Optimizing Big Blue — IBM Acquires ILOG

IBM continues to creep once again into the grey area between infrastructure and business applications with its latest announcement that it is acquiring ILOG, a provider of business rules, process and optimization capabilities. In fact, many sourcing vendors use ILOG solvers in their optimization capabilities. According to the announcement, "ILOG has 850 employees worldwide, and recorded fiscal 2007 revenues of $161.5 million." In my view, based on this and other recent software acquisitions, and its already strong services and outsourcing practices, IBM is the most logical vendor to step in and acquire a solution provider like Ariba (which offers a somewhat non-traditional combination of software, services and network enablement). Add to this IBM's emphasis on procurement excellence dating back to Gene Richter's tenure -- not to mention their recent IPO relocation to China -- and an Ariba deal might seem to be an even more logical fit. Despite the fact that rumors have flown for years about Oracle picking off its Sunnyvale neighbor, IBM feels like a better suitor. When -- if ever -- will it happen? Who knows, but if the ILOG deal is a sign that IBM is getting more acquisitive, perhaps a deal like this is a distinct possibility someday.

- Jason Busch

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