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Rethinking Agility in the Wake of COVID-19 – The Six Five Insiders Edition
by Daniel Newman | May 27, 2020

On this episode of The Six Five – Insiders Edition, hosts Daniel Newman and Patrick Moorhead welcome Pega CEO Alan Trefler. The discussion centered around the need for agility in the wake of COVID-19.

Build for Change – More Than a Motto

Alan shared that in the 1980s when he set out to build Pega, we were still defining processes by writing code. Everything was reactionary. He wanted to create a model-driven architecture where that model could live in a database. This is not traditional software development and it goes beyond low-code. But what’s especially great about this approach is that it’s really easy to change and relaunch. As Alan put it, they were built for change and were ready to help customers all over the world in the matter of a few days.

Helping Customers Find Success in COVID-19

One of Pega’s customers is the largest provider of healthcare in the United States. This company needed an easy way to manage their own staff and the network of physicians they engage. Within four days, Pega built and launched a COVID-19 management app that services hundreds of thousands of these employees. After seeing the benefit to one company, Pega released a free version of this tracking and management app for all customers.

As the pandemic spread across Germany, the Bavarian Government realized they needed a way to provide financial assistance to unemployed gig workers, farmers, and small to medium-sized businesses. Alan explained that Pega did a one day catalyst session to discuss what would be possible. Five days later, they were live with a system that allows people in need to apply for assistance securely and through an entirely digital process. The system has helped thousands of people and has detected fraudulent claims, helping the government too.

Rethinking How We Digitize

COVID-19 has made a lot of companies realize that there is a fundamental problem with how they use and deploy technology. The massive disruption has shown the seams of processes of any company. We are seeing how people work together, how approvals are automated, how things are managed, and how customers are engaged. But we quickly found out that how things were done couldn’t scale through this pandemic.

Supply chains are under pressure, the need to engage customers is radically different and revenue that was thought to be there isn’t because customers can’t pay. This pandemic is testing the agility of organizations that thought they could change. Alan shared that many companies are rethinking how they digitize and ultimately future-proof their business — and Pega is ready to answer the call.

Looking Toward the Future

Alan believes that COVID-19 will get business and IT people to change the way they work together. The current scrum culture in many companies is a non-collaborative way for the business people to get what they need. There’s an opportunity for business people to influence and drive the use of technology in an intelligent way right now that didn’t exist before the crisis. The smart companies will embrace it and come out stronger on the other side.

PegaWorld iNspire and a Concert for the Ages

What was supposed to be the annual 2-day event in Boston has been reimagined to a free two and a half hour interactive virtual live broadcast on Tuesday, June 2. Alan shared that PegaWorld iNspire will be a free event with multiple tracks, keynotes, and live Q&A sessions with Pega’s leadership team. Registration is open on their website and this is one event you don’t want to miss.

Pega is also helping Boston-based band Dropkick Murphys with a live stream concert Friday, May 29 at 6pm ET from Fenway Park featuring Bruce Springsteen. Streaming Outta Fenway will raise funds for several amazing organizations including Feeding America. Set a reminder to watch this awesome show.

If you’d like to learn more about Pega and what they’re doing to help companies during COVID-19 be sure to check out their website and listen to the full episode below. While you’re at it, don’t forget to subscribe to The Six Five podcast so you never miss an episode.

Transcript:

Daniel Newman: Welcome to the Six Five Podcast Insiders Edition. I’m Daniel Newman, your host today, joined by my ever-present co-host Patrick Moorhead from Moor Insights & Strategy. Patrick, happy Friday to you, as if it matters what day it is anymore.

Patrick Moorhead: I know it’s just day. And here in Austin, Texas, it’s the hot day. We’re starting to get into our spring, which for normal people, let’s say on the East Coast or in the North Coast like you, is more like your summer, but it’s good.

Daniel Newman: Did you just call it the North Coast?

Patrick Moorhead: I did.

Daniel Newman: I’m going to forgive you in advance for that. We call it the Midwest here in Chicago, but not so bad overall. Yes, it is Friday though. And it is day … I don’t know, 75 of the shelter in place here albeit where you are things are a little bit more open and we’ll be talking a little more about COVID throughout this podcast here today.

But exciting show on Insider. We always love these. We’ve had some great guests over the last month. We had the president of Qualcomm. We had the chief evangelist of AWS. And we have another CEO joining us today, Mr. Alan Trefler from Pega. Very excited to have him join the show just a week ahead of the company’s big PegaWorld event. And always tremendous to just be getting insights here on the Six Five Podcast. So Patrick, without further ado, I’m going to welcome Alan Trefler to the Six Five Podcast Insiders Edition. Alan, welcome to the show.

Alan Trefler: Hey, thank you, Dan. Thank you, Patrick.

Daniel Newman: Yeah, it’s really great to have you here. Next week is your big event. We’ll talk more about that throughout the show, but Patrick and I are sort of notorious for having the widest focus of any analysts in tech covering chips, infrastructure, cloud, software. I’ve been working with Pega for some time now. I want everyone out in our audience to one, know a little bit about you, and two, know a little bit more about Pega. So you mind giving us that as a background before we fire off our hot seat segment?

Alan Trefler: Sure. I founded Pega over three decades ago, which is mind blowing to say. It’s a bootstrap company. We’re publicly traded, but we’re highly independent, and have control over our destiny. We have started from the inception, working with some of the world’s largest and most sophisticated companies to help them automate their business processes end to end and engage better with their clients.

We’ve gone through five complete generations of technology from originally running on Deck Vaxis and IBM mainframes to today doing Cloud Native, Kubernetes type things. But our vision has been the same, which is you really can make organizations more efficient, you can reduce the need for manual computer programming and you make customers happier.

Patrick Moorhead: It’s incredible the lack of founders, CEOs that are still out there, Alan, and you’re part of that team and it’s just incredible to hear some of your stories. I do podcasts but I’ll admit I only listen to a few, and I have been really entertained and informed by the ones you’ve been on because there are just very few people who can say that they were part of founding a company, a public company, and they’re still running it. Either the board of directors ran them out, they found something different, they got acquired. But the five levels or the five major transitions … most companies peter out, and they go out of business or they lose their edge. I have to ask, how does Pega keep their edge?

Alan Trefler: Well, there’s a book that came out a couple of years ago called, Grit. It talks about the characteristics that make both people and organizations successful. It talks about passion and persistence, and we have both very, very deep. We also have a real focus on customers. We get a real kick out of feeling that we’re applying leading technology in a way that will make our customers more efficient, operate in a better fashion and provide more end to end service.

Patrick Moorhead: Alan, speaking of customers, we’re in the middle of COVID, and there’s only a few things that we know for certain is that, in 12 to 18 months, we’ll probably be out of this, maybe sooner, maybe later, but we will. But right now, how has the company been dealing with the business and getting customers through this rough time?

Alan Trefler: It’s funny. In the beginning of March, which feels like a lifetime ago, I was on the Jim Cramer Show. COVID was just beginning to emerge as an issue. He said, “What happens if this sort of messes things up?” And the answer I gave him is what I’ll give you, which is, “We are well equipped to help organizations when they or their industries are in turmoil.”

And at moments like this, the issues around how do you become a digitally run company? How do you make it so that you can handle a workforce that is massively, massively disrupted? How do you organize work so that you can make sure you’re taking care of your customers and your staff at a point where all the processes need to be digital? That plays perfectly do what Pega has been doing for a living from our inception.

It was interesting for the first 48 hours after the slam down, I was pretty nervous. But by 72 hours, I knew that business was continuing. Some projects canceled, of course, but lots of new ones, urgent ones coming in. In many ways, we found that the interaction with customers is easier and more intense.

Daniel Newman: Yeah, it’s interesting you say that. When this all started to happen and the shutdown started, there were so many things happening in our lives. And both Patrick and I are entrepreneurs, we own companies. We have about 30 people in our organization, about a third of them are FTEs. And for a small analyst firm and within a couple of days, a couple of projects, either research projects or upcoming retainer renewals … and we got that scary call, where someone was like, “We’re going to hold. We just got a note that we’re pausing.” And I just remember that panic. Pat, I told you about this, for three or four days straight between that and watching my 401(k) and investment accounts just absolutely capitulate, I was waking up covered in hives, Alan. I was literally … I was like telling my wife, she was like, “I think you have allergy.” I’m like, “No, I think I’m freaking out.” All my panic because I don’t think anyone knew what to expect.

Alan Trefler: Well, yeah, you have to be agile these sorts of moments. And the Pega tagline from our inception and our brand promise is, Build for Change. And perhaps we weren’t expecting change at quite this order of magnitude, but we feel really well equipped to do it.

Daniel Newman: Yeah. You actually frame my question. I was going to talk to you about that for a moment. And it’s funny. I think I came to an event from Pega, maybe the first time was three years ago. It was around that though. And I remember the first time I saw you speak and I think I wrote something about this and I’ve written thousands of articles since then, Alan. So I probably couldn’t find it if I tried, but I actually found your candor very refreshing. I remember you kind of were more outspokenly willing to criticize some of the approaches that vendors were taking about how they would sell their abilities to help and support and grow companies. I’m like, “This guy is holding no punches.” I remember I said that he’s pulling no punches up there-

Alan Trefler: I think I remember that Dan, we’re going to conduct a Google search-

Daniel Newman: We are going to go back and find it. It was your keynote at one of your PegaWorld. And I think you probably remember though-

Alan Trefler: I think what you liked was when I talked about how these other tech vendors were creating Franken-stacks. Frankenstein was dead, people saw him together. These competitors that grow by acquisition, they stick dead companies together and dead products together. And it may look fine on the PowerPoint slide, but boy, it’s pure hell for an organization.

Daniel Newman: You read the MarketWatch piece I wrote about Salesforce. Anyway, so talk about this Build for Change. It’s really something that’s become a bit of a nomenclature, almost a narrative within Pega. How is COVID driving this?

Alan Trefler: Well, it’s interesting because we actually have the phrase trademark, so there’s little R next to it. So if somebody wants to use it, they have to come to us. But the vision behind Build for Change was that … it was the ’80s, computers were getting faster. Why were we still defining our processes and our decisions by writing code? Why not create a model driven architecture? With that model, we could live in a database and then our software could literally write the software that would run and solve the business problems. And so what’s interesting about this approach is it makes it really easy to change. And what we found with our customers hit by COVID is they’ve been able to drop new processes, some of these new regulatory rules into their systems and into their customer engagements literally in days. And yeah, I’ve got a couple of great stories if you’re interested.

Patrick Moorhead: I’d love to hear about them, particularly if you have any recent ones that talk about what your customers are facing today and how that agility and flexibility worked out for them, how it helped them.

Alan Trefler: Yeah. So I’ll give you two. One was an existing client that is the largest provider of healthcare in the US, enormous company. And they needed a way to manage not just their own staff, but the networks of physicians they engage with and control. And we were able in literally just four days to build a COVID-19 management app to help them handle their own staff, in terms of whether and when they should be able to come into work and their providers, hundreds of thousands of individuals. So that was an example of where the Build for Change, the agility of the model driven, let us stand up something from scratch. We liked it so much. We took a lot of their intellectual property with their permission and we released a COVID-19 tracking and management app for free to all of our clients, which we’ve had dozens take up.

Another example … and this is weird because it’s an example of how this helped with an organization that wasn’t a customer, the Government of Bavaria in Germany … Bavaria is Germany’s second largest state, realized they needed to engage with all of these suddenly unemployed laborers, gig workers, et cetera, and they knew they didn’t have the right systems for it. We hooked up with them. We’d never done business with them before. We did a one day catalyst session to just imagineer what would be possible. And literally five days later, we were live with a system that has helped hundreds of thousands of people and has actually found fraudulent claims with the right processes and rules. They were so thrilled by this. I’ve never had this happen before. They were so thrilled by it. They put out a press release mentioning us without us even asking.

Patrick Moorhead: That is such an awesome story. I’m so glad we’re having this conversation. I’m going to even write that as an aside, but the technology heroes that have come forward like Pega have been incredible. And in an environment where tech deservedly, based on some of the privacy things the industry does and some of the security issues, I think the industry is really paying back right now. And Alan, those are some great examples.

Alan Trefler: Yeah, though I feel the real heroes are the frontline workers, often lowly paid, who are taking a lot of the physical risks. All we can do from tech is really trying to help them to have the support that they need and the way that they can properly engage with their customers and their coworkers and tech can do a lot. But we are seeing another interesting trend come out of this. There’s a lot of attention to the immediate like, “Oh my God, what do we have to do now? Oh my God, we suddenly have to provide these payment plans for people, we have to provide for customers because our current systems won’t do them. How do we, frankly, in some cases cobble things together?” In addition to that immediate focus, which obviously we’re really good at them with, and suddenly folks are realizing there’s a real fundamental, pervasive problem in how they’ve used technology. And they’re going to have to rethink how they digitize because they were unprepared in many cases for something even much smaller than what we’ve encountered.

Daniel Newman: It’s funny you use the term, Alan, Imagineer. I think Disney has a little R next to that term. So you may want a barter, you could do the … you can say, Build for Change if I can use Imagineer in my pitches. It’s tremendous when value is able to be quickly recognized because we’ve been talking so much about digital transformation. I’ve written seven books and four of them were on that topic.

And we heard so much about how it should happen fast, but it’s not happened that fast. And so we’ve got a lot of rapid acceleration here. You’ve heard terms like 10 years of change in two months, or in two weeks. So that’s stories that are starting to come out, built applications that went from nonexistent to built and deployed in five days and being used to track or trace … I see you wanting to jump in here. So I’m going to get you there because I have another question for you, but I’m going to let you jump in right here.

Alan Trefler: Yeah. Let me just say one thing that I think is really critical as they do that. What’s happening historically in a lot now is people are being forced to build these things in a way that’s going to be technical debt in nine months. And the real key for organizations is not create a whole bunch of Lotus notes type systems for people who know what that was, and then suffer with them for 10 or 15 years in agony. It’s actually to be able to build something fast, but with an architecture and in a way that those very same immediate starting points can scale up in breadth and sophistication to really be the first steps of the digitalization, as opposed to just something that’s thrown together to be thrown away.

Daniel Newman: Yeah. You make a great point. You can build an app for today that will be no longer valuable tomorrow. Every company’s got to assess that. Having said that, if that’s what you’ve built, you really aren’t transforming you’re reacting. And there’s a big difference there. You alluded to something though about real transformation and COVID-19 has also exposed a lot of what really was happening in a market that was only going one direction. And in a time when the economy was solid, when business was solid, a lot of businesses that didn’t necessarily have great practices and behaviors and processes were getting away with it. But you wrote an article talking about kind of what’s really happened here and what this has shown. Talk a little bit about that.

Alan Trefler: Well, I think organizations have been tested by this and many of them have been found wanting. The reality is the supply chains are under pressure. The need to engage with customers is radically different, revenue that you thought you had because you had a lease, well, all of a sudden, the customer’s looking for forbearance. And how do you decide if you’re going to provide it or not? Or if you are going to do it, how much? This is really tested the agility and ability of organizations to change. And I think there’s now a realization in organizations that thought they just code their way through it or buy off the cloud products and somehow they’d be flexible enough to make it happen, to realize that they really need to think differently about how they create a platform for themselves, which can plug into all the different systems, provide that sort of flexibility. And we feel terrifically positioned to provide that.

Patrick Moorhead: Yeah, it may sound a little bit campy, but good things do come from crisis. And like you said, people seeing kind of the ugliness of what they’re looking at, it takes a giant call to arms or tragedy for any ex step program, whether it’s 12 steps or five steps, or whether it’s even IT. And the great thing about this is that we will be through this and we will get to kind of longer term planning, even though some companies, some even of our customers and your clients had to have something lit underneath them. Any thoughts on how businesses better deal with this in the future? It’s kind of ironic, 45 days ago, I was thinking, “What’s going to be hot post pandemic and what’s not?” And the list of things that were hot had been most all the things that I had been advocating for anyways. The agility and the flexibility with customization, I was left a little bit unsatisfied with that, but I’d love to hear your take, Alan.

Alan Trefler: Yeah. So I think the massive scale of this disruption has shown all the scenes in the processes of any company that has sophisticated processes. And some of those scenes have to do with how people work together, some of them have to deal with how approvals are automated, how work is controlled, how things are managed, how customers are engaged with. And there’s a realization that the way that they were handling that can’t scale for this pandemic and also frankly, will need to change in the future.

Patrick Moorhead: Yeah, I think you’ve hit that on the head. And by the way one of the big topics here is really about future proofing the business. So there’s kind of the two arms of this. There’s the, what do we do? Which you’ve talked a lot about. What are the challenges that are going to be sustained in the post pandemic era? What are the challenges that companies are going to have to continue to deal with that only the strong will be able to deal with and to survive? And Alan, someone that sits in your chair is certainly fit to give this advice. So what are these challenges and what do you recommend for companies coming out of this post pandemic era?

Alan Trefler: Well, I think that at the forefront, they need to change the way that business and IT work or frankly don’t work together. We still have a culture where people say, “Give me your requirements.” And the whole, whether you call them scrum, and agile and user stories, or what other name you put on it, it’s frankly, a non-collaborative way for the business people to get what they need. And I think from my point of view, this is an opportunity to create a real democratization of how business people can influence and drive the use of technology, but do it a cogent way. People think that putting stuff in the cloud makes it all easy and smooth. Well, that’s not true. You got things on six cloud systems, it’s as fragmented as you got a couple on prem systems. And so this idea that the business needs to have a platform through which it manages itself and it runs its interaction with its clients, I believe is something that will be much easier to show people now than it would have been before this crisis.

Patrick Moorhead: Yeah. Alan, I’m so glad we’re out of the … I call it the drunken sailor mode, which we were in of cloud, which if it’s not in the public cloud, then it’s garbage. And even some of the biggest cloud giants were saying, “This hybrid thing. No, no, no, it doesn’t even exist.” And then the public cloud giants came out with hybrid solutions and it’s like, “No, no, no, hybrid’s real.” And to that point, I think we’re going to go to the next point, which says a lot of the public cloud folks are saying, “Multicloud is not real. We don’t want to do it.” Yet all of your clients have multiple clouds already.

Alan Trefler: Exactly. What’s evident to us, right from the beginning, we had a strategy we call, Cloud Choice, that you might want Pega to run the Pega system for you. You don’t even have to know what cloud it’s running on, our job, but if you want to yourself run it on Google Cloud platform, on Azure, on AWS, and you want to start on one and move it to another, or have pieces of a Pega system running across them, that’s something we built into our architecture from the beginning of our cloud journey. And sometimes it’s so great to be proven right, because you’re right, Patrick. People were saying, “Oh no, no. The hybrid won’t work. Multicloud won’t work.” No question, that’s absolutely the way it’s going to go.

Patrick Moorhead: That’s right. And I always like to say, Alan, I’m not always right, but I’m right on the things that matter. Research paper we wrote nine years ago talked about the hybrid cloud, but anyways, you have a large event coming up, you have PegaWorld Inspire that’s taking place … actually, when we broadcast this, it’s going to be going on right now. But can you talk a little bit about the focus of the event? Why people should be tuning in, what are they going to take away from the event?

Alan Trefler: PegaWorld Inspire was originally going to be an in-person event, June 1st and 2nd in Boston. So it’s kind of sad not to be able to do it there in our hometown, but in Boston. And what we’ve done is completely re-imagined it into a free two and a half hour virtual event that will be broadcast live. I’ll be taking live Q and A, as well as my CTO and others. And I will tell you the program I think is going to be absolutely terrific. It’s two and a half hours. So it’s not agonizingly long in this video world, but it’s got some multiple tracks. My keynote will be introducing some brand new concepts and products that we’ve been working on diligently, and love to have folks come, you can register for free at pega.com.

Patrick Moorhead: Yeah. I was going to ask you for tickets, but it sounds like I can just go onto the website. I don’t need to hit you up for some spots.

Alan Trefler: As many complimentary tickets as you want, Patrick.

Patrick Moorhead: Thank you.

Daniel Newman: Yeah, you can log in three or four times. Let’s juice these numbers, baby. No, it should be a great event. This would be my fourth I believe PegaWorld, Alan. I am a little bummed about the not doing it live, but it’s for obvious reasons because I was supposed to moderate or be on a panel, which would have been fun, but maybe next year or the year after, who knows? Before I wrap us up and send us home though, Alan, just for fun for our audience, when do you think the earliest time we’re going to start to see events like the past or will we ever?

Alan Trefler: I think they’ll come back but they’ll come back differently. There’s no question. It’s just hard to predict. But before we wrap, there is one other event I need to talk about, which is enormously exciting. It’s something that’s never happened before. This Friday, May 29, the Dropkick Murphys are going to be performing live to an empty stadium at Fenway Park. And Bruce Springsteen is joining them. So it’s a free concert just to kick off the Memorial day weekend. And I’m thrilled to say that it’s being brought to anybody who wants to listen by Pega. This came after St. Patrick’s Day.

Well, I’ll tell the whole story. Dropkick Murphys were going to be the band that played one night at PegaWorld. And after that got pushed off, we swept in and set them up to do a St. Patrick’s Day concert because they originally were going to do it in Boston, but they couldn’t. So we went in, helped them set it up in two days, they had 11 million views of that concert still on the web. So who knows what’s going to happen when it’s the Dropkicks, and Bruce Springsteen? I’m really looking forward to it.

Daniel Newman: That was a really sweet job of laying in a little unnecessary promotion at the end. That’s my specialty. As I’m getting off, let’s add some extra, “Check out this article I just wrote or this spot I was just on.” But Alan, that’s terrific. It sounds like a great concert. The boss, the Bruce Springsteen, it doesn’t matter really how old you are, one of the greatest. But I want to say thank you first of all, just Alan, thank you so much. What a great discussion. It’s always tremendous to have these executives and have a chance to listen to people who are leading large, publicly traded companies that are really doing things that are changing the world.

So please click that subscribe button. Please continue to tune into our show. Please check out the show notes too because everything Alan mentioned, PegaWorld, the Inspire, links to sign up or to join the concert, we’ll put a link into that. So you can go ahead and check that out. We really appreciate our audience and all the people that have been listening to the Six Five weekly, both our regular show and our Insider’s Edition. Pat Moorhead, for you, for me, for this Friday, it’s been a heck of a show, but we got to go. We’ll see you later now. Bye. Bye.

Disclaimer: The Six Five Insiders Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

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Daniel Newman