PeopleSoft Lands Biggest Deal In Its History

The shadow of Oracle's $7.7 billion takeover bid was no match for the Latin American sales team at PeopleSoft Inc. The company said Thursday that it has signed the largest software and services deal in its 17-year history--valued at more than $50 million--with Mexico's Tax Administration Service, the equivalent of the Internal Revenue Service in the United States.

The bidding process began about nine months ago, several months after Oracle began its hostile takeover bid. That bid prompted a lawsuit by the Department of Justice claiming an Oracle takeover would violate antitrust laws. The government and Oracle presented their final arguments on July 20 in federal court in San Francisco, and a ruling is expected by September.

Despite testimony during the trial indicating vendors often discounted software to win bids, Enrique Perezyera, senior VP for Latin America at PeopleSoft, says PeopleSoft didn't focus on discounts. "When you are bidding on a transaction of this size, if it isn't good business for the customer and good business for the software provider, the end result would be disastrous," he says. "We definitely didn't want to give the business away."

Instead, he says, PeopleSoft beat out competitors Oracle and SAP in the bid on functionality, performance, and the software's ability to easily make changes in the applications processes. "Tax regulations change after the end of every year, so then the applications and business processes have to change immediately to respond to those changes," he says.

The deal includes PeopleSoft Enterprise Financial Management, PeopleSoft Enterprise Customer Relationship Management, PeopleSoft Enterprise Performance Management, and PeopleSoft Enterprise Portal. PeopleSoft Global Services will provide implementation and consulting services for the project. IBM Business Consulting Services and SPL WorldGroup will assist PeopleSoft on the project. Implementation will begin in a few weeks and the project is expected to take two years.

Because revenue from the deal will be recognized as a percentage of completion times over a 24-month period, PeopleSoft isn't likely to see any revenue until the first half of 2005. Still, the megadeal is good news. In the second quarter, "we won 162 new customers and in [the third quarter] we'll have the biggest deal in company history," Perezyera says. "For us, Latin America is not the biggest economy in the world. Winning a contract like this is like having a Latin American getting to the finals in the Wimbledon and winning. It is a major accomplishment for the Latin American team, and for PeopleSoft as a whole."