CRM Watchlist Winners 2019: Once Again, Pegasystems

Pegasystems won CRM Watchlist 2019 on the strength of their narrative, product and their impact due to both. What else do you need to know? Lots. So read on and find out what I have to say about them.
Written by Paul Greenberg, Contributor

So Far, So Good…Continued

Now six are done and seven to go. While my intentions have been to group the remainder in twos and threes, once again, here, in the interests of time and length, I'm going to group them in ones. So, this post will be on Pegasystems and the next one on bpm'online rather than my original plan of the two together. Sigh. I am way too verbose. But if you know me, you're used to it. If you don't, get used to it or it might be best for your blood pressure to stop reading me. Your prerogative.  Obviously.

Here's what I have so far:

And again…if you have any thoughts about any of them you'd like to share, please feel free to email me at paul-greenberg3@the56group.com.  I'll respond. Even if you're mean to me. You know who you are.


So, rather than speak of both Pegasystems and bpm'online in the same breath, let's just start this whole thing with Pegasystems. They garner my respect for their age – a company that has been around for 36 years.

First, a shout out to Pega before I get to the meat (or the grilled vegetables if you don't eat meat) of this "treatise." Like Oracle, they had a perfect submission;  and, like Oracle, they were one of three submissions in the 13-year history of the Watchlist to be awarded actual points for the perfection of the submission.

Also, as always a reminder about the purpose of this post, as there seems to misconception about analysts (and sometimes by analysts) that if we're not mean-spirited and tough in an alpha sort of way then we are not doing our job.  Specifically, this is a post about why Pegasystems won the Watchlist. It's about why they have the impact they have. It is not meant to bash them to within an inch of their life.  Second, from a philosophical level, I once was told (as were many analysts in the same meeting) that the senior management of a major company was informed that the job of an analyst was to "tell the company that their baby was ugly."  What kind of jackass analyst actually would do that? Sadly, probably more than one. But, no. The job of an analyst is to say "hey if you raise the left cheek (on the face, people) a little and lower the right cheek a little, then the baby will be more beautiful." Sure, we are here to point out flaws and gaps honestly, but it should be incumbent that if we do that, we point out how to resolve those flaws and gaps. We are not proving something to some internal audience that is deciding how tough we are.  We are opining on what we think needs to be done to solve problems or weaknesses. Or improve on strengths.  So, again, if you don't like my idea of what I'm supposed to do, don't read this. One more time, your call.


Pegasystems could really be a leader on the strength of its most obvious achievements: Around since 1983, and about $1 billion in revenue; the top eight healthcare companies use them; seven of the top ten insurance companies; eight of the top ten global telecom providers use them. Ad infinitum.  They have quite the marquee customer base and they have the revenue to support the proof of their success.

They also have something that I rarely point out as a strength, even when it is – an exceptionally capable, innovative and humane management team. Led by founder and CEO Alan Trefler, stalwarts like Don Schuerman, their CTO; Tom Libretto, their CMO, Kerim Akgonul, their SVP of Product Management, Rob Walker, their VP of Decision Management and Analytics and Jeff Nicholson, their Global Head of CRM – among others – have taken the company to its current levels by doing what they do best – their jobs – and doing them exceptionally well and over years.

But what makes this decades-old company the Watchlist winner is that they have not only adjusted their thinking as the world evolved, but at the same time they have changed the company culture, the company's dialog with the outside world, the way it works and what it produces to meet the evolving needs of customers and the world at large. And they've done it with a deep and seamless consistency.

You might think, "so what? Since when does consistency define the impact of a company?" Consistency is ALWAYS part of the reason a company has an impact. When I say consistency, I don't mean uniformity or anything so bland. What I mean is that no matter how much Pegasystems has evolved over the years, the transitions in the corporate narrative and all the things that are required to go with that, made sense to their existing customers, to the market, and to everyone else within digital earshot from one point to the next. I realize by saying this I'm going up against Ralph Waldo Emerson, ""A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." I'm not. Because this isn't foolish consistency – its necessary consistency.  Foolish consistency is constant uniformity that prevents innovative thinking. I'm defining necessary consistency in business as something that supports the provision of a story that makes sense of radical innovation and new directions for a market, customer base and world at large without causing major doubts and fears about the direction of the company.

Pegasystems and The Corporate Narrative: A Tale of One City.

Never underestimate the power of the consistent corporate narrative. Because the corporate narrative:

  1. Defines the company's story as it evolves over time – and explains that story to a public that is not looking for insider baseball.
  2. Is the framework for the actual product, services, tools and experiences portfolio and how it all fits into the platform and the ecosystem.
  3. Not only drives the overarching corporate messaging, but the individualized product messaging.
  4. Drives all public relations, analyst relations and for even smarter companies, influencer relations.
  5. It reflects the culture of the company – and impacts it.
  6. Most importantly, it can be responsible for sustaining (or losing) the trust of customers.

Hold on a minute, Greenie!! How does a storyline determine whether or not a customer is going to trust a company?

I'll tell you a story. 

Several years ago, an unnamed mega-vendor who, at the time, was almost entirely on premise, acquired a company both for its functionality but also for its ability to open the door for the mega to transition its portfolio to the cloud. The acquisition was bleeding capital when it was acquired and if it was just for the functionality, probably wasn't that smart. But add its cloud-based portfolio and its strategic purpose – and the deal looked good. The CEO of the acquired company had the reputation of being a bit of an ass and egotist and thus may not have been the best messenger to deliver the significant change in the mega's corporate narrative at the mega's annual conference, but nonetheless, with a huge dose of shortsightedness, he was tasked to do just that.

The way that he put it at the conference was: The cloud is the only thing that matters, on premise is a dinosaur, on premise is bad, on premise has nothing to do with the future of the mega.  The problem with this is that there were 30,000 on premise customers of the mega listening to this message – live – in the audience – at the event.  Arrrgghhhh.

It took what has been estimated by others two years to repair the damage that this caused – even though the change in the corporate narrative was right and led to an ultimately successful transition to the cloud by the mega. 

Why the freakout then? Because the mega's customers lost trust, at least temporarily, in the mega – they felt they were going to be abandoned because they were on premise. They couldn't see the wisdom of the transition because they weren't told a story that reflected the continuity of thinking and thus had any relationship to its own past. It came out as one day the mega was doing this, the next day, that. The unknown – the reasons the mega was doing it and the intelligence of the decision was lost in the delivery of the messaging.

What this simply means is that if you are successfully evolving with the market, you have to be damned sure that your story makes sense to the customers.

Pega nails it. I think that Pega's corporate narrative's evolution has been both consistent and at the same time nearly flawlessly executed.  I admire it.

Pegasystems' corporate narrative: From Soup to Nuts? Or…?

If I'm truly characterizing it, in the past eight years, Pega's corporate narrative has evolved from mechanical to emotional and hasn't missed a beat in the transition. 

Why mechanical to emotional? Because they managed to make the transition from business process management to customer engagement – without stumbling and thus, without losing the trust of their customers or the market.

It went from BPM to CRMish – to CRM – to CX – to customer engagement.

BPM - Go back to the earlier oughts and Pegasystems was an established leader in the business process management (BPM) world. At that time, BPM was seen as agnostic as a process management effort could be. Six Sigma ruled the corporate airwaves.  Process unto itself, and the efficiencies in those processes were what counted toward corporate success. The tech vendors in the BPM world saw their job as automating workflows and business rules to help effect more efficient operations at a company which led to substantial cost savings and streamlined activities. 

CRM(ish) – But in the early oughts, we saw the rise of CRM toward its current dominance in the business technology pantheon.  CRM's early days were characterized by the interest in sales force automation (SFA) in particular though still defined by the overarching customer facing departments – sales, marketing and customer service.  In 2010, to meet the needs of what they saw as a growing CRM market, they acquired Chordiant, a CRM vendor that focused on specific vertical industries, and, like them, had a strong process management focus.  At that point they began to incorporate more customer-facing and reduced agnostic messaging into their corporate narrative.

CRM – The acquisition of Chordiant, though, had a more profound effect on Pega's direction than I think that even Pegasystems thought it would. By acquiring Chordiant, they tapped into a major market that led them to develop full blown (process-strong) CRM applications – sales, marketing, customer service – that competed with anyone's on the market. They, regardless of Pega claims, probably served the upper end of the midmarket and the lower end of the enterprise market best. What characterized them was how well built they actually were. They were polished and market ready.   Their corporate narrative was reflected at PegaWorld by demos of the CRM technology that, while product- focused per se, were valuable in showing what this newer player, Pegasystems, had to offer.

CX – To the credit of Pegasystems, by 2015, as a well established player in the CRM world, they began to recognize they had to align with a market that was becoming increasing right brained in its requirements. The customer base was not only demanding efficiencies and cost savings, not just products and services, but the means to provide a great experience for their own customers. While this was an early, somewhat mis-characterization by the market of what tech companies thought they could do, (they cannot enable customer experience via technology), Pegasystems at PegaWorld showed their evolution toward the customer-facing emotional and behavioral by bringing uber-thought leader Brian Solis to keynote on the connected customer and customer experience. This signified a real evolution in Pega's thinking yet, if you looked at their case studies and listened to the messaging, it was clear that they hadn't forgotten their roots in BPM. The reliability of their process engine in providing the customer with their basic requirements – transactions, answers to questions, ease of use, consistency – meeting the ordinary and keeping it ordinary – was what they did. That's what, in their eyes led to an excellent at best and sufficiently good at worst customer experience.

Customer Engagement – By PegaWorld 2019, the corporate narrative had not only come around full circle but had evolved onto a new plane.  They saw that customer needs/demands/desires/requirements involved communicating at an unprecedented level with the companies that they transacted with.  It didn't mean that they actually did the communications but that the choice to communicate was available when they needed it in the format that they needed at the time.  When this had to be done at scale, knowledge of the individual customer became orders of magnitude more important because while the company may have had to deal with millions of customers, the individual customer had ZERO interest in getting lost in the morass of those millions. They wanted the company to know enough about them to communicate with them intelligently and in a value that gave the customer a feeling that they were valued. That meant analytics and systems of engagement – which are communications systems fundamentally became of paramount importance. Pega's corporate narrative shifted to customer engagement. But to their great credit, they knew they had a legacy strength too – the delivery of systems that effectively provided that engagement. So they focused on their strength – operational excellence tied to continuing customer engagement. The circle was finally closed, and the corporate narrative well aligned with both the contemporary needs of the market and the history of the company. 

Notice the evolution of the narrative – and how it ties into the activity of Pegasystems. Because it also ties directly into the current incarnation of their platform.


Pega Infinity is unlike dozens of CRM products who are undergoing nothing more than a cosmetic name and category change. The bulk of the engagement platforms or solutions out there are just repositioned CRM solutions. Don't get me wrong. There are times where just the repositioning of the solutions and a new message are tactically justifiable. But a lot of that kind of effort without the actual platform or ecosystem to back it up is why the engagement market such as it is (more of an evolving, shapeshifting protoplasmic entity at the moment) can be confusing.  For example, you no longer see a market "category" for enterprise feedback management or gamification beyond remnants.  Most of the companies from those categories have been acquired and folded into things that are tactically justifiably called engagement solutions. Marketo for example, several years ago changed its messaging from the hilarious (though attuned) revenue performance management to engagement marketing.  When they made that change, they didn't totally revamp their solution, so it looked less like accounting and more like engagement. They actually repositioned it to where it probably belonged and of course have been successful, up to their acquisition by Adobe in that repositioning. But it had little to do with an engagement platform. Pega Infinity, on the other is a customer engagement platform that can justify its claim to be one.

Before we go further, here is what it looks like. 


The Pega Infinity Platform

Source: Pegasystems

The value in this diagram is it is also what an engagement platform looks like rather than a rejiggered repositioned CRM platform.  I would make the case, which they apparently don't, that the digital process automation that they have carefully separated from customer engagement is absolutely part of a customer engagement platform because of its role in providing the processes, business rules, and workflows to maintain the ordinary (and deal with the extraordinary) business operations that a company needs to use in order to keep customer peace by meeting expectations. What I have always called "keeping the ordinary, ordinary."  Digital Process Automation (What Pega calls Robotic Process Automation) fulfills that function. This becomes an even more compelling engagement platform if you treat it in the context of HFS, CEO and founder, Phil Fersht's aptly named and described Integrated Automation Platform which he argues is both an RPA-killer and a significant evolution in the application of business processes, etc.  It is RPA+AI+analytics which if you look at the Pega Infinity platform, is actually the model that they use. Pegasystems, taken heed of what Phil says. 

I will take it that step a further as I mention above – that it is also an integrated operational piece of a larger engagement platform and the combination that Pega describes as customer engagement and Robotic Automation  with all the attendant underlying pieces is as close to a true engagement platform as I've seen in the industry to date.

The other thing that characterizes their platform is that they claim it is no code – and if you look at the Pega DX (presumably digital experience) architecture in the diagram it tends to support that – if you translate what you see labeled as components of their architecture into usable English.  Journey-Centric Rapid Delivery for example has little to do with the active creation of benchmark customer journeys or the tracking of said journeys. It's a customer centric approach to rapid application delivery with the customer centric part being the focus of the business processes being developed.  The claim of the architecture being no code is based on the fact that both business users and IT can deliver these applications rapidly.  The Situational Layer Cake isn't a foodie's dream (or nightmare if you hate dessert) it is their name for an architecture that provides reusable objects so that you can rapidly scale or even redesign what you need as a company quickly. Again, no code claims can be made. Software that writes your software – something that is remarkably cool despite its somewhat odd name.

These are distinctive pieces, but they are the enterprise architecture that underlays the actual platform and what it can produce. The combination of this platform layer and the CRM related customer facing solutions, the ML driven process automation, and the customer decision hub which incorporates an advanced decisioning engine and strong engagement focused AI, are what makes this an engagement platform, not a repurposed CRM platform.  While I would organize and label this diagram differently, it does reflect, at least by its pieces, what a true engagement platform comprises.

But there is more to engagement than the narrative and the platform – and, when it comes to Pegasystems, they actually do understand that. Their innovation is not around the left brain, but the right brain, quite ironic for a company that came from the mechanical world of BPM. 

Engaging the Right Brain

About two years ago at PegaWorld, my good buddy Jeff Nicholson, Global Head of CRM, came to me and asked me if I would be willing to get on stage with him and do a session on empathy.  Two things made that a fascinating idea to me.  First, I was just starting to both do work on empathy and, because I am at least a self-styled extreme empath, I was just starting to try to understand myself. That was the first thing – me. The second thing that fascinated me is that Pega of all companies was the company that was actually introducing the thinking around empathy – not something that any other tech company was doing at that moment, though companies like ServiceNow are addressing it now (I'm doing a webinar with them on November 13 on that very subject).  Jeff had a framework for bringing empathy into technology which was early stage but interesting. So, we got on stage and riffed for about 45 as the last track session at PegaWorld. Surprisingly it was packed. 

Fast forward to PegaWorld 2019 and holy crap, Rob Walker, their VP of Decisioning & Analytics, and all around mad scientist,  announced Empathetic AI in a keynote session. Which is a sort of frightening name, but the effort itself is innovative and unique. Keep in mind, though, this isn't full bore empathy in the way that you and I think about it – meaning you feel what the other person feels and are able to understand what they are going through – good or bad and thus, you can supportively act in ways to reduce pain or increase happiness. Its not the empathy that we understand to be an intuitive sense honed over years of experience with people. A formal definition, not definitive I don't think, for those of you who are dictionary-lovers  is:  "understanding another person's experience by imagining oneself in that other person's situation: One understands the other person's experience as if it were being experienced by the self, but without the self actually experiencing it."

The Pega Empathetic AI, while aligned with the spirit of the definition, goes to a less romantic understanding of how the buyer/customer is behaving and learning about how to hone that increasingly well over time individual by individual so that you can anticipate behavior and act accordingly – in the business sense of action.  What makes this different than just understanding intent is that it takes the emotional state of the customer into account and learns from it as well as the actions that the customer is taking or the customer's manifested behavior. Still, this is a step forward from the algorithms at large that are typically trying to identify and anticipate behavior. Or it could be. I haven't seen it in action yet so I can't say that it is or isn't.

Here is how they define it on their site and it pretty well dovetails with what the Watchlist entry has and what conversations I have had with them indicate (I've left in their links to various thinks):

"First, it's essential for businesses to understand the outcomes they want to achieve through AI-based decisioning. Then, by defining rules related to company goals, customer journey goals, ethical goals, customer behavior, and the best actions to take depending on those defined rules, businesses will have a framework on which to apply adaptive analytics in an empathetic way."

This is machine learning applied to the idea of empathy and the attempt to reproduce it in a business environment that still needs outcomes to understand what it is they are getting with this.

That said, to Pega's support, this is the first attempt I know of that tries to understand how to proceed with a customer based on factors that include ethical goals among things that are a bit more the norm in customer journey decisioning engines. Its step one. And it can potentially add to the escalating impact that Pegasystems seems to be having.

But all of this considered, and these are among the many reasons they won the Watchlist, there are things they will need to do to sustain their impact over the next several years.

Three Things to Consider

Missing link – There is no question that Pegasystems's target markets are the upper end of the midmarket and, even more so, the enterprise. To that end, Pega's Infinity platform and the applications that sit on top of it – Sales, Marketing and Customer Service are comprehensive – and mature. However, if you are competing in the enterprise market at scale, there is a piece that is missing, Okay, no more suspense – ecommerce.  To their credit, they acknowledge that ecommerce is important (see this comment from my buddy and Global Head of CRM, Jeff Nicholson on ecommerce), but they have nothing that they can deliver to those that will require it. Time to partner rather than build or acquire I would say but time to do something.  Pegasystems is a company that is very committed to customer engagement as its vision, mission and theme. Ecommerce, while not CRM, is still a core (transactional in this case) component of a larger engagement ecosystem and offering.

Lasik surgery: from aspiration to inspiration – According to the Watchlist submission, Pegasystems's vision is: "To be the leader in software for customer engagement and operational excellence." They designed it this way because they defined vision as "what we strive to be."  As good as their messaging is, they are going to have to change what they define as vision and thus what their vision is.  What they are seeing as vision is simply an aspiration on their part – not a visionary statement.  Perhaps the best way to explain this is by one of the best vision statements I've ever seen – Ernst and Young (consulting side): "Making a better business world." Simple yet the implications are significant for the EY culture, strategies, programs, and offerings. It is both aspirational and inspirational. This is how the company is hoping to interact in the world. In Pega's example, it's only what the company wants to be – aspirational. But there is nothing about benefitting the world at large (inspirational) or even a view of the world in the statement.  Why did I say Lasik surgery – Pega needs to move from what is a somewhat nearsighted vision to clarity about the benefit they potentially can bring to the world. What is clear by all research done now, is that customers want to deal with tech companies (or any business institution) as more than a vehicle to transact with.

I want to take you higher, HIGHER – Aside from me being a Sly and the Family Stone fan in the 60s (I saw them do a tour de force at Woodstock), this is something that Pega needs to do – using colorful metaphor. As you see above, Pega has done an amazing job with their messaging and corporate narrative.  Make no mistake about it, they are setting the tone for the clearest and most concise message around customer engagement. However, if they want to continue to set the tone, they are going to have to step it up in one area that they are not doing that. That, my friends, would be thought leadership. They have a surprising paucity of material in any medium on thought leadership.  Ironically, they are actual thought leaders and visionary thinkers (see above) in areas like empathy. The aforementioned Jeff Nicholson and I at PegaWorld 2018 did a track session on empathy and at that session eventually led to Pegasystems developing an AI that embeds empathy.  But where is the market research? Where is the engagement and allying with third parties who are specialists in customer engagement? Where are the best practices and methods for successful engagement that don't involve using Pega's software (at least not directly) but show that Pega can be a trusted adviser?  I can go on, but the point is simple. Pegasystems needs to step up being the thought leader and trusted adviser on matters of customer engagement.

So, Pegasystems, congrats on winning the Watchlist and please at least read what I suggest you do. I'm aware that its no more than my opinion but I will say that you have done a lot of impressive things in the last year and that won you the Watchlist. But to continue to win the Watchlist, which translated into useful English means continue to have an impact in the markets that you are in, you will need to continually have an A-game. Do these three (and several other things that I am cleverly withholding so you'll ask me about them) and you will continue to impact it in an escalating fashion. You're on the right track. Impact isn't yours to win, its yours to lose. I'm betting that you don't lose.

Next up: bpmonline, who will be named something else by the time I write the post.

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