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Business Process Management Industry For Pegasystems Marketing Essay

1765 words (7 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Pegasystems is a pioneer and market leader in the BPM Business Process Management industry trusted and respected by business analysts world over including both Forrester and Gartner. PegaSystems is a strong team of 1825 employees across 17 countries. Along with being a highly technology driven company, PegaSystems has a greater domain expertise in domains like Healthcare, finance, Banking etc.

Many of the world’s leading organizations use Pega to drive revenue growth, improve customer experience, and enhance operational efficiency. Pega’s unified offering is recognized as a leader in CRM, BPM, and Decision Management. Pega works with existing systems and accelerates time to value with a wide range of industry applications.

Business Process Management as an industry:

Applications are fast becoming the most interesting market to view. The demand for stand-alone components has plateaued as the identity of the key buyers in Europe switch to the Financial Directors and CFO’s instead of the IT manager, as in the USA. Business managers are less interested in what fantastic technology can be sold to them, but instead the business value that applications deliver, and that is not something that component vendors find easy to understand or communicate. The figure below shows how the components fit together to form functions and applications, and BPM is one of many that integrates to provide business value to companies.

Product offerings:

The main product offering from PegaSystems is the Pega BPM Suite which is software to manage, automate and optimize a broad array of business processes. Our software unifies Business Process Management (BPM) software with a sophisticated Business Rules Engine (BRE) to broadly improve business effectiveness.

SWOT Analysis:

Strengths:

Market leader in Business Process Management (BPM) and CRM (Customer Relationship Management)

High quality products, cutting edge technology

Fast paced growth

Domain expertise of over 25 years

High investment on R&D

Strong alliances with domestic and international services companies like Infosys, TCS, Accenture, Wipro, Cognizant etc.

Weakness:

Less control over some international operations than domestic because of reliance on partnerships and alliances instead of direct involvement

Opportunities:

Global Business Process Management Market to Exceed US$5.3 Billion by 2017.

Apart from BPM, Pegasystems has ventured into offering cloud services, Customer Relationship Management. Forrester forecasts that the global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020

Threats:

Competition includes major players such as IBM, Oracle, adobe who all have massive resources and large cash positions.

I would be using the Porter’s Five Forces Framework to analyze PegaSystems’s premier product offering BPM product suite.

Threat of New Entrants

Bargaining power of customer

Bargaining power of suppliers

Threats of substitutes

Rivalry among firms

Threat of New Entrants: Low

BPM industry is going through a transformation phase and possesses high barriers of entry for the new entrants and the threat from the new organizations is low. Below are few points to look into.

BPM industry is highly technology driven industry and would require highly technically skilled resources.

Capital requirements: Would be huge as the resources are highly skilled.

Product differentiation: BPM industry is already a highly competitive industry with some other big players like IBM, Oracle, SAS. PegaSystems differentiates itself with other players due to their in-depth understanding of the market domains like finance, Healthcare other services which help develop frameworks very specific to certain industries.

There are few players who are planning to expand their product line hence increasing the rivalry. Hence entry would require large investments on the domain expertise and the technical expertise.

PegaSystems also benefits from high-switching costs and well established distribution channels

Bargaining power of buyers / customers: Medium

PegaSystems has a large number of customers ranging from medium to large clients (World’s largest banks). Our target customers are large, industry-leading organizations faced with managing complex and changing processes. Our traditional customers have been large companies in the financial services and healthcare markets. With PegaRULES Process Commander, we are also able to offer solutions to a broader range of companies as well as a broader range of industries.

The bargaining capacity of the medium size customers is considerably low. These usually include companies like Medco etc.

There are some numbers of players in the BPM industry like IBM, Oracle, SAS , adobe etc hence providing less bargaining power to the customers. However there are few large customers like Citi Bank, Bank Of America that has the bargaining power.

Pega Provides highly differentiated products. Offers best in the class software that can be customized according to the customer’s business needs. It provides different frameworks like Consumer Manager Framework for Healthcare, finance, Decision making tools for Aviation industry etc. Hence the bargaining power of the customer’s is low in that case.

The product offering provides whole bunch of out of the box functionalities that considerably reduces the development and implementation cost and time. Hence draining the business costs significantly.

Pega has vendors/ alliances in the services industry like Infosys, Wipro, Cognizant which provide the implementation of the BPM suite in the customer’s organizations. Hence reducing the organizations to know about the technical know-how and rather focus on their business needs.

Bargaining power of suppliers: High

BPM industry is transforming the way businesses are streamlined and has few big players in the market. Hence suppliers can exert pressure on the customers.

BPM industry has played a significant role in driving up the customer’s process costs. Cutting down the time on developing and implementing applications. Hence is significant for the growth of the businesses.

There are hardly few substitutes for the BPM namely SOA. Pega offers customized frameworks for diversified industries hence making a very good business proposition for the customers.

Switching to other suppliers need heavy capital and highly skilled resources pertaining to the new BPM product.

Because PegaSystems develops, manufactures, markets and distributes its own products, it has a very limited number of suppliers. Mostly they deal with partners and alliances in international markets instead. PegaSystems has complete control of their product pricing and so are under very little influence from any suppliers they might have.

Substitutes : Low

There are hardly any substitutes to the BPM products and the closest being SOA suites. However SOA suites require more development efforts, time and maintenance.

One main reason for the customer’s to look at the substitutes is requirement of highly skilled technical employees and the licensing cost. Below are few questions that could be asked in relevance.

How organizations can reduce operational costs in longer run?

How organizations can streamline the processes to automate them, make is more stable, less error prone?

In longer run, BPM provides features and implementations that can reduce the operational and process automation costs considerably.

Pegasystems product implementations have shown operational costs going down by 20%.

Industry Rivalry : High

The BPM software market is intensely competitive, rapidly changing, and highly fragmented, as current competitors expand their product offerings and new companies enter the market. Competitors vary in size and in the scope and breadth of the products and services offered. We encounter competition from:

 

Service-Oriented Architecture (SOA) middleware vendors including International Business Machines Corp., Oracle Corporation, Software AG, and Tibco Software Inc.;

BPM vendors such as Appian Corporation, Global360, Inc., Lombardi Software, Inc., Metastorm Inc., and Savvion, Inc.;

Business Rules Engine vendors such as Corticon Technologies Inc., Fair Isaac Corporation, and the ILOG division of IBM;

Customer Relationship Management (“CRM”) application vendors including Chordiant Software, the Microsoft Dynamics CRM division of Microsoft, and the Siebel division of Oracle;

Enterprise Content Management-based vendors such as the Documentum division of EMC Corporation, and FileNet, the division of International Business Machines Corp.’s Information Management Group;

Companies that provide application specific software for the financial services, healthcare, insurance and other specific markets such as Norkom Group Plc, SmartStream Technologies Ltd., SunGard, and The TriZetto Group, Inc.;

Current customers’ information technology departments, which may seek to modify existing systems or develop proprietary system

Factors that keep PegaSystems ahead of the competitors:

Product differentiation: BPM industries provide an opportunity to diversify their product offerings as they can focus on certain industry processes and automate them.

PegaSystems offers a variety of customized frameworks like smart dispute, customer process management for financial services, healthcare hence differentiating itself from the other players.

BPM industry is expected to grow at a rate of 15% percent over the next 5 years. Driven with high technology advancements it would be a value propositions for the customers.

Pega systems has vendors in Infosys, Wipro, Cognizant, Accenture etc for pega implementation. Hence helping the customers with pega practices.

PegaSystems benefits from brand recognition and loyalty as well as a reputation for providing outstanding service and support to its customers.

Conclusion:

The BPM industry is a highly technology driven industry with many big players helping the businesses to achieve their business needs. Characterized by high end technology, tremendous growth rate, high capital investment makes is a tough market for the new entrants.

It has helped large number of customers to drive their operation costs and streamline processes. Most of the world’s large customer has the bargaining power. The competition in the BPM in industry has intensified like never before with creating an array of high quality products. Hence companies that positions itself properly based on the product differentiation would be going a long way.

PegaSystems differentiates itself from its competitors with their wide array of product offerings and has a strong presence in exceptions management in the financial services and healthcare markets. We have been most successful competing for customers whose businesses are characterized by a high degree of change, complexity and size.

Customer is experiencing performance issue while accessing the application in production. Customer is having CPM 6.2 SP1 running on PRPC 6.1 SP2 deployed on WebLogic Server.

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