Inside the BPA Group at Forrester, we conducted a little experiment. I suggested that we should collaborate on a piece about the Pega acquisition of Chordiant. What followed was a large number of email exchanges. I drew the short straw in bringing all these thoughts together into a coherent whole. I prepared a document for Forrester clients to explore the acquisition in detail (probably getting through the editing process next week some time), and this blog post is culled from that document. So while the blog post bears my name, it reflects the collective opinions of Connie Moore, Bill Band, Natalie Petouhoff, John Rymer, Clay Richardson, Craig Le Claire and James Kobielus. Of course, I have put my own interpretation on it too.

Pega definitely wants to be in the customer experience/customer service business, and they want to get there by having a very strong BPM offering.  It is not that they are moving away from BPM in favor of Customer Experience – they’re just strengthening their hand in CRM (or CPM as they would call it), more forcefully making the connection. We already knew this, but the Chordiant deal just reinforced that point (see related research doc from Bill Band in 2005 !!). This is not a new direction or change in direction for Pega, it is a strong move that takes them faster in the direction they were already going.

From a product point of view, Pega are adding/strengthening their hand – Choridant’s marketing automation and predictive analytics seem to be of greatest interest. Of course, Pega also values the engineering talent that Chordiant has, and will redirect those people over time to work on integrating these capabilities into the BPM offering. They were also interested in the vertical industry and functional expertise that Chordiant had to offer.

Our general sense is that over time, Pega will fold the Chordiant products into their platform, enhancing that offering. It is worth noting, Pega is investing just as heavily in building out its core BPM environment – estimated to be around $60M in R&D for 2010. The Pega CRM framework doesn’t go away, it will get stronger as they put Chordiant components into the framework.

We believe that this is a very complementary acquisition for Pega. Chordiant’s focus is CRM processes, specifically in the multi-channel contact center. This acquisition deepens Pega’s overall BPM value proposition, and highlights the Chordiant’s CRM specialty capabilities.

So BPM and CRM are on emergent paths, but Pega has its work cut out to message this properly to both BPM and CRM communities, while also bringing these two markets together.  It won't be easy.  Pega’s success has been selling a more agile solution against the package applications – providing the ability to effect change more cost effectively. Now, that argument to the market will be harder to make.

But in the end, this acquisition is all about adding stuff to PRPC, to make it stronger and more appealing to those who are intent on improving their customer’s experience.