Teaching case “IT outsourcing at Smithfield Foods: From on-premises data center to a cloud-based ERP system”

Abstract

In August 2015, Julia Anderson, the Global CIO at Smithfield Foods, the biggest pork manufacturer in the US, was faced with a problem on how to structure the company’s ERP system. The company operated its own data center in the early 2000s. Eventually management of hardware and software was outsourced to an Infrastructure Management Service (IMS) provider. The system was running on servers hosted by an IMS provider, but lately a series of major problems had Julia contemplating whether or not to continue the company’s relationship with the provider. Furthermore, SAP AG, the company’s ERP vendor, released a new version of the system, SAP HANA. As Anderson pulled into the company’s parking lot on Monday morning, she had three difficult decisions to make. Should Smithfield stay with its ISM provider or switch to a cloud service, which was becoming an increasingly popular choice? Should the company convert its current SAP system onto SAP HANA platform, or implement and deploy a new system from scratch? Finally, should the company take a big risk and do both changes simultaneously?