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Business rules engines have failed to live up to their potential for 15 years, says Jim Sinur, analyst at Gartner Research. But changes in the underlying IT framework are finally plucking these products from the "trough of disillusionment", boosting the fortunes of business rules management system (BRMS) vendors like ILOG.

Adoption of a BRMS is now hitting the mainstream. Amadeus, the e2 billion company that provides sales and booking technology to travel agents and airlines, is ILOG's latest reference customer. Amadeus uses ILOG's JRules product to automatically provide 1,300 German travel agents with real-time airline seat availability information.

Rules engines enable businesses to automatically change data or actions according to certain pre-set rules. For example, a system might automatically change the prices of some goods dependent on external events - such as a component price rise. "About a third of IT can be programmed with business rules," says Pierre Haren, CEO of ILOG. Amadeus executives say they have cut the deployment time for new policies from three months to a week with JRules.

Account approvals, regulatory compliance and fraud detection are all possible applications of rules technology. Haren totes eBay as another key customer - an impressive application of ILOG's technology in the interminable effort to keep scams and fraudsters at bay.

While such applications are nothing new, the advent of two new technologies may help to bring rules technology into the forefront of enterprise software. One of these is Complex Event Processing (CEP) - which involves building systems that are able to automatically respond to combinations of events. Gartner sees this as an area of enormous importance, characterising it as the "event driven architecture" or EDA.

The other development is business process management (BPM), which promises to make the use of rules easier and more effective. Using BPM systems, applications are linked and managed as automated business processes, which are then called upon by a variety of business services when required.

Haren hopes the adoption of BRMS will go hand in hand with BPM, as businesses seek to take the provisioning and management of IT services out of the hands of the IT department and put them under the control of business user.

"Dissatisfaction with the IT department is our opportunity," says Haren. "BPM is going to replace ERP [enterprise resource planning], but nobody has the rules technology web services require."

Haren picks out German business applications giant SAP as the leader in the broader web services revolution. SAP has committed to breaking its mySAP software suite into freestanding business processes and services, interlinked using its Netweaver integration engine. SAP customers would benefit from using a rules engine at the centre, believes Haren.

SAP is ILOG's largest partner, but this partnership relates to a separate ILOG activity, supply chain optimisation. ILOG provides software that is sold as part of mySAP, generating 4% of its revenues. At present, this partnership does not cover the rules engine technology.

ILOG does, however, have a strong ally in FileNet, one of the leading suppliers of BPM software. Rather than embedding ILOG's rules software, the two has a co-selling agreement that gives ILOG greater visibility in the market.

Other partners, such as IBM and BEA, have built connectors for ILOG's BRMS, enabling developers to create applications that make use of rules technology. These partnerships will be vital to ILOG if it is compete effectively against other BPM vendors, such as Tibco, which has its own rules engine.

In spite of the large number of powerful suppliers in BPM and workflow applications, analysts have identified a trend towards externalising previously embedded rules engines - where they exist. Even so, independent suppliers such as ILOG are always at risk from competition from larger suppliers, even SAP.

"ILOG is well positioned for continued growth," says Meta Group analyst Michael Barnes. "The key to ongoing success is to broaden its footprint." Rules management currently makes up 39% of ILOG's licence revenues, the remainder being split between visualisation and optimisation tools. Sales increased 38% in the six months to 31 December 2004, and have now broken the $100 million mark annually.

But, notwithstanding the 15 years in the doldrums, rules engine software sales are key to ILOG's future growth, which Haren predicts will exceed 50% when the BPM market takes off.