Are Business Rules the fastest growing market you have never heard of?

The two leading business rules vendors, Fair Isaac and ILOG, announced second quarter results last week. Both of them announced record results for their Business Rules products with growth around 60% year over year! These two vendors represent more than half the worldwide market for pure business rules solutions so you have to take these results as proof that the market is taking off. Add to that the fact that Gartner are on their third Magic Quadrant (see the most recent one at Gartner Business Rules Magic Quadrant 2005) and Forrester about to do a Wave Report on the market and you see clear signs that this market is hot.

So why is this market doing so well? It seems to me that there are a number of key reasons.

1. Compliance, and the need to demonstrate compliance, is more of a focus for large companies than ever. You have Sarbannes-Oxley, BASEL II, HIPAA and much much more. Business Rules engines are a great way to build systems that ensure and can demonstrate compliance. I wrote an article on this for Compliance Advisor.
2. Personalization and customer management are an increasing focus of CRM and CDI initiatives. Business rules allow you not only to develop very focused responses to your customers but make it easy to change these responses as your competitors change and allowing you to put your marketers and support folks in charge of their own systems. For a great article on this check out Rolando Hernandez's article.
3. IT departments are trying to get out of the business of maintenance so that they can focus on using IT for strategic advantage. The demonstrable fact that systems built using business rules take less maintenance makes this an attractive proposition for IT departments. The old saying about teaching someone to fish springs to mind - business rules let your business users maintain the high-volatility pieces of their systems reducing workload for IT. For an example, see this Microsoft case study or this white paper on Knowledgestorm.
4. Companies have made large investments in CRM, CDI and more and now they need to make a return on this. Using business rules to add "smarts" to these systems is a great way to do this - check out Defying the Limits for great general articles on this and this joint Siebel/Fair Isaac webinar for some specifics.
5. Last but not least you have two vendors - one large multi-product company (Fair Isaac) and one smaller focused software company (ILOG) - making huge investments in the products and in marketing and selling them.

So business rules is hot and if you are not already using this technology, perhaps you should be?