IBM to acquire ILOG

On July 28th 2008, IBM and ILOG announced that they had signed an agreement regarding to the proposed acquisition of ILOG by IBM. By this acquisition, IBM will combine its business process management, business optimisation, SOA technologies with ILOG’s Business Rules Management Systems software. IBM has partnered with ILOG since 1996.

IBM stated that they had received commitments from certain shareholders to tender their shares to the contemplated offer, which represent approximately 10 percent of ILOG’s issued share capital. The public tender offers will be conditional upon U.S. and EU antitrust clearances. ILOG’s board of directors has approved the transaction between the two companies.

IBM’s rules engine capability has not been strong and ILOG are the leading specialist vendor in this space. Therefore the acquisition will strengthen IBM’s portfolio in the BPM and SOA space. As business rules are also important in RFID then this area will also be strengthened. IBM also talked about the use of other parts of the ILOG product portfolio. ILOG’s optimization technology (ILOG CPLEX, ILOG CP Optimizer, ILOG OPL Development Studio and ILOG Optimization Decision Manager) will be tapped for IBM’s business optimisation practice. ILOG’s Visualtion product range (ILOG JViews, ILOG Gantt for .NET, ILOG Diagrammer for .NET and ILOG Elixir) will be used to provide better visualisation for Lotus products and enhanced optimisation within Tivoli solutions.

Pierre Haren, ILOG Chairman & CEO said, “We are very excited about this opportunity to join a world leader such as IBM, a long valued partner with shared core values. This combination will allow us to dramatically extend our market reach and realize the full potential of all of our technologies while protecting investments of ILOG’s customers now and into the future.”

It is perhaps interesting to note that this majority of this announcement was about the ILOG Business Rule Management System (BRMS), of which there are currently 4 different versions (ILOG JRules for Java, ILOG Rules for .NET, ILOG Rules for C and a ILOG Rule for COBOL). It is not clear from the press release how IBM will handle the Microsoft engine for which ILOG recently achieved Business Process Alliance status with Microsoft. The Visualisation and Optimisation products suite were mentioned in the presentation but hardly at all in the press release. In addition, very little was said the LogicTools Suite, the supply chain solution recently acquired by ILOG. With IBM having stood clear of the business applications market it will be interesting to see what happens here.