In March 2010, BPM pure-play Pegasystems announced its intention to acquire Chordiant, a provider of customer relationship management software, for $161.5 million, roughly twice the acquired company’s annual revenues.
Though only modest in size when considered in the context of the entire enterprise software industry, the deal is significant in that it indicates Pegasystems’ dedication to its previously stated strategy of bringing the power of process management to the field of CRM.
Although it was within the CRM market that Salesforce.com pulled off one of the most significant developments in business software of recent times – namely making Internet-based software commercially viable, in terms of application functionality the $10 billion market has been relatively static since the introduction of Siebel’s revolutionary salesforce automation software in the mid 1990s.
Pega, as it is commonly referred to, argues that its process management technology allows businesses to improve the ‘customer experience’ by guiding customer service representatives across systems to timely and relevant information, rather than forcing them to find it themselves.
“The restrictive data-driven approach of legacy CRM forces customers to conform to technology,” Pega’s marketing material claims. Process-driven customer experience management, it states, “means a new outside-in and customer-first approach”.
On an analyst call explaining the acquisition, Pega CEO Alan Trefler argued that businesses are dissatisfied with their existing CRM applications, and will be seeking alternatives in the coming months. According to Forrester analyst Clay Richardson, “Much of what we’ve been seeing in organisations supports this view.”
Richardson went on to explain that Pega’s move into CRM, as now crystalised by its Chordiant acquisition, is part of a wider trend – the convergence of business process management and traditional applications.
“Both of these disciplines and technologies attack the same business challenge: improving business processes that are the lifeblood of the enterprise,” he wrote. “‘IT-centric’, inflexible solutions such as CRM and ERP will give way to more dynamic business-centric solutions that deliver the same process improvements with greater flexibility and adaptability for the business.”