Pega CEO - ‘Customers are shifting from short-term COVID-19 survival, to long-term strategic change’

Profile picture for user ddpreez By Derek du Preez May 28, 2020
Summary:
Pega CEO Alan Trefler says that buyers are beginning to change their priorities in response to the COVID-19 health crisis.

Image of Pega CEO Alan Trefler
(Image sourced via Pega)

As the COVID-19 pandemic continues to grip nations and industries, and as countries begin to figure out how to ease lockdown measures, we are starting to get a sense of how the enterprise technology market will fare in the coming months and years. We at diginomica have been profiling the responses of both sellers and buyers with regards to the impact on their businesses, all of which can be found in our COVID-19 resource hub here.

This week we got to sit in on a call with Pegasystems CEO and founder Alan Trefler, to get his insights into how his company and its customers are being impacted by the spread of the novel Coronavirus. Pega specialises in customer engagement and business process automation, which Trefler believes will play a critical role as the nature of work and business changes. He said:

The first 48 hours after everything closed down, I was a little worried. But by 72 hours I knew that we were going to be fine. The real thing that happened is that business just picked up digitally and our clients recognised the need not just for immediate solutions, but a need to engage around how they want to think about the longer term.

Trefler elaborated on this and said that given the negative impact that has been felt by many companies around the globe, in terms of continued operations, there is going to be an increased focus on process and digital resiliency in the future. He added:

I think companies will look different. I think this has been a challenging set of issues for the world, in general. But we're going to see much more openness, people going to be able to work in a distributed fashion, much more of a need for the things that interface with customers, to be smarter and omni-channel. Those types of things actually play to our historic and future strength.

I do think you're going to see much more distributed workforces, much more digital engagement with customers, and to be honest much higher standards inside businesses for how their technology business architecture should work.

[Customers] have pretty much gotten the stuff they need to survive the next month or three, but they realise in some cases that they made their business architecture really unsustainable. It's glued together with tape and wire. So they're looking for ways to make things better now. They now recognise that they need a longer term business architecture that is going to be sustainable. 

In terms of Pega's own resiliency, Trefler said that the company is in a strong financial position. It had targeted $1.1 billion in revenue at the beginning of the year, much of which is "highly recurring" according to Trefler. Pega also raised approximately half a billion dollars in cash before the disaster hit. Trefler said:

So we are in a really, really good position. As a result of this we have actually continued hiring.

Trefler also stated that he had been worried about getting access to C-suite buyers during this time, but that the opposite has proven to be true.

I will tell you that CEOs, COOs and a lot of the other senior people that we've wanted to talk to have been incredibly accessible. If anything, I think COVID has tripled or quadrupled our ability to have these conversations.

Pega's response

Much like other vendors in the industry, Pega released a number of crisis response apps in a ‘matter of weeks' to handle issues such as employee safety, business continuity and small business lending. It made these free for its customers to use. Trefler said:

The concept of build for change is both our brand promise and our Registered Trademark and is something that we've deeply embraced. The recent Corona-crisis has actually given us opportunities to show how fast and thoroughly and effectively we can respond.

The company, according to the CEO, has also picked up business off the back of the crisis. For example, it was contacted by the Bavarian government - the second largest province in Germany - to provide rapid relief. The Bavarian authorities had a set of "really outdated systems" that they needed to be able to use to handle an enormous surge in people claiming financial support. Trefler explained:

We were able to do this using our new Express Methodology and Design Thinking to build a full out digital system in just five days, supporting the urgent needs they had to deliver help to those businesses.

Elsewhere, the company has also raised nearly a million dollars with company matching and employees donating their next years' bonuses to provide charitable relief for both the World Health Organisation and for Pega employees who have members of their household that have been laid off from work.

My take

It's the job of the CEO to provide assurance and signal that your company is resilient when faced with a crisis. But what we heard from Trefler rings true with a number of other enterprise tech vendors in the market - and makes sense, on a number of levels. Whilst spending will be cut in a number of areas, undoubtedly, I believe that companies will double down on their digital change agendas. The companies that had made these investments already have been able to weather the storm better than those that hadn't. We will now see buyers playing catch up and/or pushing harder into these areas.