A bold strategy
When some companies decide to modernize their information systems, they’re merely playing catch-up. Hormel Foods took a different approach: “Catch us if you can.”
Hormel Foods now supports its portfolio of 50-plus iconic brands with business software on a single platform, Oracle Cloud Applications. It’s a move that has raised a few eyebrows in the food industry but not uncommon for a company that has spent 130 years at the forefront of innovation. Occasionally, Jim Sheehan, executive vice president and chief financial officer, gets phone calls from disbelieving peers. “They’ll say, ‘You’re not running one instance of Oracle for all your brands, are you?’ The answer is, ‘Yes, we actually are. And it’s a huge advantage.’”
That advantage came into play with the company’s blockbuster deal in February 2021 to acquire the Planters brand for $3.35 billion. Running the business on one cloud makes it simpler to integrate or bring in acquired companies. “Moving Planters onto Oracle Cloud is much easier than moving it onto a home-built system, especially from an HR and payroll perspective,” says Mark Vaupel, vice president of IT at Hormel Foods. “With all the data in one place, we all speak the same language, which helps as we move and integrate data, add people to payroll, get benefits information, set up accounts, and so forth. We’ve got a proven playbook.”
The Austin, Minnesota-based company started writing that playbook several years ago, when its leaders realized they needed a major change to their information technology. As a global-branded food company with leading brands in the CPG and food service space, Hormel Foods is a fast adopter of technology and uses agile innovation in its processes and systems. Among its most notable brands are: Planters, SKIPPY, SPAM, Hormel Natural Choice, Applegate, Justin’s, Wholly, Hormel Black Label and Columbus.
As the company continues to make strategic acquisitions, it has acquired different IT systems. “We had various systems for various companies that did not interface well together,” Sheehan says. “They did not provide us with a clear view of the company's performance, were difficult to maintain, and honestly, had become a burden to our competitiveness.”
In some cases, the human capital management (HCM) and enterprise resource planning (ERP) applications hadn’t been upgraded in over 15 years. Some systems depended on a single person—“whoever remained who understood the code it was written on,” Sheehan says. Adding to the complexity, Hormel Foods had customized many of its applications to meet the needs of individual brands.
As the company tackled these challenges, its goal wasn’t just to even the playing field. “We wanted to be in the lead,” Sheehan says. “We were trying to make a generational shift and leapfrog our competitors.”
Full steam ahead
In 2019, Hormel Foods launched Project Orion, a strategic and sweeping effort to modernize its core business systems. Having worked with Oracle since 1998, the company tapped Oracle and partner KPMG to move to cloud-based HCM, ERP, and its One Supply Chain systems.
“We felt like Oracle had the right cloud strategy,” Vaupel says. “Besides offering a fusion cloud environment, where cloud systems are well integrated, Oracle is committed to continuously updating its technologies. We now get quarterly upgrades for every application, which lets us take advantage of new efficiencies, plus ensure our systems are as secure as they need to be.”
Hormel Foods went live with Oracle Fusion Cloud HCM in January 2020 and Fusion Cloud ERP in June as well as Oracle Cloud EPM. Later, the IT team began phasing in Oracle Supply Chain Management Cloud. Oracle Integration and Migration, an Oracle Cloud Infrastructure (OCI) service, was used to quickly connect applications and data. The timing was, well, interesting: Hormel Foods forged ahead with its modernization despite being in the middle of a global pandemic. “We had to rely on teamwork,” says Assistant Controller Eldon Quam. “We had Oracle, KPMG, and Hormel Foods people all working together. If you weren’t familiar with the group, you wouldn’t have known the difference between a Hormel Foods person and someone who worked for another company.”
The collaboration paid off. Last summer, Hormel Foods saw its first partially automated financial close go smoothly. Ditto for moving purchasing processes to the cloud, despite the major external turmoil in global supply chains.
More than anything, Hormel Foods gained a single platform—one source of truth. “We have visibility into every business from the same point of view,” Sheehan says. “When our brands report, whether it’s their cash flow, their income statement, or their balance sheet items, they are all presented the same way. When we look at our employee base, we now see the totality, not just 70 percent of employees, with different information on the other 30 percent.”
The power of one
Using Oracle Analytics, Hormel Foods has built a forecasting model to pinpoint growth opportunities across its many brands. “In the past, we looked at things brand by brand,” says Jana Haynes, vice president and controller. “That’s still important to do, but now that we’re on a centralized platform, we’re able to notice things that weren’t apparent before.”
One example: Hormel Foods is forecasting strong sales throughout its food service brands, which market to restaurants, hotels, and other food service operators. “We’re factoring this into everything from operations to demand planning,” Sheehan says. “As the economy recovers and restaurants reopen, the last thing you want is a product shortage in a channel where demand is strong.”
Hormel Foods has a similar bird’s-eye view of global procurement data. With all procurement except for China and Brazil now on Oracle Cloud, it’s easier to analyze vendors. For instance, the company discovered that some of its brands paid more than others for the same item. Another nugget: the number of vendors that are the sole source of items its brands rely on. Knowing this allows the company to explore alternative sources and be ready should a vendor prove unable to meet demand.
“This type of analysis yields a competitive advantage,” Sheehan says. “It helps us be forward-thinking and make smarter decisions.”
A 130-year-old innovative, food-forward company continues to do it right.
The KPMG Powered Enterprise approach allowed Hormel to tap straight into advanced organizational design, leading technology, processes, and operating models to accelerate its implementation of Oracle Cloud.