Many IT departments have had to confront the reality of extreme customer dissatisfaction as a result of the rise of cloud computing.

That’s the view of Alan Trefler, founder and CEO of the $US800M (revenue) enterprise IT provider Pegasystems, which is holding its annual user conference in Las Vegas this week. He made his comments in a briefing to press and  analytics prior to the start of the event.

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And he said there were harsh lessons for many IT vendors as well, some of whom he described as getting “fat, dumb and happy from sucking up 22 per cent maintenance fees and not actually giving much back.”

“So the good thing is some appropriate pressure is being put on the recalcitrant and under-responsive IT departments and frankly some under responsive software vendors.”

Pegasystems plays in the enterprise grade computing market and its customers are giant incumbents in markets such as baking, insurance and health – basically a who’s who of disrupted incumbency.

As such, it is a business that is engaged in do the often difficult work and recalibrating core systems in a way that lets information flow seamlessly across organisational silos and allows for more sophisticated analytics.

It’s particular sweet spots include CRM, real time decisioning, case management and business process management.

Trefler told Which-50, “The cloud is forcing organisations to think differently and be responsive and that’s a really good thing.”

His company is also undergoing its own transition having rebuilt its offering to the cloud in recent years. Like other enterprise vendors it currently has a foot in both the on-premise camp through its legacy apps as well as the newer on demand offerings.

And as befits the leader of a company that operates in the world of real things, he has a refreshingly blunt view of the practicalities of cloud computing.

“From an architectural perspective I think some of the decisions being taken as people try to respond to their pent up frustration and anger are going to lead to some of the same problems we saw with the transition to client server* where everyone thought this was going to solve all of life’s woes.”

Now however he says, companies are starting to understand that what they may have actually done is to create a new collection of systems that might not be responsive to the future. And it has a very different cost base than they expected when they went into it, he cautioned.

“I see customers who are going to big cloud providers but who are still doing nightly batch feeds of their customer data. That’s actually the standard for many of these customers. How stupid is it for us to be doing nightly batch feeds of customer data? How does that fit with any concept of being a connected real time company?”

Trefler said companies need to think about how to get their data together “… and to avoid doing things that might create more silos in future instead of doing the things that will let them become real time.”

“That’s the biggest issue I see in the industries we work with.”

In fact the rapid shift to software as a services adoption – which in many cases was used by line managers to circumvent the perceived weaknesses of internal IT – may have ironically dealt the CIO back into the digital game.

According to Karim Akgonal, senior vice president at Pegasystems, “Businesses have found their SaaS implementations reaching the point where they hit the limits. Now they want to transfer them back to IT which is an interesting political dilemma to say ‘Well you told us not to use this but we used it anyway. But now its so big you need take it back and control it and manage all the change.’ “

“Increasingly we get engaged on those types of initiatives,” Akgonal said.

(Client server was the big architectural shift in the 1990’s away from centralised mainframe computing to distributing computing where processing power was pushed out to the desktop.)

Andrew Birmingham is the editor of Which-50. You can Connect with him on Linkedin or follow him on Twitter @Which50

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