trip to the US – this time to take in PegaWorld, Pegasystems’ annual user conference. The company is currently publishing full-year revenue guidance of around $430m for 2011 – up from $330m or so last year – which means it’s grown 30% in each of the last three years. As it digests its Chordiant acquisition and finds ways to combine the technologies it now has to hand for new customer scenarios, the company is clearly riding high and full of confidence: but I think it’s also showing early signs of growing pains. Whether these impact the company’s growth is not yet clear.

From what I saw at the show, the company is clearly on a roll in terms of its ability to deliver great results for customers. But – is it actually a BPM technology provider? And who does it want to sell to? Now it’s quite possible that the answer to the first question doesn’t really matter, unless you’re a technology industry analyst wanting to compartmentalise and evaluate stuff (depending on how influential you think such analysts are in the buying cycle); however the answer to the second question is perhaps more of an issue. Let’s talk about that one first.

You know, it’s interesting: Pegasystems’ founder, Alan Trefler, makes a big play of his company’s technical strengths and advances. He talks about things like ‘model-driven automation’, ‘situational layer cakes’, ‘customer oriented architecture’, and ’6R work automation’. But at the same time, the company claims that it sells to business leaders, not to IT folks. If that’s true then on this basis, I would say they’re likely to be confused a lot of the time.

When the company’s customers get up and talk – which, at PegaWorld, they do with impressive openness and frequency – they talk about operating models, margins, market structures, competitive pressures, regulatory controls, and so on. They talk about Pega technology as a way to make the thorny tradeoff between the need for consistency in business execution, the need for competitive differentiation, and the need to specialise execution for particular markets and segments. They are fantastic advocates for the business benefits of working with Pegasystems. But these are not people who really naturally engage with the idea of ‘situational layer cakes’.

So, who is Pega selling to – business or IT decision makers? The audience at PegaWorld was pretty much evenly split, I think; but it was difficult to see this reflected in how the company engaged with the audience. Of course the answer should be that Pega needs both sides: it needs to have both groups accepting its propositions in order to drive customer success. Pega’s technology is technically advanced, but despite recent usability improvements it’s still not exactly point-and-shoot – you need to have some targeted technical expertise to hand to deliver projects. Business leaders provide the mandate for change and the resources; technology people help to deliver the tools for change and provide integration and support services.

From what I saw at PegaWorld, its field people have one-to-one customer dialogue and understanding working very well; it’s clear from talking to Pega people and Pega customers that the company is absolutely dedicated to customer success – and a big part of its growth right now, I suspect, is driven by the power of successful customers talking to their peers.But I think the company needs to do more work to clearly engage these different audiences at scale in the marketplace.

So onto the other question, quickly: is Pegasystems a BPM technology provider? In his opening keynote, Alan Trefler claimed that the company’s recent growth makes it more than 10 times larger than its nearest pure-play BPM rival – but in truth this comparison is a little sneaky. Pegasystems isn’t really a BPM pure-play.

It is a BPM technology provider – but in the same way that SAP’s BPM investments make it a BPM provider. There’s a difference between the two companies in that they’ve achieved similar technology positions from different directions: SAP started with packaged applications and layered BPM technology on top after. You might think that Pegasystems has long majored on its BPM technology, but this isn’t entirely true; it’s just been that its more application-focused offerings have been less widely talked-about. With the Chordiant acquisition, though, the company has made its position much more obvious to the uninitiated. Pegasystems has publicly stated here at PegaWorld that it sees the work it’s doing in the CRM arena following the Chordiant acquisition as being just the first example of what it plans to do much more widely – that is, sell process-driven application propositions across multiple industries and across multiple business scenarios. Of course Pegasystems wouldn’t pitch these as ‘packaged applications’: but of course in today’s reality, there are few application vendors who would gladly hitch themselves to that wagon.

Trefler himself highlighted this corner of Pegasystems’ marketing landscape choices when he said: “BPM is a horrible term: we’ve debated whether we still wanted to be considered as a BPM provider.” On the basis of PegaWorld, it’s still not clear to me that the debate has been resolved – but on this question at least, I’m not sure the answer really matters.



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One Response to Pegasystems keeps on truckin’, and fast – but down which road?

  1. Pingback: MWD on PegaSystems and PegaWorld » Process for the Enterprise

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