IBM has agreed to buy process management software group ILOG for €215m (£170m) in cash.

The deal will strengthen the merged company's position in business processes management and service-oriented architecture (SOA), helping clients to deliver critical business information in real time and to make faster and better-informed decisions.

There is healthy demand for software that can improve flexibility and adapt to future change, said Tom Rosamilia, general manager, IBM WebSphere.

"ILOG's software allows businesses to more effectively manage and automate the decision-making process, giving companies an opportunity to react with incredible speed and accuracy," he said.

"IBM has partnered with ILOG for over a decade, and by adding ILOG's capabilities to IBM's software portfolio, this is a great combination to provide value to our clients," Rosamilia added.

ILOG's board has approved the acquisition and expects to submit a final recommendation before 15 September.

Pierre Haren, ILOG chairman and chief executive, said: “This combination will allow us to dramatically extend our market reach and realise the full potential of all of our technologies while protecting investments of ILOG's customers now and into the future."

With this move, IBM is looking to stay a step ahead of the other software powerhouses – SAP recently acquired its own business rules management solution, YASU Technologies. There are only a few leading rules engine providers remaining, which begs the question: who else is talking to whom now? said Donald Light, senior analyst with Celent, a US financial research firm.