8-K/A

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 8-K/A


                                 Current Report
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



       Date of report (Date of earliest event reported): November 14, 1997



                                Pegasystems Inc.
              ----------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)




        Massachusetts                    1-11859                 04-2787865
        -------------                    -------                 ----------
(State or Other Jurisdiction       (Commission File            (IRS Employer
      of Incorporation)                  Number)          Identification Number)



            101 Main Street, Cambridge, MA                        02142
            ------------------------------                        -----
        (Address of Principal Executive Offices)                (Zip Code)



Registrant's telephone number, including area code:           (617) 374-9600





Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits.

Exhibit No.         Description
- -----------         -----------
16.1                Letter of Ernst & Young LLP to the Securities and Exchange
                    Commission




                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on behalf of the undersigned
thereunto duly authorized.


Date:  November 17, 1997                          PEGASYSTEMS INC.

                                                  By:
                                                     ---------------------------
                                                     Ira Vishner
                                                     Vice President, Corporate
                                                     Services, Treasurer, Chief
                                                     Financial Officer

EX-16.1

                         [ERNST & YOUNG LLP LETTERHEAD]


November 14, 1997



Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Gentlemen:


We have read Item 4 of Form 8-K dated November 5, 1997, of Pegasystems Inc. and
believe that it is not accurate as to its description of disagreements, as
defined in item 304(a)(i)(iv) of Regulation S-K, between the Registrant and us
and with respect to reportable events as described in Item 304(a)(i)(v) of
Regulation S-K.

With respect to the disagreement described in the second paragraph in
Section(iv)(1) of Item 4 of the Form 8-K, we believe the conversations between
Ernst & Young LLP and the Registrant, at the time the transaction referred to in
its Form 8-K was being negotiated, did not provide a basis to conclude Ernst &
Young LLP had made any determination of the appropriate accounting for the
transaction.

We believe that the matter described in Section(v)(1) of Item 4 of the Form 8-K
should have been included as a disagreement in Section (iv)(1) of the Form 8-K.
The Registrant's senior management informed us that the Registrant intended to
recognize additional revenue relating to the transaction of approximately $11
million in the third quarter of 1997. We advised the Registrant's senior
management and Board of Directors that we disagreed with the Registrant's
intended recognition of this additional revenue in the third quarter.

We are in agreement with the statements contained in Section (i),(ii), the first
paragraph of (iv)(1), (iv)(2), (iv)(3) and (vi) of Item 4. We have no basis to
agree or disagree with other statements of the Registrant contained in
Section (iii) and the third paragraph of Section (iv)(1) of Item 4.

/s/Ernst & Young LLP
   ERNST & YOUNG LLP