Pegasystems Annual Report 2002

Transcription

1 It s Simply Smart BPM Pegasystems Annual Report 2002

2 It s Simple > Our products are inherently easier to use and easier to change. Our vision is to empower business users to change and evolve business processes at their desktops with just a few mouse clicks. It s Smart > Our patented business rules engine automatically selects the right rule at the right time for the right user resulting in improved productivity, agility and responsiveness, and a clear competitive advantage. And now it s called BPM > We ve been delivering financial services, healthcare and horizontal applications that automate business processes for 20 years. Today, the business process management (BPM) market is emerging and Pegasystems is at the forefront. <#> Pegasystems Annual Report 2002

3 It s Simply Smart BPM The only products on the market today that automate both the business decisions and the processes that drive them delivering unprecedented ROI for our customers and partners. Pegasystems. Simply Smart BPM. 1 Pegasystems Annual Report 2002

4 To Our Shareholders: Revenue 2 Pegasystems Annual Report 2002 (in millions) Cash and Investments (in millions) Earnings Per Share (in dollars) $ $ ($0.71) $95.1 $33.0 $0.37 $63.4 $97.4 $ Pegasystems ended 2002 with record revenue of $97.4 million and earnings per share of $0.43. We generated $27 million in positive cash flow from operations and ended the year with $63 million in cash and investments. Our success in 2002, in the face of a challenging economic environment, is directly attributable to the skill and spirit of the entire team here at Pegasystems, and we thank them for their efforts. During 2002, Pegasystems strengthened its position as a leader in rules-based business process management (BPM) software. We expanded and extended our core applications to serve our target vertical markets of financial services and healthcare. We developed and launched a variety of new and enhanced products such as PegaCARD Services, which supports our re-entry into the credit card business. And we commercialized PegaRULES Process Commander our rules-based BPM platform available for horizontal markets. We believe this suite of products, designed to deliver rules-based BPM across all industries, will provide our Company with significant growth opportunities in the coming years. In 2002, we added names such as Bank of New York, EDS/Inland Revenue and the UK Post Office to our roster of world-class customers. Our rules-based software continues to improve the agility and productivity of our customers in the field every day. Many of our blue-chip customers renewed and extended their relationships with us during 2002, further validating the return on investment offered by our products. We will continue to leverage our strengths in the markets we currently serve, and we plan to demonstrate to a new set of customers in new markets and industries the benefits that our rules-based BPM platform can provide.

5 Great products and customers are not in themselves sufficient to enable a company to succeed operations require the same attention. During 2002, Pegasystems strengthened its management team and continued to fine-tune internal disciplines. We start the new year with a strong array of products, customers and operational sophistication. As we look ahead to 2003, we will continue to leverage our leadership position in the business process management market. We will use our hard-earned reputation, our world-class sales team and the support of partners such as Accenture, IBM and Sun Microsystems to generate bookings growth. And we will continue to develop exceptional products and delight our customers. We firmly believe that Simply Smart BPM delivers what we have promised and, more importantly, what our customers are asking for intelligent productivity through automated decisions and processes. We have the products, the people and the experience to deliver on the tremendous opportunities that smart systems provide. We look forward to continued success for our customers, our shareholders and our employees. Thank you for your support. Alan Trefler Chairman and Chief Executive Officer Henry Ancona President and Chief Operating Officer Alan Trefler (left) and Henry Ancona

6 It s Simply Smart BPM Pegasystems Announces PegaCARD Services, Expands Commitment to Card Market June 30, 2002 The Bank of New York Selects Pegasystems Investigations Software for Payments October 1, 2002

7 Financial Services Maybe it s because eight of the top fifteen card issuers in North America use our products to deliver personalized service to their customers. Or, because millions of checks pass through our check research and adjustment solutions each day. Maybe it s because our products handle more financial investigations transactional volume than any other enterprise solution in the world. At Pegasystems, we know it s a combination of all of these reasons that, in 2002, our innovative rules-based BPM products for customer care and exceptions management continued to be the choice of leading financial services organizations. It s simple > These companies rely on our products to quickly respond to changes in customer, competitive or market conditions. By using our products to change and evolve their own business rules, they set the stage for continuous process improvement. Resulting in greater return on investment, year after year. And it s smart > As we focus on our customers business needs, our products evolve to meet those needs by using rules-based BPM to streamline operations, significantly decrease operational costs and maximize productivity. With Pegasystems, our international banking network can track and trace investigations independently, so they no longer have to contact our investigators for assistance. There has been an 80% drop in the number of phone calls alone, which has considerably raised our productivity levels and reduced costs by 38% at the national, international and branch levels. Jaap Van Caspel, Vice President of International Payment Services, Rabobank International In working with Pegasystems as our preferred provider of rules-based BPM technology to support our customer service platform, PFPC is able to quickly bring products and services to market that yield a tremendous competitive advantage for our financial services customers. Michael Harte, Executive Vice President and Chief Information Officer, PFPC Inc. 5 Pegasystems Annual Report 2002

8 It s Simply Smart BPM British United Provident Association Selects Pegasystems to Deliver Improved Customer Service January 7, 2002 Health Contribution Fund of Australia Selects PegaHEALTH Member Services April 10, 2002

9 Healthcare and Insurance Much has changed in the marketplace since we first launched products designed specifically for healthcare payers and insurance companies. Whether it s regulatory compliance, quality improvement or cost savings initiatives or all of the above today, these organizations rely more than ever before on technology to efficiently and effectively manage their business processes. And in 2002, with the acquisition of 1mind Corporation, Pegasystems, too, changed dramatically. The addition of 1mind s industry knowledge combined with its proven success in providing robust solutions to healthcare payers and insurance companies enabled us to increase our penetration in these markets, strengthen our management and delivery teams, and deepen our domain expertise. At Pegasystems, it s simple > After all, it s that expertise that sets our rules-based BPM products for customer care and exceptions management apart. And it s smart > Whether automating claims management, providing superior customer service to nearly 40 million health plan members worldwide, or empowering their sales and marketing teams, 20% of the Blue Cross Blue Shield network (and a growing number of international healthcare and insurance customers) rely on our products each day to meet their challenges and maintain a competitive advantage. Pegasystems was our hands-down choice, given its strong record of providing simple-to-use, yet powerful applications. Pegasystems will allow us to equip our customer service representatives with the data they need to deliver personalized and responsive service, while also automating specific processes and driving new value from our back-end systems. Pegasystems is providing us with a rock-solid platform for distinguished customer service. David Zink, Chief Information Officer, Blue Cross & Blue Shield of Rhode Island Installed in less than 120 days, Pegasystems software has reduced our claims inventory by 41% after 3 weeks of use. We have eliminated manual processes, increased the number of pended claims handled per hour, reduced overtime and increased management control. This type of return on investment is a compelling reason for other healthcare organizations to select Pegasystems. Gary Kerl, Senior Vice President and Chief Information Officer, HealthNow New York Inc. 7 Pegasystems Annual Report 2002

10 It s Simply Smart BPM Pegasystems Positioned as Leader by Top Industry Analyst Firm; Confirms Expertise in Business Rules Engine Market April 8, 2002 Pegasystems Signs Two New PegaRULES Partners, Deepens Commitment to Alliance Program June 21, 2002 Pegasystems Partners with Business Rule Solutions December 10, 2002

11 Horizontal BPM Applications At Pegasystems, BPM is more than a product category. It s not only eliminating paper and silos of information, or automating processes to remove manual steps it s proving that we can deliver intelligent productivity across the extended enterprise to our customers and partners around the world. In 2002, our horizontal BPM application, PegaRULES Process Commander, was selected by several organizations as their solution of choice to address their BPM challenges. These companies recognize the tremendous opportunity that Simply Smart BPM offers business adaptability, rich process management features, and superior integration technology that has put us ahead of our peers. Through our Alliance Program, we are partnering with the world s most innovative companies to take our horizontal BPM application to market. Our Services partners include many of the world s leading systems integrators and consulting companies. Our Solution partners include a growing list of leading independent software vendors (ISVs) that work with us to build and market highly differentiated solutions through joint development. And our Technology partners provide complementary software, database tools, CTI and more. For us, it s simple > We believe that Simply Smart BPM offers what our customers want easy-to-use and adaptable systems that have a material impact on the way work gets done. Period. And it s smart > Through our partnerships, we can reach further than even the extended enterprise to change the way that business does business just by changing the rules. With a notable history of providing similar capabilities for large, transaction-intensive, financial services organizations, Pegasystems software was a clear choice to handle the high volume of inquiries received by the Inland Revenue. Because of Pegasystems core competency in rules-based business process management, Inland Revenue users will be able to gain fast access to the right information which will help them to deliver improved customer service. Bob Docherty, Technical Delivery Group, EDS Effective implementation of business rules is critical to creating value from customer initiatives. Pegasystems provides products that will help our clients ensure that they are managing each customer interaction in the manner they desire to optimize their relationship. Furthermore, Pegasystems' rules-based BPM technology allows customers to rapidly respond to changes in business demands, which will give our customers added agility. Jay Istvan, Vice President of Strategy and Marketing, eloyalty 9 Pegasystems Annual Report 2002

12 Providing enterprises with rules-based software products to improve both agility and productivity. Pegasystems. Simply Smart BPM. 10 Pegasystems Annual Report 2002

13 Directors Leadership Team Shareholder Information Design: Schenkel/Stegman Communications Design, Henry Ancona President and Chief Operating Officer, Pegasystems Inc. Alexander V. d Arbeloff Former President and Chief Executive Officer, Teradyne, Inc.; Chairman, MIT Corporation; Co-founder, Sparkventures Richard H. Jones Vice Chairman and Former President and Chief Operating Officer, Pegasystems Inc. Steven F. Kaplan Managing Director, The Audax Group William H. Keough Former Senior Vice President, Chief Financial Officer and Treasurer, The Pioneer Group, Inc. Edward A. Maybury Former President and Chief Executive Officer, Creative Systems, Inc.; Former Chief Executive Officer, Data Architect, Inc. James P. O Halloran Former Senior Vice President, Chief Financial Officer, Treasurer and Clerk, Pegasystems Inc. Edward B. Roberts David Sarnoff Professor of Management of Technology, Massachusetts Institute of Technology Alan Trefler Chairman and Chief Executive Officer, Pegasystems Inc. William W. Wyman Former Managing Partner, Oliver, Wyman & Company Alan Trefler Chairman and Chief Executive Officer Henry Ancona President and Chief Operating Officer Christopher J. Sullivan Senior Vice President, Chief Financial Officer and Treasurer Joseph J. Friscia Executive Vice President and General Manager, Pegasystems Application Business Kenneth W. Olson Senior Vice President of Advanced Technology Michael R. Pyle Senior Vice President of Product Development June M. Morris, Esq. Vice President, General Counsel and Clerk Carmelina Procaccini Vice President of Human Resources Samir Gulati Vice President, Global Marketing Rodney P. Jackson Vice President, Global Services Paul McNulty Vice President, PegaRULES Victor Khatutsky Vice President of Rules Engineering Annual Meeting of Shareholders The Annual Meeting of Shareholders will take place at 9:30 a.m. on Tuesday June 3, 2003 at One Main Street, Cambridge, MA Form 10-K Report Additional copies of the Company s most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, are available without charge upon written request to: Investor Relations Pegasystems Inc. 101 Main Street Cambridge, MA Or, requests to investors@pega.com. Please include Investor Relations in the subject field of your . Registrar and Transfer Agent State Street Bank and Trust Company c/o EquiServe, Limited Partnership P.O. Box 8040 Boston, MA Shareholder Inquiries: (781) Independent Public Accountants Deloitte & Touche LLP 200 Berkeley Street Boston, MA Legal Counsel Choate, Hall & Stewart Exchange Place 53 State Street Boston, MA 02109

14 Corporate Headquarters Pegasystems Inc. 101 Main Street Cambridge, MA USA (617) North American Offices Atlanta Chicago Concord (NH) Dallas New York San Francisco Toronto European Offices Paris Reading (UK) Asia Pacific Offices Melbourne Sydney Except for the historical information contained in this Annual Report, the matters discussed in the Annual Report are forward-looking statements (as that term is used in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties detailed from time to time in Pegasystems filings with the Securities and Exchange Commission. Pegasystems draws the reader s attention to the factors described in its report on Form 10-K for the year ending December 31, 2002 under the heading Management s Discussion and Analysis of Financial Condition and Results of Operations Factors that May Affect Future Results. Any such forward-looking statements speak only as of the date such statements are made, and the Company undertakes no obligation to publicly release the results of any revision to these forwardlooking statements. Pegasystems Inc. recognizes and acknowledges all trademarks and copyrights worldwide. The material presented here is summary in nature Pegasystems Inc. Printed in April 2003.