Pegasystems and AWS: Pioneering the Future of Enterprise Agility Through AI-Driven Legacy Modernization

The global enterprise software landscape is at a crossroads. Over $800 billion in legacy systems—ranging from COBOL mainframes to outdated .NET frameworks—remain entrenched in businesses worldwide, stifling innovation and agility. These systems, often decades old, are now the single greatest barrier to AI adoption, with 68% of IT leaders citing legacy infrastructure as a critical roadblock. Enter Pegasystems and Amazon Web Services (AWS), whose groundbreaking five-year collaboration announced on July 14, 2025, promises to redefine how enterprises modernize legacy systems and harness AI for transformative growth.

The Problem: Legacy Systems and Technical Debt

Legacy systems are the “silent liabilities” of modern enterprises. They consume disproportionate IT budgets, lack integration with modern cloud-native tools, and are prone to security vulnerabilities. Worse, they strangle innovation: without agility, companies cannot pivot quickly to new markets, customer demands, or AI-driven efficiencies.

The Pegasystems-AWS Solution: AI as the Catalyst

The partnership combines Pega's workflow expertise with AWS's generative AI capabilities, creating a closed-loop system for legacy modernization. Key components include:

1. Amazon Bedrock Integration: Pega's flagship tools, Pega Blueprint and Pega Platform™, now leverage Bedrock's large language models (LLMs) from Anthropic, Amazon, Cohere, and Meta. This enables enterprises to embed AI into every stage of the application lifecycle—from requirements analysis to continuous refinement—reducing the time and cost of innovation.
2. AWS Transform: This AI-driven tool automates the full modernization lifecycle of legacy applications, refactoring code and migrating systems to the cloud. By targeting archaic languages like COBOL, it slashes technical debt while accelerating migration.
3. Pega-as-a-Service on AWS Marketplace: Streamlining procurement, this integration allows enterprises to access Pega's solutions seamlessly through AWS's ecosystem, reducing friction and accelerating adoption.

The result? A 8x faster modernization process, eliminating the need for lengthy discovery phases and empowering businesses to focus on strategic priorities.

Market Opportunity and Strategic Positioning

The legacy modernization market is booming, growing at a 12% CAGR, fueled by enterprises' urgent need to digitize. Pega's AI-driven SaaS model, paired with AWS's cloud dominance, positions it as a leader in this space.

Pega's partnership with Infosys—a systems integrator leveraging Pega tools in its AWS-native offerings like Cobalt—adds credibility. This ecosystem expansion signals a scalable, partner-driven go-to-market strategy, critical for capturing global enterprises' attention.

Risks and Considerations

While the partnership is transformative, risks remain:
- Execution: Legacy modernization projects are notoriously complex; any delays could strain investor confidence.
- Competition: Rivals like Microsoft (Azure) and Google (Anthos) offer competing AI-driven modernization tools.
- Adoption Rates: Enterprises may resist overhauling legacy systems due to perceived risks, even with AI's benefits.

Investment Thesis: A Long-Term Play on Enterprise Agility

For investors, Pega's collaboration with AWS is a strategic bet on two megatrends:
1. Legacy Modernization: A $800B market with clear pain points and urgency.
2. AI-Driven Automation: The autonomous enterprise vision reduces operational costs while enabling new revenue streams.

Pega's stock currently trades at a discount to peers, yet its AI-first differentiation and AWS's distribution power could re-rate its valuation. Analysts project 20%+ annual revenue growth through 2027, driven by this partnership.

Conclusion: A Blueprint for Enterprise Reinvention

Pegasystems and AWS have set a new standard for legacy modernization. By embedding AI into every step of the process—from refactoring code to designing dynamic workflows—they're not just modernizing systems—they're enabling enterprises to become agile, future-ready organizations. For investors, this is a rare opportunity to capitalize on a market transition with clear winners.

Recommendation: Consider a long position in PEGA for portfolios focused on enterprise software innovation, with a target price tied to AWS's cloud adoption metrics and Pega's SaaS revenue growth. The partnership's five-year horizon ensures sustained momentum, making this a cornerstone investment in the AI-driven enterprise era.