ILOG has become the leader in the software arena of business rules management, according to a new report by IDC, "Worldwide Business Rules Management Systems 2008-2012."

The new positioning has come out a few days after IBM announced it had initiated a stock tender offering for all the shares of ILOG stock, valued at $340 million at the time of the announcement. The ILOG board of directors has voted unanimously to be acquired by IBM since the initial July 28 offer. On Oct. 14, it initiated tender offers in the U.S. and France to shareholders that will remain in place through Nov. 17.

U.S. anti-trust authorities have OK'd the acquisition; European authorities are still to rule on the proposal. ILOG is headquartered in Paris and in Sunnyvale, Calif.

The market for business rules management systems has been heating up as compliance and legal requirements grow on business. The former market leader was Fair Isaac, whose rules processing system was a favorite of credit card companies and insurers.

The role of business rules engines is expected to continue to grow as mortgage lending and other consumer credit gets reviewed for unsound practices or comes under increasing regulation. A year ago, SAP bought the Hyderabad, India, business rules engine supplier, Yasu Technologies. It planned to incorporate its QuickRules Business Rules Management System into its NetWeaver product line. A rules engine can be tied to a particular service or application, or serve as a stand-alone unit for many applications.

Oracle decided it should jump into the fray yesterday with its purchase of RuleBurst Holdings Limited, owner of Haley Limited, a supplier of a policy and rules engine used by government agencies. No price for the acquisition was announced.

ILOG as an independent software vendor had partnered with IBM; its JRules engine has been integrated for business process management use with the WebSphere Process Server. In a statement accompanying its Oct. 14 tender offer, IBM said, "ILOG technologies will add significant capability across IBM's entire software platform."

Oracle, IBM and SAP can all be expected to increase the application of rules engines in insurance claims processing, credit card authorization, consumer lending, and customer relationship management. An ILOG-equipped customer service desk would recognize a premier customer coming into the queue and prompt the service desk to move that customer to the front of the line, IBM said in its statement explaining why it wanted to acquire ILOG.

ILOG was founded in 1987 and has 850 employees. It has about 3,000 customers and partners with 465 independent software vendors who make use of its system.

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