This is probably my third or fourth visit to Pega’s annual user event in the US - and each year media are treated to a roundtable with outspoken CEO Alan Trefler, who isn’t afraid to say what he thinks about the state of the enterprise software industry.
I don’t always agree with Trefler’s take on things - as you can read here - but it can’t be denied that he is an intelligent man with a passion for changing the way companies do business and interact with their customers. This year didn’t disappoint and I think Pega is finally telling a consistent story that makes sense for a lot of buyers.
There’s a caveat to that. I think Pega is finally able to take advantage of its automation roots in the age of ‘AI-everything’ and build out systems that will be appealing to complex, large companies that feel that they are special. Very much its traditional customer base. It is hoping to scale out of the IT department too with its impressive low-code development capabilities. However, I don’t think that Pega is still able to capture much of the market that some of the other cloud vendors are able to appeal to, as Pega sells based on the perceived complexity of businesses (which I think will fall flat on some SMB buyers’ ears).
That being said, I’ve had some incredibly interesting conversations with customers this week - even government ones - that are taking advantage of Pega’s new and improved robotic and automation features, to rethink processes for end users.
Pega this week announced its next-generation platform, dubbed Infinity, which is packed with a whole host of automation announcements. We saw some particularly clever demos around self-optimising, AI marketing campaigns and AI-driven customer service tools, for example. A huge emphasis is placed on its low-code development platform too, as Trefler is a big believer in letting Pega do the hard work of building apps within a model driven environment - but more on that later. You can read about the whole list of features here.
The roundtable with Trefler this week didn’t disappoint and he discussed a wide range of issues. For instance, he wasn’t shy to talk down some of the customer engagement systems that are used by companies and the CRM tools being developed by the leading cloud vendors in the market. He said:
Our historical strength, which has been very strong, has been in being able to do process automation and make processes work better. Has been being able to make AI practical. Those I think are places where we are very strong and being able to do it at scale. Where scale is not just big, but scale is also sophisticated.
I think, frankly, our typical competitors lack all of those strengths. Although some are very good at marketing. And although some are very cult-like in terms of the following they have. We are working hard at getting better at marketing, but I don’t think we have to lose our technical integrity to get better at marketing.
And he didn’t hold back, when he added:
I think some of those systems are bad. I don't think the systems are there. I think the technology around customer engagement in many of the world’s largest firms has gone backwards. I think we are seeing the rebirth of Siebel. Ironically it comes from the same DNA as Siebel. It is the reboot. I would say that there’s been a confusion between the marketing of systems and the reality. And I think that’s why you get these incessant mediocrities.”
I think [we differentiate with the] get real’ piece - we are into real, is what it comes down to. You can buy 50 things and call them clouds, but that doesn’t make them something that hangs together. They’re all talking about it, but being able to pull it off, to get the respect of the right companies [that’s a different story] - I think we are in a good position.
I asked Trefler how Pega was going to make AI meaningful within Infinity, given that so much of what we see in the AI market is just marketing drivel. He believes that because Pega has adopted a ‘design thinking’ approach to the development of Pega’s AI systems, users will be rethinking how their processes should look when aided by automation and robotics. He said:
I think the interesting piece of Infinity was that it came out of a lot of the design thinking working that we ourselves have done over the last three years. And that it introduces design thinking principles to how we expect our customers to do implementation. People used to start projects around user stories. And as a contact centre operator, I receive this type of call, so I do such and such. This elevation of the concept to the idea of identifiable journeys that have a combination of personas and interfaces that they use and do that in a way that’s very visual, we think really elevates the ability to both automate processes and bring AI to it. To allow something that becomes a lot more tangible.
So I think the introduction of design thinking is one of the core principles and something that I don’t actually hear any of our other competitors talking about. Design thinking is an analysis process.
And Trefler argues that Pega has sophistication built into Infinity, where it takes what Trefler calls “dimensionality” and builds it right into the system from the ground up. Dimensionality, in this case, means flexibly building in different customers, products and jurisdictions into a seamless front end system that engages with users. However, whilst these capabilities of managing complexity are an asset to Pega, Trefler recognises that it poses a challenge for the company too. He said:
Our challenge, which I think we’ve really embraced and made a lot of progress on, is how do we take our traditional, very sophisticated approach to automation and analysis, and simplify that so that it can be used in a more straightforward way, much faster? I’d actually rather be on that journey than trying to take something that was designed for very simple things and figure out how to make it so it’s rich.
Automation and low-code
Anyone that takes a look at Pega’s Infinity will quickly realise that it has two central focuses - automation and low-code. Trefler said that these two priorities are the ‘heritage’ of the company and given the scale and capabilities of modern computing, will allow Pega to fully take advantage of them. Trefler said:
I think most of our competitors aren’t very good at automation. And they don’t come from a heritage of automation. If you go back to the earliest days of the firm, there were two things that we wanted to do. One was to automate work. And two, we wanted to automate programming.
We think having a world where you’ve got hundreds of millions of people typing cryptic words into text funnels is crazy. I think it’s the complete failure of the software industry to do things that we now take for granted in manufacturing. It’s insane, absolutely insane. The idea of automating software, as well as automating what software is intended to do are two very complementary ideas that we have a unique position in.
When you’ve got a culture of programmers and data scientists, they’re protecting their own. In the old days it was because the computers weren’t powerful enough, but boy that’s changed.
Trefler joked that Pega is a company that “became an overnight success”, but only after 24 years (it took 24 years for it to reach $100 million in revenue). Just over a decade later and it is now hitting $950 million in revenue. Impressive growth, but it can’t be denied that it’s still falling well short of the likes of Salesforce, a much younger company. So whilst Trefler likes to do a bit of trash talking, and whilst Pega’s systems may well be technically superior, customers aren’t necessarily buying into it. That’s not to say Pega is bad at what it does - as I said above, I think it has a brilliant proposition for companies that *are* complex and want a solution that seems more than a bunch of marketing hype (according to Trefler).
But I think where Pega’s real opportunity lies is with the low-code combined with automation features, as Trefler notes. Low-code development could be a huge success for Pega (it is nuts if these companies have thousands of developers when they don’t need to) and the automation features I’ve seen showcased are impressive. To sum up, I think Pega is at a bit of a cross-roads here and I think much to Trefler’s dismay, a lot of this will come down to whether it can communicate the simplicity of Pega, rather than the complexity, through its marketing. As someone said to me at the conference: “I’d never really heard of them, but they seem to be leading the way with a lot of this stuff, which seems odd.”