BPM Tie-up Craze Claims IBM, Ilog

For the past 10 years, IBM has incorporated various Ilog technologies into several of its products, including its WebSphere Process Server business process management (BPM) suite, and now with IBM’s pending acquisition of the French software vendor, the two companies are as one.

IBM’s purchase of Ilog continues the trend of acquisitions in the attractive market for BPM applications. Large vendors have been snapping up small independent makers of BPM products that will allow their customers to squeeze more value out of IT.

Oracle bought BEA for $8.5 billion earlier this year, and SAP acquired Business Objects for $6.7 billion in October.

Sandy Carter, IBM’s vice president of SOA (service oriented architecture) and WebSphere, told InternetNews.com that the purchase of Ilog will boost the company in three key areas: business rules, optimization and visualization.

For example, some of Ilog’s business rules are already integrated with IBM’s WebSphere Process Server BPM suite, Carter said, but incorporating the full set will “bring the ability to govern those rules and manage more complex rules,” she explained.

Meanwhile, IBM’s Center of Business Optimization, a group of consultants acquired when IBM bought PricewaterhouseCoopers Consulting for $3.5 billion in cash and stock in July 2002, uses Ilog’s optimization products heavily, Carter said. She noted that consultants can now more fully leverage tools such as Ilog CPLEX and CP Optimizer.

IBM has linked Ilog’s visualization tools into WebSphere Business Events and Tivoli NetCool, which helps manage services. These tools add sophisticated displays such as Gantt charts, diagrams and dashboards, to Java, C++ and .NET applications for the desktop and for rich Internet applications .

Carter could not comment on how long it would take IBM to fully integrate the Ilog applications into its own because of regulatory restrictions related to the pending deal.

Ilog has additional partnerships with major vendors other than IBM — Oracle (NASDAQ: ORCL), SAP (NYSE: SAP) and Microsoft (NASDAQ: MSFT) — and this could be a problem for Big Blue, as all of them compete with IBM in the BPM space.

Massive consolidation

The Ilog purchase will simplify licensing, service and support for large customers such as Fortune 1000 firms or government agencies using IBM products that implement Ilog technology.

With the move, customers using IBM (NYSE: IBM) products that incorporate Ilog’s technology will have an easier time getting licensing and support.

“When you have such tightly integrated systems, it’s a lot easier to call one organization and have one belly button to push, so to speak,” Shane Aubel, an analyst at the consulting firm Accent Global System Architects, told InternetNews.com. “The BPM space is seeing a massive consolidation, and I think this trend will continue,” he added.

What will happen to Microsoft, SAP and Oracle once the purchase goes through? “I think other strategic partners of Ilogic might not get the level of support they once did,” Aubel said. “Does the support dry up? How are existing agreements and alliances going to work? Is there a conflict of interest?”

IBM declined comment on whether it would continue supporting other Ilog partners who are competitors. Like other large vendors, however, it accepts the premise of cooperation with competitors, because vendors find that customers don’t want a single supplier.

SAP and Oracle had not responded to calls from InternetNews.com by press time. IBM expects to finalize its deal by the end of the year.

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