PegaWorld iNspire 2024: Alan Trefler keynote - The AI Innovation Imperative

Hello, PegaWorld. It's so exciting to be here.

And I will tell you that, you know, it's hot in Vegas, but it's going to get a lot hotter in here. And we've been doing a customer event like this for 31 years, obviously... yeah. Build for change and persistence. I do believe in that.

But, you know, it's obviously quite a bit different than ten years ago in many ways. But the thing I'll tell you is that I have never come to one of these events with a technical agenda as powerful, as compelling and as game changing as you're going to see today. It's really a revolutionary moment.

And I want you to know that all of us at Pega have been really gearing up the challenge, the execution to be able to give you things that, frankly, three years ago I would not have thought was possible.

And the way it happens is that it's such a privilege to work with you, with all of you in the audience, with these amazing brands and these folks who have environments that really challenge us to make sure that with clients and partners that are dealing with the most sophisticated problems, that we're able to try to find ways to simplify them, to organize them, to make it so that you can really be in control of your business and do things in new ways without having to throw away the whole rest of the world and start over from scratch.

And you know, if I've been traveling in this post-Covid era, and it's been great to get back out there and see what customers are doing.

One of the things that I'm super excited about is that a vision we've talked about for the last five years has really been taking hold, and you'll see it, by the way, go up another notch today.

That vision is the idea of a Center-out business architecture.

Now everyone talks about wanting to do a great job for their customers, or a government for their constituencies and then they, you know, make promises, they envision, they spend money, they do all sorts of things.

But when they begin to apply the technology, they apply it through channels. And when they apply it through channels, inevitably they end up putting business rules and business processes in the channel, and all of a sudden they're doomed.

This is the birth of the legacy system. They end up having things that, oh, yeah, maybe it works great in your Salesforce system but what I want to have it work on the website. I'm going to have to change it there too. And then the mobile app and then the contact center or the back office or what you really want to go to is self-service.

It's not conceived of and designed for two channel independence. There are lots of people who mouthed those words. On the other hand, people have said, well, we'll just fix it all in the back ends. We'll make the back end smarter, or we'll stick service busses or microservices in front of them, and that they'll take all that complexity that makes our businesses hard to change and difficult to even understand. We'll be able to encapsulate that in the back end, but it's not encapsulated, It's vomited all over everywhere.

And the travesty is this is - I was going to say it's going to get worse before it gets better, but this is never going to get better. And the reason it's not going to get better is that everyone is moved to the world of the cloud, and you don't own a lot of those systems anymore. They're owned by other providers.

And so the data structures and a lot of the concepts of them, it's not like you can put them in some magic data lake and have them all work.

And when we were looking at this 4 or 5 years ago, and we were stuck in some of these traps too, you know, people would say, let's go end to end, you get one of those fancy consultants in, they start drawing pictures on the website and they're going to do this and then this and then this and end to end basically means you just lock all the legacy rules and processes in the front end from like the first minutes of the discussion.

The reality is we said, look, if you can't put them in the front and it doesn't work putting them in the back, where do they belong? And by process of elimination, we said, you got to put it in the center. You have to have engines in the center that are capable of making AI driven decisions that are capable of then initiating workflows and having those workflows use decisions and kick off decisions.

And all of it requires record keeping, what we call case management, where you keep track of what you did and what you're doing, so you can do machine learning on it so that you can make yourself better.

And you can also make the regulators happy. This idea of Center-out is absolutely core to the vision of where we're going, and we hope you are joining us. The vision of the autonomous enterprise, the vision where the work is not locked in to the UIs in the front ends and the work is not locked in to the particular systems of records, But the work that defines your business is in fact an entity unto itself.

An entity that lets you run without the assumption of humans and lets you run across different back end systems and different environments.

And I'll tell you, I was in Amsterdam recently where for some reason a lot of my customers, who are doing brilliant work on this, are Dutch. And they showed me how they could make changes to a lending process by just changing the workflows, changing the center, and it would instantly flow across the web channel, on the mobile app and the front ends and truly an embodiment of that, also encapsulating from back end systems.

The Center-out approach. This is something that is super powerful. But, you know, we've heard that as people have wanted to use Pega and wanted to apply these visions, that there were things that were difficult, that were problems for our customers. We've heard that Pega can be seen as it's a little hard to learn, hard to use, that resources can be scarce and expensive. And a year ago I put up this slide and said, we've heard this and we've been working on it for a long time.

But with this new introduction of generative AI, we think there's a way to change this in a way that was completely inconceivable before. Completely changing our minds. And what we said is at this conference, I would report out, this is like right now, how we would have done on three things related to this problem.

The first, how would we make it so we could put expertise at your fingertips for your engineers so that when people were building stuff in Pega, the right stuff just appeared to them at the right time, and they didn't have to go through laborious training to be able to be empowered and to do things.

The second was that by using AI, how do we double developer productivity? Because we've already seen what we could do even though it wasn't available yet. I will tell you, some of the team got a little freaked out by the double. They kept saying like, why couldn't you say 20% ? Well, the reality is, this technology is so compelling. We have a chance to think discontinuously, to think different about how it should be applied. And one way to do that is to set the audacious goal to be able to try to profoundly change what happens.

And the third is how do we make it so we can use AI to be continuously optimizing, so it can be continually to find ways to do a better job of coaching the team who's using the system, or actually looking at the system to see things that can be optimized.

And I'm happy to report that the landscape looks very good today. What you will see, and you can go to the exhibition hall or for much of this, you can actually literally use it today, our amazing advances to fulfill these goals and promises.

The first is what we call Knowledge Buddy. You'll see a lot more of that today. Knowledge Buddy is a way that allowed us to take our knowledge. All of our documentation, all of our processes, bake it into a vector database and a set of LLM technologies, it's very state of the art, to make it so that you can ask the system questions and it will help you do things.

But even better, with Knowledge Buddy we built it so a customer can have their own Knowledge Buddy that is a secure and capable way to organize your data. For your purposes as well. Just this morning we announced and made public on the website a new facility called Socrates which recasts Pega Academy.

I always thought Pega Academy was actually very good, but Pega Academy was videos and texts and tests. This we cast it to be Socratic. education that will walk people through how they learn and it will test their knowledge, not by testing them with multiple choice, but by determining from their answers what they understand. And by the way, it's available in ten languages. So some of the historic issues where for some countries it was slower to get access to some of this, we're using GenAI to completely change that. And I think it is the beginning of a massive and miraculous change to how education works.

Around developer productivity, we announced several weeks ago Blueprint, which is a revolutionary new way for people to be able to capture their concepts, be driven through a design thinking method, and get outcomes in a way that is guaranteed to be Center-out without making them learn and having it taught to them. It ensures that the things that you're doing will operate in that Center-out mode, even as it brings business and IT together in ways - well, you'll see it - that I think are absolutely mind blowing.

And the third you'll see us using Coach, which is the application of generative AI in any system to be able to look at cases, look at your best practices, and figure out how to advise somebody as to what to do next, how to tell people what's really going on at a particular minute, and then to complement that with Process Mining, to look for opportunities for improvement, and Process AI to be able to bring statistical analysis to things that are going on in your business, so you can have the system figure out if you're going to miss a service level or whether something is at risk for a fine.

These are game changing and they're all at the heart of achieving digital transformation. And I'll tell you is that digital transformation is there today in Pega Infinity 24.1. But AI is at the heart of what we're doing with Infinity. AI is really powering this whole new transmutation. But there's so much confusion about AI. There's so much hype, there's so much nonsense. There's a bubble, frankly, though there's a lot of real stuff too.

So I think the challenge is, how do you think about this in a way that you can cut through the noise and really decide what you can consume and who you can consume it from? We see that there are ways of doing it that we think are wrong. Some people want to apply AI by just generating more code. Candidly, that's not the way to build for change. Don't get me wrong, you can use it to build code at times, but that doesn't give your business the structure it needs to have, the structure you need.

You need your AI to be broken into the three fundamental parts of AI that empower a business to go forward. The first is decisioning, that ability to do statistical and numerical analysis based on data - you see a picture here of our Next Best Action Designer - to be able to do a next best action to figure out what's up, to make a statistical recommendation. Super important. We've done this for a long time. This has been a core skill long before GenAI came out.

Now when GenAI came out, it provided some additional capabilities and we kind of classify those in two areas. First, there are AI productivity tools. What do I mean by that? Well, for Pega we have productivity tools, for instance, that do summarization, can look at a case and tell you what's going on. Or productivity tools that you might use, for instance, to answer questions as part of a Knowledge Buddy or productivity tools to be able to coach you like I was talking about. These are very important and we've got several dozen. You'll see them out there in the Innovation Hall and on our website.

And frankly, you're probably building dozens of them internally with various projects, and you'll get some of them from other vendors. We think this represents something that everybody is going to do and is going to select from different choices. But the third way is something that I think only Pega can provide and offers a whole new opportunity, a whole new way to think of transformation.

Because we already have Blueprint being used by customers to rethink systems that they otherwise would not have been willing or able to tackle, to make them modern, to make them cloud ready, to make them state of the art, to make them understandable.

And Blueprint as an engine for transformation, both where it is today, plus where it's going, I think it's going to revolutionize what our customers who are bought into this vision are able to do, because Blueprint is our engine running on Pega.com and actually runs on Infinity, but we put it on to Pega.com so everybody could use it.

You don't have to install it onto your Pega system to use it. You don't have to do anything fancy. Anybody can use it. And by the way, we've had over 30,000 blueprints created by customers and partners and prospects in the last five weeks, which is, from my point of view, just mind blowing. But Blueprint allows you to take advantage of Pega's best practices. Our understanding of the structure of work. Our understanding of work is best thought of as cases and stages and steps and personas.

All of that work that sits inside the way Pega envisions work and work automation, that's all built into Blueprint using GenAI technology, by the way. We also have allowed our partners to create their own templates in Blueprint that we've uploaded onto Pega.com Blueprint just for them, so the partners can put in things that are special to them, that make them distinguished when they go talk to a client.

And what I find amazing is in just the five weeks since this has been possible, we've had a dozen partners put in over 60 of these Blueprint templates with amazing stuff. We're not allowed to look at them, by the way. I can't see what the content is, but I can read the names, the name of the partner and the name of the Blueprint. And there is a lot of intellectual property our partners have that they've decided to make accessible through this vehicle.

And in addition to this, we go out to the World Wide Web and we ask if you want to know what the best practice is for a retail market, collections application for a particular industry? We'll go ask the web, what are the best practices for this? And it is amazing what's on the web. The quality of what comes back is mind blowing. And then we're making it so that if one of our customers has a Knowledge Buddy that they fed with their information about how they want to run their business, we will also go out to that Knowledge Buddy and pull the relevant pieces in.

And then using the power of GenAI, fold these all together into a Layer Cake, as it were, that enables an application to be conceived and constructed with great inspiration and with record time. You know, gone are the days of people standing around in a conference room with blackboards and whiteboards and sticky notes and trying to imagine for two weeks how they want something to work. This allows you to apply that design thinking methodology in two hours or less and give yourself not just a starting point, but something that is really, really rich and good but completely changeable.

Enabling collaboration between the different participants, between business and IT. Enabling them to really figure out what a Blueprint should be and magically, automatically doing it in a Center-out way. So it avoids the traps of logics in the front end or overdependence on the back end data structures.

So I think what we've done here is taken the hard parts of getting to a Center-out architecture and the hard parts of really revolutionizing and transforming. We've been able to use GenAI in a safe way to empower the very transformational thinking of our customers, which is good because what we see is that they need it bad. You know, this is a copy of a system diagram slightly obscured from one of our actual clients.

And I'll tell you the level and types of systems that are out there, as you all know, are dragging you down, thousands of them and no real opportunity to go after them and replace them. And often off the shelf packages, you bring in just one compromise after another.

What Pega is doing with Blueprint, and with some of the add ons that we're putting on in the coming months, is letting you rise from the ashes of those legacy systems, let you really think about revitalizing your estate, really doing broad transformation by making it so that you can become an autonomous enterprise that you can tie together in a fabric.

Lots of applications that have been design thinking re-envisioned, one at a time, that can operate as individual applications, but you can understand what's going on across the whole estate. You can check out the Process Fabric booth in the Innovation Hub if you want to understand a little more of that. Because this ultimately is how we see us working with our customers to live up to our promise that we will build for change, which ultimately is what we all need to do to prosper in this age. Let me know what you think of what you see.

Thank you all so much for coming!