The IRS Does CRM

The Internal Revenue Service 9IRS0 will announce this week that is has signed an agreement to utilize a variety of software technologies from PeopleSoft, Inc., in a massive upgrade of its aging IT operation. Officials at PeopleSoft are expected to announce today that the company has won a $10 million contract to provide the IRS with its new PeopleSoft 8 CRM software.

Pleasanton, Calif.-based PeopleSoft sells software that automates a variety of business operations, including human resources, financials, and customer service. Observers say the IRS contract is a significant victory for the struggling software maker, which has lagged behind rivals like SAP and Siebel Systems in the lucrative market for front-office software.

In 2000, Congress appropriated $506 million for technology upgrades at the IRS under the so-called Business Systems Modernization Program. For 2001, the IRS was given $432 million for further information technology upgrades, and the agency expects another $390 million in 2002.

Richard H. Skorny, director of tax administration modernization for the agency, said the IRS is trying to "to catch up with some of the best practices in the private sector." Implementing a CRM package is an important step in that direction, Skorny said.

The agency expects to introduce its improved online services for certified tax preparers some time next summer. The new services will provide companies like H & R Block with more information about their clients' accounts, such as estimated tax payments made or missed during the year. The agency expects to be able to provide the same level of online access to taxpayers and IRS telephone support agents by 2004.

This isn't PeopleSoft's first government contract coup this summer. Earlier this month the Department of Defense (DOD) agreed to license PeopleSoft 8, which the DOD will use to support its personnel and payroll systems for all branches of the US military. The human resources management and payroll system is expected to serve 3.1 million military personnel located around the world.

The IRS unveiled the first phase of its technical improvements—to its telephone system—in late July. The new system routes calls more reliably and efficiently, and offers voice-recognition features in English and Spanish.

The IRS has announced that it will spend $33 million over the next five years to improve its Web site. The agency awarded the first year of the contract to consulting firm Accenture for $5.7 million. The new design is expected to go public in January.

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About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at [email protected].