Pegasystems: Learning CurveBy Baselinemag | Posted 2004-11-01 Print
Pegasystems' software is more complicated than promised, according to some customers.
Pegasystems started life 21 years ago as a developer of workflow software for financial institutions. In the late 1990s, it ambitiously started styling itself as a customer relationship management software vendor and got its wings clippedposting annual net losses in 1998, 1999 and 2000. It has since regained its balance with a tight focus on business process management, although some customers say Pegasystems' software is more complicated than the company promises.
Gary Kirkham, vice president of planning and support at American National Insurance, says the company has matured since he began working with it six years ago. "They went from being a boutique to being a real player in the industry," he says. Another plus: "They weren't continually coming back to us for more revenue. That's a rarity in this day and time."
Michael Kerl, manager of e-commerce at HealthNow New York, says Pegasystems' process management product uniquely combines workflow with a business-rules engine, so the system can make workflow-routing decisions based on a central set of criteria. That was key, because the insurance carrier wanted to automatically sort different types of incoming claim forms consistently using a standard set of rules.
"The other packages we looked at didn't have the same flexibility," he says. "Pegasystems had a tool set that was customizable to do more things."
In hindsight, however, Kerl says HealthNow should have put the project in the hands of the information-systems department, rather than with the managers of the staff using the software. According to Kerl, Pegasystems said its software was intuitive enough to teach a business person to write workflow rules: "That was the big selling point." In practice, HealthNow found that the Pegasystems product had a steep learning curve. "We've had to go back and rewrite some of our workflows," Kerl says.
Stephanie Ledoux, assistant vice president of customer and provider service at Blue Cross & Blue Shield of Rhode Island, also says the software isn't easy for non-technical staff to manage. For example, changing a template for automatically generated customer letters requires knowing how to modify an Oracle database. "We still have to rely on our I.T. people," she says.
Pegasystems CEO Alan Trefler claims most customers have business users "driving the changes in the system." He does, however, allow that the products could be made easier to use: "The challenge for us is to continue to simplify how a business process can be defined, so it can be turned over to a business person."
Pegasystems Operating Results*
* Fiscal year ends Dec. 31; YTD reflects first six months
Source: company reports
Total assets - $188.49M
Stockholders' equity - $159.94M
Cash and equivalents - $95.22M
Long-term debt - None
Shares outstanding - 37.06M
Market value, 11/1 - $261.04M
** As of June 30, 2004, except as noted
Includes short-term investments
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