Pegasystems: Handling Complexity

Financial services firms Seekingto adhere to government regulations, such as measures aimed at combating money laundering, have found that software tools help them manage compliance. And when laws change, these same tools help them quickly adopt processes to meet those new rules, without disrupting hard-coded applications.

Small wonder that Guido Sacchi, chief information officer at CompuCredit, hails business process management (BPM) software as the Holy Grail. In 2005, the $1.3 billion credit card company implemented Pegasystems’ PegaCard Smart Dispute.It automates the resolution of routine credit card disputes, and guides more complicated reviews by making sure that the card servicer complies with regulatory and other requirements.

“It has proved very successful for us,” says Sacchi, who puts the cost of deployment at between $300,000 and $500,000. He pegs CompuCredit’s annual savings at $400,000 to $500,000, due to lower costs to implement changes.

Pegasystems views its product as a tool to help a company roll out new products and services in a cost-effective way. “Companies like AIG and others in that sector,” says Pegasystems chief executive Alan Trefler, “see BPM as a way to pull together and define products. BPM lets them do that without having to rip and replace their legacy architecture.”

Pegasystems, founded 24 years ago as a developer of workflow software, got the highest marks from consultancy Gartner in its “Magic Quadrant” report on business process management vendors last year. Janelle Hill, a research vice president at Gartner, says Pegasystems has the “best breadth and depth” of the vendors and the “most interesting deployments.”

HealthNow New York, parent of BlueCross BlueShield of Western New York and BlueShield of Northeastern New York, five years ago decided to improve the rules engine of its core insurance claims system (TriZetto’s Facets) and its workflow. Using Pegasystems’ rules engine, it now takes an inbound claim, verifies the identity of the member, checks that his coverage is valid and routes the claim accordingly.

Michael Kerl, HealthNow’s e-commerce manager, says the insurer processed 10% more claims without manual intervention, and within two weeks of implementation, cut pending claims by 40%.

Kerl would like to move from Pegasystems’ PegaWorks product, based on the C++ programming language, to PRPC, which is Java-based and provides improved functionality. However, he’s “a bit discouraged” because migration to PRPC would require the insurer to overhaul its rules and interfaces. He’s not planning a change in the next year or two.

Jay Sherry, Pegasystems’ vice president of marketing, concedes there is no “push-button upgrade,” but the company has helped other clients recast their rules at low cost.

Pegasystems’ customers tend to be large companies with legacy systems. As such, he says the vendor provides scores of services and connectors to help customers integrate Pegasystems software with an assortment of development platforms such as Microsoft .NET and Java 2 Platform Enterprise Edition (J2EE).

Pegasystems CEO Alan Trefler aims to keep the needs of business uppermost in his company’s approach to business process management software. “It’s time to put the B back in BPM,” he says. “Companies with an integration approach are creating BPM for techies. We love techies – I’m a techie. But our target market is BPM for rich business problems.”

At A Glance

101 Main St.
Cambridge, MA 02142-1590
(617) 374-9600



Alan Trefler CEO

Michael Pyle SVP, Product Development

SmartBPM Suite for planning, building and managing a business process management framework; PegaRules for automatically analyzing a customer’s data, determining which business rules apply to that data, initiating the appropriate business processes and prompting users for any additional inputs required.


2006 2005 2004
Revenue $126.02M $100.21M $96.46M
Net Income $1.84M $5.92M $7.55M
R&D Spending $22.70M $19.4M $19.88M

†Operating income represents a company’s profit minus operating expenses and depreciation of gross income. Pegasystems’ 2006 results reflect a change to recognize revenue from software licenses as payments are made instead of upfront.

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