Pega CEO claims most CRM apps are nothing more than 'conformist online rolodexes'

Derek du Preez Profile picture for user ddpreez June 9, 2015
Pega CEO Alan Trefler argues that companies shouldn't assume vanilla is better. He makes the case for powerful apps that are deeply integrated and customisable.

One of the core arguments for cloud CRM, driven by the likes of Salesforce, is that it gives companies a best practice, out of the box, vanilla, continuously upgraded application that you can pretty much turn on and get going with. Gone are the days of customising and configuring to death, which left companies in a mess when changes needed to be made, and often meant having to throw money at consultants to fix the problems. No mess, no fuss.

It's an argument that you get very used to hearing when you regularly cover the enterprise software market.

Which is why it took me a little bit by surprise when Pegasystems CEO Alan Trefler took to the stage at the company's annual user conference in Orlando this week and labelled most CRM applications, making a particular dig at those in the cloud, as often nothing more than 'online rolodexes'.

Trefler spoke at length about how that it is Pega's view that these out of the box applications are a short-term fix to a long-term problem and that they force companies to “conform” to processes that don't allow them to provide unique brand experiences. Instead, Trefler said, enterprises should be thinking about strategic, customisable/configurable software that allows you to differentiate and embed your brand promise into the processes.

And I'll admit, at first I thought that this was way off the mark. My initial reaction was that Pega was missing the point that most companies in the market today are looking for a solution that is continuously upgraded for them and provides them with a 'best of breed'. Hell, even Microsoft is going down this route with Windows.

But after listening to the arguments and having spoken to customers, it soon became clear to me that Pega has actually made quite a savvy decision. Whilst the others in the industry are following suit and heading down the 'vanilla' cloud apps route, Pega is providing the largest, most complicated, richest organisations with an alternative that doesn't quite feel like the disastrous apps of the past, but isn't so bland that it doesn't appeal to their 'we are special and need something different' psyche.

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Pega is hoping to give companies with significant legacy (both technological and brand) a CRM offering that feels like it is closely aligned with the Salesforce's of the world, but still allows them to be different. One that is based on the Pega 7 platform, either on premise or in the cloud, running integrated marketing, sales, operations and services apps.

Stop conforming – CRM Evolved

Trefler's keynote focused a lot on how companies are struggling with different silos within their organisations and don't know how to integrate these. And as a result they end up choosing a 'conforming app' (out of the box app) that appears to offer a quick fix. However, he argues that this leaves a gap between your existing stack and a gap between what your customers expect from an experience with your brand. Trefler said:

These organisations have inevitably developed silos and touch points that are disconnected from the critical outcomes that customers see. These silos take multiple forms. There are siloed systems that don't connect together. There are silos between departments that are formed around antiquated concepts like middle-offices. This whole world has to move to this sense of immediacy, this ability to drive from the touchpoint to complete fulfilment. These silos lead to the ultimate devastating silo, gaps in the customer experience. Organisations are really struggling to address these gaps.

We see a lot of organisations jumping to fix these problems by getting 'an app'. Getting a quick solution because they're frustrated and tired of waiting, that they're going to believe the software market and fill those gaps. The problem is of course that not all gaps are equivalent and not all software is equivalent either. If you look at the software landscape, we see it falling into two fundamental buckets. There's one that we call conforming applications – one where they do something very important, but you are going to conform your business to the way that technology works. You're going to do it the way 'they' said you should do it.

For certain things that should be completely standard, that's fine. If you are thinking about

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client engagement, if you are thinking about how you differentiate yourself, if you thinking about how you are able to bring a novel new product or process to market, those conforming applications are going to fall woefully short.

Trefler believes that Pega's platform provides companies with 'strategic' applications, as opposed to those that force companies to 'conform'. He said that because software defines so much of client engagement, it needs to be differentiated and provide a strategic approach.

There's no app for that. That's something that requires you to mix your DNA into the software, to make it consistent with your visions and goals, your objectives. If you are going to do this, you are going to need to have high expectations of what the technology will bring.

Most CRM apps are unbelievably conforming. Yeah they are good at record keeping, they'll maintain your contacts, your list of opportunities, your accounts. They'll allow your people to do the hard work of figuring out how to integrate this. At the end of the day, they're kind of an online rolodex. If you used a typical CRM system, you've experienced the rolodex. Perhaps an electronic rolodex, but a rolodex nonetheless.

These systems, they do nothing to make the employees more effective, they don't really help guide and experience, or bring at the point of connection with the customer, anything special. Now what's really sad is that you can take a rolodex, diamond encrust it, you can gussy it up, you can stick it in the cloud – and it's still just a rolodex. That's why we think it's time for a new generation, a new breed, a new thinking about these key CRM applications that will enable them to move from this conforming status, to be true strategic instruments. We call that vision, based on Pega 7, CRM evolved.

Trefler made the case that Pega's powerful platform, with an integrated CRM suite that is customisable, allows companies to evolve and to be different. In addition to this, Pega announced new analytics capabilities for Pega 7, which Trefler argues provides employees with customer context and delivers them the 'next best action' in real-time, across all channels. He said that this integrated approach, across all the touch points, defined to your brand's needs, gives you something that typical CRM cloud app can't. Trefler said:

We have committed to making sure that we don't dumb down those powerful core engines, the engines of growth. Simplicity can be seductive and it can be attractive, gets you off to a fast start, but simplicity without power is going to leave you short.

Is vanilla best?

This is a very powerful technology base on which to deliver this CRM Evolved. The rolodex CRM applications can track stuff, but they don't have the power to really have any sort of sophisticated or differentiated process that is differentiated by customer group, or differentiated by product, differentiated by jurisdiction – those are the things that are built into our process architecture.

Everything in our system, the user experience, the rules, the process elements, the data that is received, is all driven by this thing that we call the layer cake. The layer cake is a way to structure what is similar and what is different in a way that actually operationalise it. You are able to put your standard approaches and definitions in the bottom layer of the cake and then you build up what's different in the dimensions of the business.

Customisable doesn't mean problematic

Following Trefler's keynote I got the chance to sit down with Pega CTO Don Schuerman and took the opportunity to ask him further about why this confirming versus customising argument has come up and what it means for customers – and mostly what it means when it comes to upgrades and making changes.

Shuerman's agrees wholeheartedly with Trefler, as one would expect, and said that companies with any sort of legacy aren't going to be satisfied in the long term with an app that doesn't give them the freedom to do what they want to do. He said:

A large portion of what we believe strategic applications are about, are about being able to safely customise an application to do what your organisation needs. Especially for CRM, since a large portion of that is baking in your company's brand promise and how you do marketing, or what your service processes are - you have to customise these applications. You have to customise them to deliver a brand to the market place.

Also, because of the large enterprises we sell to, you have to customise them to fit into the existing silos and operational back-end you have. Your processes are not going to be cookie cutter. You need to customise on the front end and the back end.

And he said that this is a debate that has been circling the software industry for years, but one that isn't as black and white as each camp makes out. Schuerman suggests that Pega 7 sits somewhere in the middle, a sweet spot. He said:

This whole customisation versus non-customisation battle is one that we continually flip back

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and forward between in the software application world. The right mode is not either or, it fits in the middle. I want an app that comes out of the box with a rich enough set of features for the things that are pretty much de facto for my industry. But I need a way on the platform to customise those processes and decisions and experiences.

And to do it in a way that ensures as the technology, the underlying application and platform are upgraded, I can take those changes forward. That's the danger that companies have faced historically. But I think especially for the size of the organisation that we deal with, it's not going to go away, unless you want to deploy an experience the same as everybody else.

And it's this final point Schuerman wanted to drill down. He said that although companies are configuring and customising to a certain degree, it is being done within the confines of the model based forms. It is not about making a bunch of changes to the source code that leave you stuck in later years (although read my take on this at the end for more on this point).

This is something that Pega is exploring more with the release of Pega 7 Express, a cloud based app that lets users, with business users in mind, build, test, run and configure straightforward business applications on the fly without much technical support. Schuerman said:

When we talk about customisation, we are not talking about writing about a bunch of extra code into the application, we are talking about using the model based forms to configure it – with often a high degree of variation, to configure it to do what your business wants it to do. The goal we have with Pega 7 Express is to push even the limits of that configuration to the point that business people can do it without any training in the environment.

My take

A very interesting couple of days with Pega. Whilst I was initially dubious of Trefler's message - telling everyone to go and customise and be different from the rest – I came to realise that this argument makes a certain degree of sense...particularly for a certain type of customer.

We have to remember that Pega mainly sells to Fortune 400 companies. Companies with hugely complex environments that have a huge amount of legacy underpinning them. I bet for many of those buyers, the idea of a vanilla, out the box cloud app may initially seem appealing, but probably isn't going to be the long-term fix that they're after. Remember, these are the companies that DO like to think they're different from everyone else.

And having spoken to customers at the event, it seems that Pega hits that sweet spot perfectly. It allows them to be just agile enough to build a nice new layer on top of their legacy, but without having to forget all of their legacy investments. It's clear that Pega has spoken to their customer base and come up with a solution that fits well with them.

However, I do have a couple of 'buts'. Firstly, Pega may very well be a great choice for many large organisations out there that have a long history and customer base, but I'm not so convinced that a quickly growing, mobile first, digital organisation would think that they're a good fit. I think perhaps they'd be viewed as a little too 'complex'. And that's okay. The customers Pega is selling to have deep pockets for IT projects, and maybe those new-age digital organisations aren't in their sights just yet.

Secondly, I spoke to a customer today that had been running on Pega 6 and was in the middle of an upgrade to Pega 7. A large US customer that had chosen Pega for its ability to easily customise the apps. And they were very happy with the product. However, they did tell me that upgrading the customisations was nowhere near as easy as Schuerman was making out and caused a lot of pain. Now, apparently Pega has gone some way to fixing this problem with the latest iteration of the platform, so some of this may no longer be a problem for the most up to date customers.

Thirdly, I'm not entirely sure companies like Salesforce would agree that their platforms are entirely conformist or vanilla. Just the other day I had a conversation with a Salesforce exec, who told me that Salesforce's stickiest customers are the ones that customise the most – and the Salesforce 1 platform allows for that.

Having said all that, I come away from the event believing that Pega is doing a very good job of selling to a customer base it knows very well. And I get why it is taking this approach. For those with legacy, with a culture of customising and of being different, Pega 7 seems a good option.

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