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Who Runs the World? Pega’s Push

Salesforce is in Alan Trefler’s cross-hairs. 

“They’d love to buy us. We’re giving them a lot of aggravation. But we’re not for sale. We’re pretty vocally independent as a firm.”

That’s almost an understatement. Through two full days of Pegaworld 2017, the sideswipes at Salesforce and its CEO Marc Benioff came fast and furious. “You won’t see any caricatured participants dropping in here,” said Trefler in his keynote. “Einstein’s not showing up.” Later, in a sit-down with four journalists: “Salesforce buys all these companies; renames them; they’re all different products. There’s no one architecture.”

There are several reasons Trefler, founder and CEO of Pegasystems (known to employees and customers alike as Pega), is in attack mode. There’s the leaked email from October 2016, suggesting a Salesforce interest in acquiring Pega. There’s the Gartner 2017 Magic Quadrant for Customer Engagement, which in Trefler’s eyes show Pega breaking away from the pack in pursuit of Salesforce. And there’s the sense that Pega is on the brink of being recognized as one of the key players in the customer engagement and experience space, rather than as a leading BPM vendor one doesn’t really associate with marketing tech.

This is a result, says Tefler, of a “conscious decision to do a few things differently.” Just a few years ago, Pega was only selling to the world’s largest companies. “We needed to become less restrictive in who we sold to. It limited our visibility. That’s now changed.” Not that Pega is courting SMBs. It’s competing for companies with at least 250 employees. And for all its BPM reputation, it’s now going head-to-head with Salesforce in sales.

As I reported Monday, Trefler doesn’t hesitate to use strong language when comparing Salesforce’s customer engagement offerings with his own. But looking at dashboard after dashboard, flashed up on the big stage at the MGM Grand, it can be hard for the buyer to tell the difference. That requires some deeper digging.

The BPM Beat

The difference between Pega and Salesforce goes back to Pega’s roots.  Pega was founded in 1983 by Trefler, then a 28 year-old computer scientist and chess prodigy, who had graduated from designing chess-playing computers at Dartmouth College to integrating software systems for banks. “When I started Pega,” Trefler told Forbes in 2015, “it was with the vision that we could create a set of metaphors –an intermediate visual language that would enable business people to more directly instruct the machine and put the heavy lifting not on the part of programmers translating into machine languages, but get the computer to really understand how business people wanted things to work.  That’s what set me and Pega on its journey.  And it turns out to be a fairly hard problem to solve.”

Pega solved the problem sufficiently successfully to become a global supplier of business process management software to Top 100 companies. BPM has been defined as “a systematic approach to making an organization’s workflow more effective, more efficient and more capable of adapting to an ever-changing environment.”

The relevance of Pega’s BPM background can be seen in the way it imports BPM concepts — “case management,” for example — into tasks around marketing and customer engagement and service. For some of their customers, the evolution seems seamless. I spoke with Shirish Joshi, director of information sciences at Cisco. The IT and networking giant began its Pega journey about five-and-a-half to six years ago. 

Back then, said Joshi, Cisco had multiple solutions across multiple stacks. The brand went through “a lot of POCs,” Joshi said, “and then we found Pega.” The “top track” application of Pega was BPM, from which Cisco derived business optimization and automation. Among the business areas in which Pega brought improvements were service and supply chain, collections management, and compliance. Pega is implemented in Cisco’s private cloud (Trefler is forceful about Pega’s cloud agnosticism: “I don’t understand why customers today would allow themselves to be trapped on someone else’s cloud.”)

One of the first major areas where Pega was leveraged was dealing with delivery cases. For Cisco, SLAs tend to imply very tight delivery schedules: difficult to manage using a series of siloed legacy applications. “We didn’t have end-to-end visibility,” said Joshi, but as they introduced Pega they dismantled the old applications one by one (receiving a Gartner award for the project). 

Cisco is now using Pega for customer service (the commercial side, Joshi explained, not technical support). The first layer is “case avoidance” — confirming whether a case is valid. What follows is automation of the case resolution process, beginning with intelligent case routing (an example of “next best action,” or NBA, in action — we’ll come back to that). “It’s way better, more accurate and faster than manual routing,” said Joshi. Pega also predicts case resolution time.

Circuitous though this may seem, it brings us to the kernel of Pega’s approach to marketing and customer engagement. Pega thinks in terms of specific business cases — whether they involve orders, supply chain, or customer pain-points — and seeks to expedite the resolution of cases by automatically predicting the next best action the brand can take.

It’s diametrically opposed to a traditional marketing approach, which takes the concept of an audience, or an audience segment, and uses technology to make engagement with those audiences ever more granular and predictive. To put it another way, one-to-one is in Pega’s DNA.

Enter the Machines

But of course the challenge of transferring one-to-one case management to the marketing and sales space is that it needs to be done at scale, especially for businesses engaging with clients in massive numbers like Coca-Cola or Royal Bank of Scotland (both Pega clients). Talking with several Pega executives, it became clear that no event has been more significant in Pega’s current pivot than the acquisition, in 2010, of Chordiant Software, a CRM vendor. And there was a pearl in Chordiant’s oyster: KiQ, a predictive analytics and decision-management specialist, acquired by Chordiant in 2004.

Dr Rob Walker, of KiQ and Chordiant, is now VP of decision management and analytics at Pega, and he’s known as a key architect of NBA decision modeling, a concept which has been around for some years, but which has been made more powerful and more easily scaleable by advances in — yes — AI.  The Pega Customer Decision Hub uses machine learning, predictive analytics (including text analytics), and adaptive modeling to identify the next best action — in relation to specific, identifiable individuals; but at scale — in the context of a marketing, sales, or service opportunity. 

For Trefler, segmentation is “the antithesis of NBA,” but says that Pega will use it where there’s a data shortage, for example in dealing with prospects. If Pega “knows enough” about the customer, then NBA is the strategy of choice, including for outbound marketing and paid media.

How do these concepts manifest themselves in practice for Pega’s clients — for example, for a telecomms brand like Sprint? More tomorrow.

Pega covered DMN’s expenses to attend Pegaworld 2017.

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