ILOG is now part of IBM.
IBM Completes Acquisition of ILOG gives the official details. The ILOG Rules family of products is one of the best (the best?!) rules engines on the market. Sandy talked about this acquisition back in July in IBM Signs MOU to Launch Tender Offer to Acquire ILOG (as did I in IBM Buying ILOG).
A good rules engine is an important part of the middleware foundation for enterprise applications because it helps extract policies and decisions from the rest of the application and express them in a form which makes the policies easier to understand, manage, and modify. This encapsulation of decisions also makes the rest of the application easier to write because it can just delegate to a rule set when a decision needs to be made, rather than a developer having to hand code the decision logic. A good rules engine can also execute a large, complex set of rules far more efficiently than equivalent (Java, C#, etc.) code can. There tends to be good synergy between a process engine and a rules engine, where the process engine is used to guide a series of tasks over time and a rules engine is used to make a decision at a point in time.
I believe the ILOG acquisition is an exciting addition to the WebSphere SOA family of products. Being able to include this rules engine more easily within SOA application infrastructure will enable us to more easily develop better SOA applications.