You were quite a renowned chess player before you started Pegasystems. Did that inform your thinking at all?
I think chess is interesting because it’s a marriage of strategy and tactics, where you are constantly recalibrating, using – if you are going to be successful – fresh information, while at the same time understanding what your general objectives might be. As we look at how we apply the technology, there are a lot of valuable concepts that we take from chess.
I see three megatrends impacting IT today: cloud, social and mobile. How do you intend for Pegasystems to continue to be considered a thought leader against this backdrop?
One of the things I am most excited about is that when we introduced our fourth rewrite – from scratch – in 2005, we did something at that point that was very controversial but that has turned out to be perfect for the cloud: we created our development environment to allow it to be run completely in a browser; our competition requires a fat client, which is the antithesis of cloud computing.
In addition we have several thousand customer instances running on the cloud today. We offer full cloud service in the UK, Europe, North America and Asia and we have customers with very serious implementations on the cloud.
Social is key and we’ve built excellent integration to be able to incorporate input from Twitter, mash up into Facebook, and create a seamless environment between what happens in a business operation and in the social world.
Finally for mobile, I think it’s interesting because it is a terrific opportunity to do something right that I think a lot of companies are doing wrong.
Fifteen years ago when everybody was flocking to the Web, a lot of them said they were going to create a separate implementation for their processes and their go-to-market strategy for the Web channel. Now these very same companies are struggling with the fact that they don’t have processes that are able to operate across the channels.
We see companies, in many cases, falling into the same trap with mobile. With our Pega Mobile facility we’ve paralleled what we did for the Web: we allow you to build processes and rules and bits of the user interface that will make sense across the channels.
Could you tell us about some customer use cases?
BAA has talked about how they have used Pega to improve their on-time departure rate from 68% to 85%, which is remarkable for customer service but also for fuel savings. We’re profoundly involved with Lloyds, and they’re doing an end-to-end simplification initiative that they expect to save them literally billions of pounds over the coming years. We have a wide array from telcos like O2 and Vodafone to traditional financial services institutions to a variety of insurers like Aegon, who have used Pega to both optimise the customer experience and automate the operations.
You had a little bit of a tricky quarter, missing some analyst expectations. What was good and not so good?
We tell the analysts that we don’t run the business for quarters, and we’ve been very pleased with our year-over-year results. Last year we did more than $416m in revenue; a 25% or greater increase in each of the last several years. But individual quarters bounce around. Our investors already know that because if you look at the stock price it really didn’t move. We’re continuing to grow and we’re very cash flow positive.
Pega does BPM and CRM, but with stiff competition it is difficult to remain laser-focused on one or the other. Given the synergies between them do you think it’s still right to be in both markets?
The definition of these markets in many ways seems to me to be retrograde. People talk about a rules market and an analytics market and a BPM market and a CRM market.
We have a technology that incorporates all of those elements, which is what we think you need to be able to automate operations and serve customers. I view CRM as simply BPM aimed at the customer, with some out-of-the- box assets that really allow you to understand the customer and serve them. But we’ve been doing that for decades.