A disclaimer first: I spent 8 years working for ILOG, previously a leading vendor of BRMS (business rules management software), but I spent those years primarily architecting, building and managing IT systems.  So although I’m pretty familiar with BRMS and related topics, I’m by no means a BRMS expert.  Secondly: if you’re a fellow ex-ILOGer (or current IBMer), or just generally a BRMS expert, please feel free to correct me.

Back in July of 2008, IBM announced their plans to acquire ILOG.  Most of the buzz was around IBM integrating ILOG, a Java business rules engine, into their IBM WebSphere J2EE application server.  It seemed like maybe IBM’s aim was to improve their BPM offering by extending BPM with a full blown BRMS engine.  That would allow for some hyper complex routing rules in BPM, and also strengthen IBM’s position against Oracle’s recently acquired BEA WebLogic Server (now Oracle WebLogic Server).

Around October of 2008, Oracle announced that they were planning to buy Haley.  Haley was originally a small US-based BRMS vendor, but was purchased by RuleBurst, an Australian company, back in November of 2007.

Oracle has said publicly that their intentions in buying Haley were to help develop software in a highly regulated financial market, and in fact InformationWeek speculated on that idea just yesterday.  They seem to be betting on the notion that the financial markets will become more regulated to prevent the kind of credit default swap madness that we’ve been hearing about over the last few months.

But I believe the real story is a tiny bit different, and it probably goes something like this:

• Oracle has long competed against IBM and SAP as a leader in business applications – in CRM, ERP, and other middleware categories
• The BPM (business process management) market was predicted to grow between 29 to 44% through 2011, for a total market size somewhere around $4 billion USD (according to Gartner, IDC and Forrester – source)
• Oracle had acquired a ton of middleware, an additional BPM engine (Fuego, later known as AquaLogic BPM), and a robust J2EE application server – in fact they ultimately dropped their own Oracle iAS J2EE server in favor of WebLogic Server
• Oracle’s primary intention in acquiring BEA was to both have less competition in the SOA/middleware market, but also to compete more strongly against IBM with a better J2EE platform
• IBM also has a J2EE application server, perhaps arguably the only one that stands in the way of total market domination for Oracle, as well as a BPM engine
• IBM wanted a larger share of the BPM market, so they bought ILOG with that intention, but also planned to put WebSphere ahead of WebLogic Server strategically
• Oracle decided to dump their own home grown rules engine in favor of Haley

The way it all works out, though, is really rather interesting.  Both vendors are now strategically in a healthy position to react to any need for complex software that can handle new and evolving financial regulations.  And it’s a good way to explain the decision to the market, even though it seems like the Haley acquisition may have actually been more of a response to IBM than to the possibility of a heavily regulated financial market. 

It should be interesting to see how this story continues to progress.

Filed under: Enterprise Web, IBM, Product Management