Pega has has impressive financial performance over the last few years, as Neil Ward-Dutton documents:

The company is currently publishing full-year revenue guidance of around $430m for 2011 – up from $330m or so last year – which means it’s grown 30% in each of the last three years. As it digests its Chordiant acquisition and finds ways to combine the technologies it now has to hand for new customer scenarios, the company is clearly riding high and full of confidence[...]“

But Neil asks a few questions that I think are pretty interesting:

But – is it actually a BPM technology provider?

Well, it spent a lot of effort getting re-branded as a BPM provider a few years ago, when BPM was an up-and-coming tag for a category of software.  But Pega was never really a pure-play BPM software vendor. This is the first time I’ve seen an analyst of any kind question whether Pega is really in the BPM business.

So onto the other question, quickly: is Pegasystems a BPM technology provider? In his opening keynote, Alan Trefler claimed that the company’s recent growth makes it more than 10 times larger than its nearest pure-play BPM rival – but in truth this comparison is a little sneaky. Pegasystems isn’t really a BPM pure-play.

It is a BPM technology provider – but in the same way that SAP’s BPM investments make it a BPM provider.

It actually does matter – the difference between the mentality of a pure play and an SAP is larger than one might think.  The distance is so great, in fact, that IBM bought Lombardi to get that pure-play DNA into its veins.  But Neil doesn’t find that question nearly as interesting as whether Pega is selling to IT or selling to Business.  It is an interesting point:

They talk about Pega technology as a way to make the thorny tradeoff between the need for consistency in business execution, the need for competitive differentiation, and the need to specialise execution for particular markets and segments. They are fantastic advocates for the business benefits of working with Pegasystems. But these are not people who really naturally engage with the idea of ‘situational layer cakes’.

I’m sure Pega would argue that they just have to do both – sell to the business and IT.  That’s not a bad recipe.  But from reading Neil’s post, it sounds like Pega isn’t sure what its organizing principle is – what is the mission?  Improving business processes?  Improving customer service?  “Driving Customer Success” is admirable but bland -  it describes a whole host of companies in different industries…

Bruce Silver gets the scoop on most product updates in the BPM space, and this time is no different.  He received an update from Pega, and his writeup gives a little bit of market positioning and background, followed by a quick run-through of their product offering, screen shots included.

Two of the UI-design elements jumped out at me – the “chiclet style” process mapping diagram (Bruce’s phrasing) that is so similar to Blueprint, and the tab-centric interface so common to CRM platforms (even dating back to the early 1990′s).

Bruce also summarizes their Case Management offering, and calls Pega “clearly a major player in Case Management”.

Sandy Kemsley reviews Pega’s SmartBPM V6 in her Column 2 blog recently:

I had a remote product demo of SmartBPM prior to PegaWORLD, then a briefing from Kerim Akgonul at the conference. A lot of the changes to the product over the past year and a half have been focused on making it easier to use, trying to fight the perception that it’s a great product but that the inherent complexity makes it hard to use. In fact, the two main themes that I saw for this version are that it’s easy to use, and easy to share through design and runtime collaboration.

Once again, reference to themes of simplicity and ease of use.  Sounds like some of the bigger players in the BPM space have awakened to common themes.  The question is whether there will be real, substantive follow through on these themes from the same vendors.

There’s been a lot of gnashing of teeth about the state of BPM vendors, and the BPM segment, ever since IBM announced its acquisition of Lombardi (and followed quickly by Progress’ acquisition of Savvion).  Even before then, there was much discussion over whether BPM really was a bright spot in the enterprise software space – could it really be growing when everyone else was struggling to tread water?

And since these acquisitions, the attention has often turned to case management (or, the nom du jour, “Adaptive” Case Management), and some have argued that “BPM” as imagined by advocates of BPMN is in trouble.   Of course, as with many things, one way to measure “success” is by whether the businesses advocating a particular approach are doing well – and doing well is typically defined as increasing revenue (and/or profit).  Ironically, if such a firm makes money, critics will say this only proves that the firms are good at making money, not that the software or approach to BPM is adding value for customers.  But we have to accept that in the long run, averaged over *many* decisions, the market assesses value by assigning dollars (or euros, etc.) to the products that are perceived to add value, and starving the products that don’t add value by not making purchasing decisions.

Dennis Byron says the big enterprise software firms are well-positioned to take advantage of the BPM “explosion.”  Meanwhile the independents don’t appear to be suffering.  The latest report from MWD summarizes results from Appian and Active Endpoints, two vendors who wholeheartedly support BPMN (Appian with a SaaS model, and Active Endpoints with a BPMN-up-front and BPEL-in-the-back approach).

Key data points:

Appian highlighted the growth of customer orders by 58% from Q4 2009 to Q1 2010 (and this isn’t a seasonal thing with Appian; in 2008 its Q4 was its largest quarter). Active Endpoints highlighted revenue from new customers: it tripled in Q1 2010 over the same quarter in 2009 – contributing to an overall doubling in revenue against the same period a year earlier.

Bigger firms like Pega are doing just fine as well, according to their quarterly reports.  So this is a good indicator of increasing demand for BPM software.  The increased demand for BPM skills, education, and even consulting is sure to follow.  It is an exciting time to be in the BPM market. Congratulations to these firms for having good Q1 results.

Looks like BPM companies are starting to crow about their growth and reveue prospects.  Savvion announced that it won every competitive deal they were in, Appian announced the best first half in their history, and Pega announced 1Q earnings of $9M, though they havent (yet) announced Q2.

However, outside of Pega, who of course is publicly traded, the results lack enough meat on the bone.  If Savvion won every competitive deal they were in, and Pega‘s license revenue was up 60%, then that statistic tells me that Savvion is missing a lot of deals (maybe north of $50M worth).  Appian quotes statistics about customer acquisition and “new orders” but leaves us wondering how that turns into revenue – ie, if orders are up 67%, does that mean that Revenue is up a similar amount?  bookings?  or did the ASP (Average Selling Price) decline?  Can’t tell.  Further muddying things is the fact that Pega doesn’t break out any of its non-BPM revenue from its BPM revenue.

I haven’t seen Q2 or 1H announcements from Lombardi or Intalio yet – but if I missed them please chime in here and help me out!

UPDATE: Pega’s Q2 results came out, and it reported 25% increase in revenue from Q2 2008 to Q2 2009.  Pega’s CEO reports that they are growing faster than “the market” though I’m not sure if he means the software market or the BPM market in particular. 25% growth is a pretty good result in the 2009 economy.

UPDATE (8/25/2009): Lombardi issued a press release on its 1H2009 results.  In the press release, Lombardi reports double-digit growth (though 10-99% is quite a range), and it also reports being profitable and adding to its cash reserves.  Lombardi goes on to tout its historic growth rate, market share gains, analyst reviews, product releases, etc.