The Six Five Insider with Alan Trefler, Pega Founder & CEO
The Six Five – Insider Edition hosts Daniel Newman and Patrick Moorhead welcome Alan Trefler, Pegasystems Founder & CEO. Their discussion covers:
- The autonomous enterprise’s ability to combine people and tech to deliver benefits to businesses and customers
- Unique value proposition of Pega’s unifying AI-powered engine
- Business value of automation powered by AI
- Insights on Pega’s upcoming event, PegaWorld iNspire in June
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Patrick Moorhead: Hi, this is Pat Moorhead and we are live with another Six Five Insider episode and the Insider podcast. We’re talking to most important, coolest, most awesomest executives from the most relevant company in the industry. I’m joined by my co-host and bestie, Daniel Newman. Daniel, how are you doing?
Daniel Newman: Pat, I always love the Insiders and I love when we have a guest that we have a cadence of speaking to. Today’s show is going to be really interesting as we head into this summer. It’s a repeat guest. I won’t spoil that just yet, Pat, but the Insider is one that I really do enjoy and let me tell you why I enjoy it. Getting beneath the hood, under the covers, whatever metaphor you want to use is something that I find really valuable as an industry analyst. Having the chance to talk to the people leading these businesses and dealing with real disruption of innovation that’s going on and in a space like say AI, where we’ve seen how much in just a short period of time it’s changed our lives, it is really fun to have some of the people that are leading innovation, building around these products. By the way, people have been talking about this for a while and that didn’t just suddenly become relevant in the last six weeks as ChatGPT took over.
Patrick Moorhead: Yes. That is a great segue to jump in and introduce our guest, who is doing AI before AI was cool, Alan Trefler, CEO of Pega. How are you doing, Alan?
Alan Trefler: I am doing terrifically, Pat, Dan. Great to see you again.
Patrick Moorhead: Yeah, I love repeat guests. It’s almost like it was planned. Anyways.
Daniel Newman: Yeah, it’s always good when Alan pops up on our radar because you and I have, what, done 800 Six Fives together now between our weekly show, our annual event, and then of course going around the world and sitting in on different events. Alan, I think this is his fourth time. I think it’s been like once every year. So mark the calendar, everybody. Alan Trefler is back. I actually always go back to that story when software that writes software. I forget exactly how you code it, but it stuck in my head forever, your first keynote speech. This guy gets it and he’s willing to challenge this out his quo, be a little bit provocative. That was my first PegaWorld experience and I’ve been following your work ever since. Alan, welcome. Why don’t you remind everybody a little bit about yourself, Pega? By the way, get my quote right because I know I wasn’t exactly right, but I know you said something like that.
Alan Trefler: It’s software that writes your software. That really reflects the concept that led to Pega’s founding nearly, God forbid, 40 years ago, which is a terrifying thing for me to say.
Daniel Newman: I was founded 40 years ago.
Patrick Moorhead: Terrifyingly awesome in my mind, but continue.
Alan Trefler: Yeah. So the idea really was that if you could create a model of what you wanted your business to operate as, how you wanted it to work, then from that model, we would be able to generate the software to actually operationalize that. Then if you wanted to change it, you change the model and the software regenerates. It’s really the idea of bringing the concepts of CAD/CAM, computer-aided design, computer-aided manufacturing and 3D printing to the vision of how you get the software to run your business. Since then, Pega has grown and been able to work with a lot of the most sophisticated companies in the world, really working on trying to refine this. We’ve got about 5,800 staff now who spend their time working with our clients and for our clients to build this technology out. It’s a very exciting time to be thinking about the next stages in the evolution of technology, particularly technology that does AI. We can talk a little bit about what that means and should mean, but it’s something that’s been, well, part of our DNA since the inception of the firm.
Patrick Moorhead: Yeah. Alan, like I said in the run-up, you were doing AI before it was cool and before most people were doing it and doing it in an area where AI can add a tremendous amount of value. In fact, you’ve been talking about this notion of the autonomous enterprise for a while. Maybe that’s a good place to start is, what is the autonomous enterprise and how does it benefit the enterprise versus sounding really, really cool?
Alan Trefler: Well, I think the autonomous enterprise is a way of thinking about how you want to organize and architect a business. How do you structure it? How do you lay it out? How do you contemplate what the right way to operate is?
Patrick Moorhead: So it literally starts at the business level, not the tech level.
Alan Trefler: Yeah, very much so.
Patrick Moorhead: Okay.
Alan Trefler: It’s about how do you conceptualize a business that’s capable of running autonomously, that’s capable of using intelligence, of using automation to automate everything that can be automated, be as close to the customer as it’s possible to be. And that’s what the underlying vision is, as opposed to, let’s face it, most people, if you go and buy a CRM system or a business process management system or some robotics platform, these are all intended not about getting the end-to-end customer-oriented process to work, but about, well, helping the people inside the business as opposed to really helping both them and the customer.
Daniel Newman: Alan, you’re talking a little bit about this shifting enterprise and we’ve heard a lot about automation. I wrote a book maybe four or five years ago called Human/Machine and a lot of what the focus was then was talking about the difference between augmentation, replacement, displacement, how’s the enterprise going to be able to be faster, more productive versus how do you keep a culture intact and moving when people are fearing that the technology is coming after them. You have to be living this right now where you are seeing this for some time. But talk a little bit about that. I just want to build on that. How are you seeing all this as it’s coming to life? How are you seeing those two forces working in parallel?
Alan Trefler: Well, look, technology is going to change people’s jobs, change their functions and change how they interoperate and how they operate with their different customers. I think one of the questions is, do you organize your business so that it can really operate with the, well, optimal amount of automation? When the term AI is used, I often like to think of that as actually meaning augmented intelligence as opposed to artificial intelligence. Because the last thing you really want is for the intelligence to look or feel artificial to the consumers of it. What you really want is candidly to be able to augment the power of your staff and the power of the enterprise, which is exactly what we’re working to do with our technology and where it’s going.
Patrick Moorhead: Yeah. So it’s human in the loop one step further, which is engineered with the human in the loop.
Alan Trefler: Well, engineered with the human in the loop where that makes sense. The idea of self-driving, the idea of autonomous cars is not perhaps to obviate the need for people, but to make it so that you could perhaps turn over the driving to the car itself in certain circumstances or at least have it assist you and prevent you from making certain mistakes or crashing into the car in front of you if it slows down suddenly. So this idea of applying those sorts of principles to the overall business engine and productivity of a company, I think to me is what the autonomous enterprise is about.
Patrick Moorhead: Yeah, so get the organization aligned to fully be able to take advantage of it and then at some point, technology is involved. I am curious about what you call a unifying AI-powered engine. Can you talk a little bit about Pega’s?
Alan Trefler: Well, what we believed from the inception of Pega and boy, it’s evolved a lot over these decades here as well, is that what you really need to do is have a brain in your business. I talk to lots of executives, business executives, technology executives, and they explain to me that they’ve got an architecture, their architecture, they’re doing something on a desktop, they’re doing something omnichannel. They got something that’s trying to unify the backend, access the data. They got some enormous lake that all their data lives in in some cases. You look at their picture and I think there’s a very numbing question that should be asked, which is, where’s the brain? And there’s no brain in the picture. If there’s no brain in the picture, well, then the brain is going to be in the heads of the people who are on the front lines or you’re just going to be inefficient or you’re going to be balkanized or federated in a way that’s ineffectual.
But having a brain, I think, is absolutely key. And the idea of having an engine that knows how to make great decisions, that knows how to follow rules, but also knows how to do predictive and adaptive analytics in real time, having a process engine that knows how to take those good decisions and operationalize them and then we have the idea of what we call case management, which is how do I wrap these in a container so that I can, well, both know what I’ve done, prove to regulators I did the right thing, but also learn from the ultimate outcomes. That’s sort of engine, which should be independent of the channels and independent of the data is, from our point of view, the engine of the autonomous enterprise.
Daniel Newman: It’s a amalgamated space where CX, CRM, automation are all coexisting. I am following you. I think the challenge is getting all the data organized, Alan, in such a way that the system can use reinforcement learning and training to be able to get to the point. Just digging a little deeper on that last answer, I’m curious though, how does Pega uniquely do that? Because I think a lot what you’re saying is a lot of analyst engines are making the claim that they are a brain, that the intelligence you’re looking at on your screen is based on that. I’m hearing you say we do it a little different. We do something that we think is more, you said effecacist, effecus or effectual. I forget which word you use, but the point is works better. Talk a little bit about how you ensure that it works better for your enterprise customers.
Alan Trefler: Well, I think the first thing you do is you don’t fall into the trap of thinking it’s on the screen. The way it works has got to be intrinsically multichannel. A lot of people will go, when you talk about CX, they’ll say, “Ah, I get some big consulting firm here. They’re going to redesign the way my business works. I’m going to create the perfect process for onboarding customers. We’re lending them money or selling them something,” and they start marking up what that website’s supposed to look like and going all the way through. And candidly, they’re just screwed because what they’ve done in the process of doing that is they’ve put the rules, the analytics and the process definitions in that front end.
And when you then want to do it in another channel, when you then want to do it on your mobile app, when you then want to do it in say, a physical branch, if you’ve got one, when you then want to do it in a completely API-driven world, you’ve locked your stuff in to the front end, which whether it’s in your Java in React or whether it’s in Salesforce in Apex, any way you do it, if you are building the logic and building analytics and building process in a channel, a screen, then you’ve lost your way.
The autonomous enterprise is about how do you create an engine, and we use the term center out. How do you think of your business from the service catalog as a cloud term, the service catalog of services? You are going to offer your business and it needs to be independent of the specific data structures. So when the data comes in, it’s always going to look the same to this engine. Candidly, with some of the advances of technology, that’s easier and easier to do. You can have the data be in different structures as it lives out in the real world. But when you’re making these decisions in the center and driving them out to the channels or out to the data sources or data lakes or data systems of record, that’s where the brain and process needs to be holistic, needs to be able to run regardless of what’s going on and can’t be tied to screens.
Patrick Moorhead: Well, how would you explain maybe to customers who might be, I wouldn’t say concerned about AI, but really asking pragmatic questions like, “Hey, what does this actually do for us? How does it make my better business? Can I do the same for less? Can I redeploy resources onto more valuable projects? What does this get me”?
Alan Trefler: Well, you know what? We’re doing and what we’ll be showing at PegaWorld in 60 days is how we’ve incorporated a lot of the more recent generative AI capabilities into advise the people who are building this model what an optimal way to do it is, to be able to make it so that we can use that power to help them define data structures, use that power to help them create a library of offers that might make sense for people with different predilections, whether people are more economy-minded or whether they’re more socially-minded. How do you make the right offer to that person and be able to use that to candidly build the model with the power of AI, which means there’s still someone in control? There’s still the person who says, “Yeah, that’s what we want to do,” but the AI has radically simplified and made that more powerful.
Now we’ve also used AI for many years to be able to do what we call next best action, which is when a customer is engaged, whether they’re engaged… Well, it’s the whole omnichannel thing, regardless of what channel the engine is touching, whether they’re engaged on the website or whether they’re engaged on the mobile app or whether they’re engaged a contact center, that the next best action is going to be continually recomputed and continually predicted based on what the customer’s doing. What just worked didn’t just work all in real time. So that’s a form of AI that actually has been central to our engine. To the extent you’re asking about a lot of this new generative stuff, I think it’s going to really accelerate how people are going to be able to deploy this technology and how they can be more complete in building out that autonomous enterprise.
Daniel Newman: As analysts, one of the things that we always think about, Alan, is how are the customers reacting to this? We spend a lot of time with vendors, both Pat and I will nod and say, we hear that this is the solution that’s going to fix everything. Our validation, besides just playing with the tech ourselves, generally comes down to talking to these customers. Pega, you’ve built a very successful company, Alan, and generally that means you have clients that are willing to go to the mat and say, “Hey, this company is the one that we depend upon for these things to build our…” As you’re seeing this change though, because even the Pega, the software that writes your software era, this has gone really fast from where we were to where we are today. How are your customers doing with keeping up with this? How do they feel? Can you share any examples? Are they buying fast? I see how quick on a consumer level people are trying these things, but are they buying in and fully implementing this type of technology to the magnitude that you’re saying your product is capable?
Alan Trefler: Well, the next best action technology is established, runs in a hundred major companies and provides the advice and the counsel that people have come to trust. So that’s very well established and we’ve been able to really work on the ethical aspects of that to be able to make sure that it operates correctly. The newest piece, which is this whole generative concept, customers are fascinated. There’s an enormous amount of enthusiasm and interest, and there is a little bit of anxiety about the fact that, how do you rely on something that can hallucinate? I think that it is fast. I think it’s incredibly powerful and there are some game-changing aspects, but it’s still early innings and we need to stay agile in terms of understanding how to apply it. I’m really comfortable we’ve come up with a set of ways to apply it that are going to both really accelerate the software that builds your software message, but also do it in a way that’s safe.
Patrick Moorhead: Alan, some of the questions that I get, and I talked to probably a Fortune 500 enterprise once a week, talking to them about new technologies is okay, theoretically, I get the benefit. You’ve talked to me about a couple other companies who are doing this, but where do I get started? How do I get started? Any recommendations from what you’ve seen with your customers, how you got them started with using some of these AI features and the autonomous enterprise?
Alan Trefler: Well, the autonomous enterprise concept is something that’s being worked with a number of very typically large, sophisticated organizations. The way it starts is by first realizing that the way most people build software is wrong, that most people build logic in the channels or in the backend, and that you need to have a place in your picture that’s a brain and getting that realization. I hope, Pat, you’re not just saying yeah to humor me, but if you actually believe you need a brain in the business, you should ask those Fortune 500 companies where’s their brain. And I think you’ll find that they’re not exactly sure.
Patrick Moorhead: I might do that just to spice it up a little, Alan. I got a call later on today, so maybe I’ll let that drop.
Daniel Newman: In those exact terms, where’s your brain?
Patrick Moorhead: Where’s your brain? I’d like to know. First question.
Alan Trefler: Well. I often ask it actually after I say, do you have a picture of what your target architecture is?
Patrick Moorhead: Right.
Alan Trefler: Then they’ll show you and the you ask, well, where’s the brain? You’ll get people who are staring frantically. They’ll say things like, “Oh, it’s in the microservices.” Well, you need something to pick the microservices and to make them. The stuff doesn’t just work magically. The reality is in most cases, it’s stuck in code driven by a front end. It’s either stuck in code driven by a front end or stuck in some backend trying to drive the car from the back seat as it were almost. Neither of those candidly will give an enterprise the agility they need to operate across multiple channels and multiple data sources.
Daniel Newman: My semiconductor brain wants to say it’s sitting somewhere on a disaggregated 3D chip that’s being architected. But again, then you still need some software to talk to that. Pat and I’s joke is everyone says the software will eat the world, and we always say, well, chips will eat the world because you can’t run any software without semiconductors. But I digress, Alan. I think you’ve hammered the point is that the actual abundance of information and the exponential growth of data information, software systems sprawl, creep, whatever you want to call it in the enterprise has led to a bit of a dangling issue, which is, how do we actually centralize trust? How do you centralize all the data information and have it have one very important microprocessor, whatever you want to call it, that it all runs through to make sure information is useful and accurate?
Alan Trefler: Well, the magic is you want to virtually centralize it. You want it to feel like it’s centralized even though for large and sophisticated companies, they actually don’t want to have some massive single point of failure in the middle of their enterprise. The way we describe this sometimes is how do you create a process fabric across an enterprise that actually can bring the decisions, bring the processes to all of the places that it needs to be, but be candidly distributed even if the intelligence is centralized. The thing that’s made it really so much more important, and I think key as we think about where this is all going, is that when we look at companies today, everybody wants to be a platform company.
Patrick Moorhead: Sure.
Alan Trefler: The software may be eating the world, but it’s going to dine on a dining room table of platforms is what it is. Because when I say platform, businesses need to be able to sell and service products they don’t manufacture, but also have their products sold and service through other channels that they may not control. This idea of being a platform I think is one of the really important things that we’ve brought to this fabric concept. This process fabric needs to encompass not just your enterprise from this center out way of thinking, but enable you to plug in on the front and the back other enterprises, other products so that businesses can be a lot more agile and can just be more effective.
Patrick Moorhead: I’m so happy you used the word fabric. That’s a key word that I’m using in the future state of IT in this hybrid multi-cloud world. If you think about it being part of the overall fabric where let’s say you have an automation fabric, a networking, a security and application fabric that can span so many different places, it almost creates in itself an entire ecosystem because we know there’s going to be no magic APIs between cloud partners. That data’s going to seamlessly move across because it goes against the theme of total world domination. We’re not going to see that. So if you’re a fabric that can be used in so many different places, I really think that is super powerful. And again, Daniel will agree, whenever somebody else makes me me look smart, I actually know what I’m talking about, they’re just my best friend and what they’re saying is really smart.
Alan Trefler: Well, and I’d love to jump on that bandwagon. I think that’s true. A lot of people don’t realize that for all the amazing benefits we’ve gotten from the cloud, it has actually made certain things more complicated.
Daniel Newman: Absolutely.
Alan Trefler: When you’re in the cloud or accessing lots of cloud systems, you no longer have control over their data structures. You can’t hope to reconcile them here. Now what’s really cool about ChatGPT and that sort of technology is this whole data broker API industry that existed, I think that’s going to get chomped on as well because it’s pretty trivial to ask ChatGPT to create an interface to an SAP system and have it write the code for you or to ask it what sort of fields, particularly in the Oracle system. They actually do a brilliant job of being able to automate a lot of that. The people historically would’ve wanted to create some big fat SOA-ish, child of SOA platforms. So we’re pretty excited about it. We think it fits our picture perfectly.
Daniel Newman: Yeah. It’s been amazing what these different large language models have been able to automate or to implement in such a short period of time. It’s going to change the world and I think it’s really good that you can go on the record and say, “I said this a long time before it got commercialized that this was going to happen,” and now you’re seeing it happen, Alan. Maybe you can tie that in here, but I want to wrap up talking about PegaWorld. You’ve alluded to it a few times. I know you’re very excited. I believe you’re back in person after a few years of hiatus, so this is a big thing for you. I’ve been a number of times on the ground. It’s always been a big energy customer and partner moment for you. Talk a little bit about this year, what to expect, what some of your focus is and topic areas are going to be. I’m sure everybody out there’s really excited, especially those that are going to be out there.
Alan Trefler: Yeah. We’re terrifically excited to get back in person. The pandemic was candidly very sad because we end up going to virtual, which was very well attended, but it’s not the same by a long shot. We also actually, one of the years of the pandemic, we were due to actually hold it in Boston, which I was really excited about because it’d been a long time since we’ve held it in Boston. But sadly, that got masked out. We weren’t able to do that. But this year, it’s going to be fabulous. We have a top-notch list of really creative companies who are prepared to come forward and explain in a lot of detail what they’re doing. What I’ve always tried to pride PegaWorld on is to be very content-oriented and be very specific so that customers candidly get up and say things we wouldn’t be allowed to, because our customers sometimes compete with each other, so I can’t really say what they’re doing. But these guys get up and they can say whatever they want.
We’re also going to be showing some terrific new technology, some of which is in this whole generative area, which will, I think, show a ability to markedly accelerate and broaden how the models are written and how we can, still in a safe and curated way, improve businesses’ ability to be center out, improve their ability to be autonomous, improve their ability to create that sort of fabric to create a platform that will work whether Pega is on the front end or not, candidly, which is an important part of where we’ve gone.
Patrick Moorhead: Yeah. I looked at the details of who’s doing the keynotes and it’s very impressive. It is amazing. I think we all got used to not going to these events, but, I know I could speak for myself, once I started going to these events again, the richness of the conversations and the relationships, the new relationships that you can build… I think you could put a relationship on cruise control remotely for a while, but you really do need to get together and have these. I’m excited for what you and your staff and everybody at Pega that you experience and that you learn at this conference as you’re talking about your new technologies and your new capabilities. So Alan, I want to really thank you for coming on again, veteran of the Six Five Insider. We really appreciate you coming on.
Alan Trefler: Well, it’s a real pleasure and I look forward to seeing you guys at PegaWorld. What I love is just seeing the melding of people’s experience and aspirations. We’re really going to create an opportunity to do that. It’s June 11 to 13 at the MGM Grand in Las Vegas. Should not be missed, pegaworld.com.
Patrick Moorhead: You heard it here. PegaWorld iNspire, June 11th to the 13th in the city of tech shows. I actually like going to Las Vegas. I know maybe I’m in the minority, but I love it. It’s like home. It’s like a second home, Daniel.
Alan Trefler: Yeah. They’re really good at it. They make putting on a tech show with 4,000 or 5,000 people a very doable thing. It is actually very gratifying to see how good they are at facilitating what we try to do.
Daniel Newman: Yeah, the facilities really work. The ability to put lots of people together, lots of restaurants for entertaining, lots of space to have the meetings, it makes a lot of sense. I think when you’re professional event attenders like Patrick and I, when you do 50 or a hundred conferences a year, variety can be interesting. But for us, more than anything, it’s probably about efficiency.
Patrick Moorhead: Yeah.
Daniel Newman: For people that come to maybe one, two, three conferences a year for major partners like Pega, they want to go somewhere fun with great food and entertainment and then of course, an opportunity to meet. So I’m really excited, Alan, to see how it goes. I’m really interested in what you’re going to say.
Alan Trefler: Well, I think you’re also going to be interested. We’ve got a hundred thousand square foot innovation center.
Patrick Moorhead: Nice.
Alan Trefler: That’s going to have probably about 200 live stations where people are going to be showing off real, detailed insights as to how some of this stuff works. So yeah, make sure to put some time across to do that.
Daniel Newman: Hey, Pat, if we’d known they needed a hundred thousand square feet, you could have let them use your kitchen.
Patrick Moorhead: Oh, right.
Daniel Newman: Well, I’m going to end it on that one. That was too fun. Alan Trefler, CEO of Pega, always great to have you.
Alan Trefler: Hey, let’s be clear. I’m founder and still CEO.
Daniel Newman: Founder and CEO.
Patrick Moorhead: Still CEO.
Daniel Newman: Let’s get you full credit.
Patrick Moorhead: Believe it or not, still CEO. No, that’s hard to do. One of my first executive jobs was with a founder of a company and it’s so different. It’s so unique and so hard. I think the next thing you need to do is write that book, Alan, on wisdom from Alan, how to-
Daniel Newman: He’s too busy. He’s too busy doing it, Pat. The people like me that write all the books, it’s because I was already doing it. I’ll get back to it. He’ll have a nice book to write at the end.
Alan Trefler: Yeah, maybe I’ll get ChatGPT to help me. Who knows?
Daniel Newman: I was going to say, you won’t have to write it. Let’s just be honest. You ain’t going to write the book. Someone will write the book and it’ll be your content, but you ain’t going to write the book. So listen, it was great having you on the show. Thanks for going through this. Very excited about PegaWorld iNspire. Great to have it back in person. I look forward to hearing all your comments, all your launches, all your remarks for this show and for this Six Five Insider edition, Alan. Unfortunately, we do have to say goodbye. We’ll see you in 12 months because that’s the cadence we’re on, but it was a lot of fun to have you here.
Alan Trefler: You better see me in June. Catch you soon, guys.
Patrick Moorhead: Thanks. See you, Alan.
Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio