Mexicos Tax Administration Service (SAT) last week signed a $50 million, two-year contract with PeopleSoft to have its federal tax collection and investigation systems rewritten onto a single PeopleSoft platform.
SATs tax system sits on 66 databases across the country. The goal is to modernize and integrate the systems—a project that The World Bank Group is financing. IBM will provide change engineering services.
The deal is significant for two reasons. First, the contract could help to settle customers fears in the wake of Oracle Corp.s hostile bid to acquire PeopleSoft. Secondly, it will infuse a good amount of capital into PeopleSofts bottom line over the next two years, assuming the company executes well.
Oracle launched its bid for PeopleSoft last summer. The U.S. Department of Justice quickly challenged the deal on the grounds that it would stall competition among tier-one business applications providers it defined as SAP AG, Oracle and PeopleSoft.
The Justice Department took Oracle to trial earlier this summer, seeking a federal injunction to block the merger. That decision weighs in the balance now, with a ruling from U.S. District Court in the Northern District of California expected this month or next.
In the interim, PeopleSoft has suffered, posting poor second-quarter earnings late last month. Officials blamed the low figures on the fracas with Oracle, saying uncertainty over the trial caused customers to either hold back on deals or turn to a safer bet, SAP—which posted a 63 percent increase in U.S. software sales for its second quarter.
Enrique Perezyera, senior vice president for Latin America at PeopleSoft, said his company won the Mexico SAT deal in a fierce battle against Redwood Shores, Calif.-based Oracle and Waldorf, Germany-based SAP.
"For us, this is a great win," said Perezyera, in Pleasanton, Calif. "Even with the threat of Oracle—and the customer was very well-informed that we were a target to a hostile takeover. At the end of the day and an evaluation of our technology, the customer said, I dont care what happens, this is what solves the challenges that I have in front of me."
Perezyera said he is confident that the deal will lead to similar wins in Mexico and throughout Latin America.
"If you look at the Latin American theater, all of us are developing nations where tax collection is growing," Perezyera said. "We need to increase tax collection."
Mexicos SAT system will utilize PeopleSofts Enterprise Financial Management, Customer Relationship Management, Performance Management and Portal.