The Industrial Revolution of software: Alan Trefler, CEO, Pegasystems

Alan Trefler, CEO of enterprise vendor, Pegasystems, discusses digital business and the relationship between IT and business functions.

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(13:19) But I do think there is a lot of connection between at least how I think about strategy and how I think about chess. When I think about the thought process that a strong player goes to, it really seems to fall into three phases.

(13:32) The first phase, is pattern recognition. I know very quickly if there is this position or some elements of this position that feel like something I’ve seen. Can that sort of guide me to where I want to do my deeper exploration.

(13:48) The second step is the more detailed analysis, if I go here and they go there and I go here and they go there, what’s going to occur? And that’s the reason pattern recognition is so important, it lets you focus on your analysis and lets you go deeper into the places that make the most sense.

(14:03) And then finally, one of the things that I do before I make a move is just sort of try to sit back and say okay, what the hell have I missed? What disaster is out here that’s lurking, was there something in my assumptions about the patterns or the calculations that might have eluded me. You know, is there some mate in there that has nothing to do with my strategy, that may come and rip the guts out of my position if I’m not paying attention.

(14:31) And I think maybe being able to put together those three phases, a chess master or a chess player is to be effective in how you make decisions and also prevent against risks and uncertainties. I think that is very much how I think about business. You want to be strategic, you want to see the patterns and you want to be open to new patterns. You want to use that to focus your analysis … What are the things that I might have done last time that are influencing me and may no longer be appropriate.

(15:04) And it’s that sort of check step that I think is really critical in both business and chess.

Vala:               (15:10) Alan, you wrote a book about customer engagement called, Built for change, which discussed the relationship between customers and companies can you summarize what you called the coming of the customer apocalypse.

Alan:               (15:27) Well, you’ve heard of the zombie apocalypse you know and that’s something that obviously makes for good TV. This is the customer apocalypse. So the customers are going to sort of rise up, not like zombies, but like pretty antagonistic allegiance that are going to actually be able to either make companies highly successful or obliterate them.

                        (15:54) And in the book I talk about the sort of Gen D. Everyone talks about the Gen C connective generation, millennial’s and all of this we’ve heard many times before. There is a really interesting dynamic that we are saying in which there is this gen D that has grown up on all of that, but they’re just in love with like their Apple fan boards or they love cosmetics from them, or they want to devour companies.

                        (16:20) They sort of chew them up and actively kill them you know, these are folks who are not happy and just tell a couple of friends. They go tweeting and using social media and other mechanisms to really actively injure firms.

                        (16:34) What is interesting is that I read the other day that there is now this Duff Sucks domain name, where companies are actually having to pay $2,500 per site to buy a Duff Sucks name to prevent people from basically saying it’s got XYZ.sucks, that strikes me as a very gen D sort of thing. That somebody would actually buy a domain name, and actively go out to deep promote a firm.

                        (17:09) It’s this sort of added pressure, coupled with the fact that if you can get these folks to stick with you, they can also be very very passionate in about how they promote a firm, that has raised the stakes I believe for the leading brands of the world.

 

 

 

Michael:         We have a question from Twitter, from Mandy Bishop, who is asking based on your comments, it seems like senior executives need to be data scientists any thought about the role of, data scientist and data science in being a senior executive these days.

Alan:               (17:42) Well I think that exec’s definitely need to appreciate the role of data, but I think that a lot of this is less data science and more about the ability to execute. I see lots of companies that actually kind of know that they have to make a change. The change is fundamental and I’ll give you an example, a customer that goes to their website and calls their contact center, gets a horrifically different set of offers and different experience. I don’t need to be a data scientist to know that a client needs to be treated well in every channel that they want to be engaging.

                        (18:19) So I think you note the way – and I talk about this in my book – I think about it is there’s really three things. There’s data, and data’s important, but in the human metaphor data is like memory. It’s about what’s happened.

                        (18:34) The second element, which builds on that data is insight, its judgement, it’s intent. It enables you to take the context provided by the data and form good decisions. That’s where the data scientist would come in, but the third part is even more important.

                        (19:49) It’s being able to execute, it’s being able to sort of bring the process to the fore, so the process starts with the client, quick fulfilment, and work seamlessly across channels. You know in the human metaphor that’s muscle. Just having sort of smart brains but not being able to execute, is no better than just being muscle and having no brains.

                        (19:13) At least then you can try stuff to see what works and what doesn’t work. I think even more than data science, which is part of our product line and is important, is the ability to have that build for change muscle, so you can use your insights to try something. To try to champion challenge your analysis, being able to try different things with different populations, and have it execute across your entire business. That’s what you need, frankly at least as much as the brains.

 

 

 

Vala:               (19:41) So this natural shift of expectations in this digital connected economy, what are some of the implications that you see as you guide and mentor and service your customers in terms of brand and the ability to sell.

Alan:               (20:02) Well I think that one of the things that we see is actually a pretty sad, and frankly perhaps understandable mistake that certain customers are making that now some of them are realizing that they’re making. And, to explain that mistake let me go back a decade or a little more and talk about what happened when everybody decided that they needed to be on the Web.

(20:28) Well some companies thought, the Internet is going to be important, so we need to make it the works as part of our operation, and most companies actually set up separate organizations divisions, or groups to go and bring them to the Web. Now unsurprisingly those groups became incredibly disconnected from the rest of the business, and that’s what led to these dislocations that Gen D’ers are finding unacceptable when something is offered online but not on the contact centre, or I want to be able to use it on my mobile device, and suddenly it’s different there.

(21:07) That’s some of the stuff that really upsets people, which by the way leads to the mistake what’s happening now. This whole idea of going mobile first which you hear a lot of people talking about, well you know that might make sense if you are Uber and all you are basically doing, or most of what you are doing is the mobile device.

(21:25) But if you are a business of pretty much any size, that operates across multiple channels you know going mobile first runs the strong risk of building into that mobile channel logic, rules, processes that are then going to intrinsically either diverge from the rest of your business or put enormous cost pressures on your business as you go and have to do re-implement in multiple places.

(21:48)Our vision of what the future of customer service, CRM, and process is that you really need a brain in your organization that can reach out into each of these channels, the mobile channel and the multiple sizes of multiple channels -- phone, iPad, on the Web, pushing into the Internet site in the contact centre, in the physical branch location if one exists. And that brain needs to be able to create a model for your business that doesn’t get mired in some quick fix, single channel solution.

(22:21)And so, we see a lot of companies now understanding that, they’ve had their flotation with trying to whip together some mobile apps, they are seeing their satisfaction scores are improving in the way that they want it, and they are actually I think beginning, just beginning to see this the way that’s going to empower them in the future.

Michael:         (22:40) So Alan, let’s dig into this for a moment. It seems that the general issue that you’re raising here is the ability for companies to develop equal skill and capability across all of the different channels, through which they interact with their customer, whether it’s mobile, Web, or whatever else. Right, so isn’t that the underlying issue is how to develop the skills and capabilities to interact with customers across all of these channels equally, with equal strength?           

Alan:               (23:17) So I think understanding how important that is, is a key part of getting this journey correctly. But there is another really insidious problem of that -- separating out the ones who are failing and the ones who succeed. And that has to do with, all right they only want to do something, but how do we figure out exactly what to do and who should do it?

                        (23:42) And, the solution to that is to get business and IT to work together in a completely different way. I started Pega when I was working at some of the allegedly largest state-of-the-art financial institutions on Wall Street. I was appalled by the way that they wrote software. They would have the business people write these big requirement documents. They would pass them over to us and we would do functional and technical decomposition. Then, at the end of it we’d sort of type cryptic words into text files and compile them.

                        (24:16) Now, the irony is 30 years later, computers are massively more powerful than we ever could have imagined, we’ve made some changes, we don’t call them specs anymore. We call them user stories. But the whole process, by which business defines what they want and then gets it done in software, which is so critical in running businesses these days is staggeringly and agonizingly manual.

                        (24:42) If you think about any other industry, think about manufacturing. The advent of computer aided design made it possible for me today to go and perhaps build a wireframe document that describes a cup or describes this camera, or describes anything that might exist in the real world, allow it to be passed off to somebody else to tweak it. The program will make sure the physics are respected. Make sure that you’re not going to create something that’s going to break when it just comes out of the mold.

                        (25:15) And today, with 3-D printing I can go from concept to specialization, to actual fulfilment seamlessly. It’s all connected. How does that compare to the way that technical systems both work?

                        (25:28) Those computer systems the mobile device, in the front office, anyplace in the organization on the Web, those are all written in garbage code, that has nothing to do [with and] is unconnected to the business requirements.

                        (25:42) So I think Mike, if you really want to put it together, it’s kind of the conjunction of these two things. It’s understanding that you need to have seamless service experiences that go across channels, and at the same time to gain agility you need to change the very way that business and IT work together so it’s not all about translating things into the gobbledygook of the machine. That the dialogue about what’s getting built can happen at a higher level of metaphors than programming languages in machines and random specs in documents.

                        (26:21) Does that make sense, there’s two things I think that might have to come together.

 

 

 

 

 

 

 

 

 

 

Michael:         (26:25) Yes I think, so what are the implications then, what are the down in the ground practical implications for enterprise buyers. Enterprise buyers of software such as yours or other enterprise companies, in other words, the brands.

Alan:               (26:42) I think it’s interesting. I think the first implication of all of this massive change is it’s like the hitchhikers guide to the universe, it’s don’t panic.

                        (26:54) What we are seeing in lots of enterprises is what I would describe as almost panic reactions to stuff speeding up but them not knowing how to deal with it. And some of that you see with what I would sort of describe as flight to inadequate solutions of the cloud.

                        (27:13) Now don’t get me wrong, we run on the cloud. The cloud is incredibly important in having changed how people think about both cost structures and purchasing approaches to software and I think it’s tremendous.

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