IBM, spotting a potential shortfall in business rules engine capabilities against enterprise software rivals like SAP, broke out the checkbook to acquire French company ILOG in a $340 million deal that awaits final ILOG board approval in September, as well as U.S. and European regulatory approval.

IBM plans to pair ILOG’s Business Rules Management System (BRMS) engine with its own business process management and SOA technologies that will simplify clients’ needs to make product and service changes on the fly—and see the immediate impact those changes would bring. With ILOG, IBM acquires a platform and optimization tool that’s gained high visibility in the financial services industry, with deployments at ABN Amro, Bank of America, Citigroup, Deutsche Bank and Visa.

Despite its market presence, the publicly traded ILOG has struggled in recent quarters, piling up losses from a declining market in new-license sales.  IBM purchased ILOG at a 37 percent premium of its July 25 closing price, or a 56 percent premium over its average closing price of the past month.

IBM says the rules-engine tools will round out its BPM/SOA for information and application lifecycle management—and according to a Celent senior analyst, may portend a rush by major software firms to build out their own solutions with acquisitions.

The deal “marks an important new stage in IBM's continuing strategy to acquire powerful middleware applications that enable key business processes,” according to Celent senior analyst Donald Light, in a statement. “IBM is looking to stay a step ahead of the other software powerhouses—SAP recently acquired its own business rules management solution, YASU Technologies.  There are only a few leading rules engine providers remaining, which begs the question: Who else is talking to whom now?”

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