A Few Thoughts on ILOG's LogicTools Acquisition

Because I was on the road last week, ILOG's acquisition of LogicTools slipped under my coverage radar. But even at this later date, it's still worth discussing some of the implications of the deal and for ILOG in general. For those who don't know ILOG, the vendor is perhaps best known in the Spend Management vendor world for its optimization solvers (even though this is only a small piece of their business). LogicTools, the target of its acquisition hunt, provides multi-tier supply chain network modeling and optimization capabilities. In an article covering the deal Managing Automation noted that "in 2005, an existing partnership with SAP spurred ILOG to cast its lot among the application providers ... The enterprise apps heavyweight enlisted ILOG's expertise in building out SAP's Advanced Planner and Optimizer product, and that began ILOG's push toward more of a customer-facing role."

For companies in the process of designing new supply chains in new markets -- or revisiting the design of older ones in existing environments -- solutions from companies like LogicTools and rivals Optiant and SmartOps can help companies model costs, risks, and trade-offs regarding inventory, risk and working capital decisions in a multi-tier environment. Now, I'm not an optimization geek like Michael Lamoureux. I'll leave the detailed analysis to him. But needless to say, it will be interesting to watch whether ILOG begins to embed capabilities for companies to make better complex Spend Management decisions (e.g., make / buy, multi-tier sourcing, etc.) in products which they sell directly to users, versus simply enabling them through the sale of solvers to pure-play sourcing vendors.

Jason Busch

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