21 November 2013
INTERVIEW
Pegasystems CEO Alan Trefler
plans his next move for the $500m
software company
Bill Goodwin
“I
t’s always nice when the stock
market affirms your work,” says
Alan Trefler, CEO of Pegasystems.
Trefler, the chess and ping-pong playing
founder of the $500m software company, was
in a bullish mood when he spoke to Computer Weekly.
Pega’s stocks rose by 20% when the company reported strong growth in its licence
revenue in November 2013, in a market that
has seen others struggle.
Pega specialises in software for business
process management (BPM) and customer
relationship management (CRM).
The company’s clients are largely Fortune
500 companies, including JP Morgan, insurance group ING, Lloyds Banking Group,
Cisco, Philips and BAA.
Pega rules
Pegasystems’ third quarter 2013 results
show the company is doing well in an otherwise difficult market, with licence revenues
rising 34% year on year.
The company benefited from major deals
with three global telecoms companies, which
will use Pegasystems software to automate
their customer service and sales processes.
“
Pega is probably the only BPM
vendor doing over $100m every
quarter, apart from IBM
Derek Miers, Forrester
”
Other players, such as Oracle and IBM, by
contrast, have experienced only “languid” or,
in some cases negative, growth in their BPM
sales, claims Trefler.
And he has a point, say market watchers.
“There are lies, damn lies and statistics, but
in this case it’s probably true,” says Forrester
analyst Derek Miers. “Pega is probably the
only BPM vendor doing over $100m every
quarter, apart from IBM.”
For Trefler, BPM is at something of a
turning point. The market has consolidated
in recent years, leaving just three or four
companies – IBM, Oracle, Pega and Appian
– capable of tackling Fortune 500-scale BPM
projects.
“I think that is because customers tried
BPM and ran into its boundaries. They found
they could not get where they wanted to go.
They found that things which looked simple
to start with ended up requiring a lot of code
to work,” he says.
Keep on trucking
Pega’s core software,
PegaRULES Process Commander (PRPC), is at the
top end of the market when
it comes to BPM. But suggest to Trefler that it is a
Rolls-Royce solution – with
a Rolls-Royce price tag to
match – and he bristles.
It is more a Mack Truck,
he suggests, referring to the
iconic heavy-duty, long-distance trucks seen
on the highways of the US.
“Our strength has always been the
confidence our clients have that they will
not run out of runway. We have the proven
ability to let them start fast, but they can
also scale,” he says.
Pegasystems rarely makes acquisitions, but
in October 2013 it made an exception, buying
Antenna Software, a company that specialises
in mobile application development.
Prior to that, its purchase of CRM specialist Chordiant Software in 2010 gave Pega
a way in to new markets, such as telecommunications and healthcare, helping it grow
beyond its traditional financial services base.
Tuning in to new technology and
an expanding customer base
Antenna is another smart move for Trefler,
who reportedly snapped it up for a knockdown price. The company has technology
that Pega needs and a customer base that will
help it expand.
Pega plans to integrate Antenna’s mobile
technology into its own products, to offer
more sophisticated mobile services, such as
the ability for employees to work both offline
and when connected to company systems
online, says Trefler.
For example, insurance agents could use
the technology to write policies during a
flight, when they lack an internet connection, then re-integrate with the case management system once a connection is available.
A government agency involved in land
management plans to use the technology to
send people out in the field with tablets, in
areas that may have patchy reception.
“They can take pictures of things, draw on
the face of the tablet, mark up and record
additional information, all of which is geotagged. When they come into range, they
automatically reconnect,” he said.
Cloud integration
Pegasystems’ next focus will be on refining
its existing PRPC software. More than a million hours of effort went into making the latest version easier to use and more powerful.
And customers have given it some “spectacular feedback”, Trefler claims.
In recent months, Pega has been working to integrate PRPC into Salesforce.com’s
cloud-based sales software. That has attracted
interest from companies including General
Electric, which plans to use the software to
move from automated sales tracking to automated order execution.
Making Pega software more
elegant
Pega’s software architecture is now “pretty
complete”, says Trefler, which means future
development will focus on making the software easier to learn and implement, he says.
“I believe the future is in our hands with
the components we have,” he says.
This strategy makes complete sense, says
Forrester’s Miers. Pega would reach a wider
audience if its software could be made easier
to deploy. “The opportunity for Pega is to
open the aperture a bit, looking to small and
“
I believe the future is in
our hands with the
components we have
Alan Trefler, Pegasystems
”
medium-sized companies,” he says.
Any move to help overcome the current
shortage of skilled professionals able to deploy Pega will also help the company expand.
“Pega itself is kind of constrained with the
ease of use of its technology. Its market could
be a lot bigger,” says MWD analyst Neil Ward
Dutton. “You need a lot of expert resources to
implement Pega, and they are expensive.”
The long game
With Pegasystems on a relative high, Trefler is planning to celebrate by playing chess
against 20 opponents simultaneously at next
year’s Pegaworld customer conference.
It is an exciting time in chess, with the
world championships underway in India, says
the chess master.
But he has no plans to try the same stunt
with ping pong. “That would be an interesting event,” he says.■
The rules of acquisition
There is no prospect of Pegasystems buying
another company any time soon, says Trefler.
“We are not a company that depends on
acquisitions for growth,” he says. “There was
none of this buy a company and a year later
pretend that revenue went up, which you see
a lot of in the software business.”
Having a coherent product architecture
is important for Pega, he says. Each acquisition requires significant work to ensure its
technology integrates with Pega’s existing
technology, so it makes sense not to do too
many.
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