IBM lays the rules down

The good news is that ILOG is a great fit for IBM. Its rules engine adds a piece missing from WebSphere Process Server, and in fact has excellent synergy with a raft of IBM products that start with Business Events (apply sophisticated rules to piecing together subtle patterns emerging from torrents of data), FileNet content server, WebSphere Business Fabric (the old Webify acquisition, providing frameworks for building vertical industry SOA templates), and the list goes on. And that’s only the business rules management system part. IBM Global Business Services and its Fishkill fab are customers of ILOG’s optimization engine, while Tivoli’s Netcool node manager uses ILOG’s visualization.

The sad part of the deal is that the acquisition will likely abort ILOG’s interesting foray into Microsoft’s Oslo vision, where it provides the underlying the business. Even if IBM wants to maintain the business, we'd be surprised if Microsoft followed suit. ILOG went to the effort, not simply to port Java-based JRules, but write a fully .NET native product. That’s analogous to what happened with Rational, whose Microsoft Visual Studio partnership originally dwarfed its ties with IBM.

What's interesting is CIO UK’s Martin Veitch’s take, which is that “IBM is continuing to dance around the margins of enterprise applications” with the ILOG deal. We’d agree, just as with the previous acquisition of Webify and the bulking up of WebSphere Process Server, that it’s getting harder to see where tools leave off and applications pick up. In an era where all these pieces become service-oriented and theoretically composable, maybe that's irrelevant.

Feast of bottom fishers

Veitch takes issue with the broader implications for IBM and Oracle - that “these companies have become planets to be explored rather than recognizable fiefdoms of even 10 years ago,” and that “a lot of people are unimpressed by the levels of integration and R&D that follow the incessant deal-making”.

Well, part of that may be to satisfy Wall Street, but the march toward agglomeration has become something of a self-fulfilling prophesy. That is, if a $500m software company is no longer considered large enough to be viable and if customers are afraid for vendor survival, that will reinforce the trend for IBM, Oracle, SAP, and Microsoft to gobble up what's left.

That’s a larger issue that gets beyond the pay grade of this post, but ironically provides subtle reinforcement of what Haren told us roughly six months ago: that once a market gets to the billion dollar or so level it becomes prey for “bottom fishers” that push niche providers back into their niches.

This article originally appeared in onStrategies.

Copyright © 2008, onStrategies.com

Tony Baer is the principal with analyst onStrategies. With 15 years in enterprise systems and manufacturing, Tony specialises in application development, data warehousing and business applications, and is the author of several books on Java and .NET.