Businessmodel of PegaSystems

Customer Segments

PegaSystems serves businesses and organisations of all sizes and across multiple jurisdictions. According to its 2015 annual report, the Company has historically derived a significant portion of its revenue from clients in the financial services, healthcare, insurance, and communications markets.

While these markets remain important for the Company’s future growth, PegaSystems continues to serve other sectors, including the government, insurance, energy and life sciences sectors.

PegaSystems main market is its native US, which accounts for more than half of the Company’s annual revenue. Outside of the US, the Company is particularly active in Europe and Asia.

Among PegaSystems’s customers are household names such as HSBC, Expedia, ING, Deutsche Bank, Cisco, Coca Cola and BNP Paribas.

Value Propositions

PegaSystems provides value to its customers through its products, services and solutions. The Company’s success is dependent on the quality and reliability if its products.

The standing of the Company within the customer relationship management and business process management field is reflected by the high standing and success of its customers and partners, which include Cisco, HSBC, Accenture, EY and Hitachi.

The Company provides personal support to its customers on an ongoing basis and is always seeking to provide its customers with more innovative products adding features and services and providing enhanced functionality in collaboration its its technology partners.

Channels

PegaSystems operates mobile and desktop websites at www.pega.com, where customers can browse the Company’s products and services and request demonstrations.

Products cannot, however, be purchased directly from the PegaSystems website. Instead, customers must contact one of the Company’s sales teams directly, in order to receive a more bespoke service.

In addition to its international sales teams, PegaSystems collaborates with a number of resellers and affiliates in order to increase its market presence.

Customer Relationships

PegaSystems provides its customers with technical support services and training through its Pega Academy, Pega Knowledge Base and My Support Portal. This includes a range online learning resources and guides in the form of webinars, documentation and FAQs.

Additionally, customers can interact with one another and work through common software problems via the Company’s customer forum. Customers can also interact with PegaSystems directly through the company’s LinkedIn, Facebook, Twitter and YouTube accounts.

Key Activities

PegaSystems develops, markets, and licenses software products for marketing, sales and onboarding, and customer service requirements, targeted at business customers worldwide. The Company also offers software applications built on its own Pega 7 platform and provides support and technical assistance services to its customers.

With its software, PegaSystems aims to assist its clients in building and developing enterprise applications that cover existing markets for customer relationship management, business process management, business rules management, dynamic case management, and decision management.

The Company primarily serves the financial, healthcare, insurance, life sciences and healthcare markets.

Key Partners

PegaSystems partners with a range of companies, across multiple sectors and jurisdictions.

It divides its partners into four categories:

• strategic consulting partners, which work to provide project management and business advisory services to PegaSystems’s customers;
• systems integrator partners, which assist PegaSystems’s customers in deploying proprietary software solutions;
• registered business partners, which provide technical expertise and implementation services to customers across a variety of regions; and
• technology partners, which provide complementary solutions and infrastructure with a view to increasing the functionality of PegaSystems’s products. PegaSystems’s strategic consulting partners include Accenture, EY and Cognizant; its systems integrator partners include Tech Mahindra, Incessant and Wipro; its registered business partners include Hitachi, Ordina and Unisys.

Key Resources

PegaSystems’s key resources are its technology and products, its IT infrastructure, and its personnel – notably its sales and support staff.

Searches of the US Patent and Trademark Office identified two patent applications registered with PegaSystems as the applicant: ‘Systems and methods for distributed rules processing’, which refers to a distributed rules processing system, and ‘Content-based caching using a content identifier at a point in time’, which refers to techniques for data processing and caching.

Cost Structure

PegaSystems incurs costs in relation to the research and development of its products, the maintenance of its IT infrastructure, and the retention of its personnel.

The Company employs around 3,300 workers worldwide, amounting to costs in the form of salaries and benefits, and several offices – including in the US, UK and Australia, which accrue costs in the form of rent and utilities.

Revenue Streams

PegaSystems generates revenue primarily through the sale of software products and licences to businesses and organisations worldwide, as well as through the provision of consulting and support services. The Company’s licence revenue is primarily derived from sales of products targeted at marketing, sales and onboarding, customer service, and operations, while consulting services revenue is principally related to new licence implementations.

The Company also provides training to its customers for a fee. According to its 205 annual report, PegaSystems expects consulting revenue to decrease in future as customers become more accustomed to using the Company’s products and partners begin to lead more projects. The majority of PegaSystems’s revenue is generated in the US, with around 45% generated from outside the US in the past three fiscal years.

In 2015 PegaSystems generated $682.7 million in annual revenue, an increase on the $590 million recorded in 2014. As of 31st December 2015, the Company also had software license, maintenance, cloud, and services agreements with clients expected to result in future revenue of around $580.9 million, of which the Company expects to recognize as much as $336.9 million in 2016.