Former General Motors Corp. chief technology officer Tony Scott came from one of the most outsourced IT operations around, so it's no great surprise to hear of Walt Disney Co.'s decision last week to outsource a number of IT operations to IBM and Affiliated Computer Services Inc. and transfer about 1,000 computer jobs to those vendors. "He comes from a culture of outsourcing," Moors & Cabot analyst Cindy Shaw says of Scott, who became Disney's first company-wide CIO in February.
GM outsources nearly all its IT operations and development, most of it to EDS, which GM used to own. So it makes sense that at Disney, Scott will look to outsourcing as a means of capping the company's increasing IT expenses. In a regulatory filing, the company said that higher IT costs at Walt Disney World contributed to a $422 million increase in overall second-quarter expenses. Scott also will be under pressure to help Disney deliver on outgoing CEO Michael Eisner's promise to show double-digit earnings growth this year. "He'll be looking to take cost out," Shaw says.
Disney executives declined to be interviewed. In a statement, the company said the outsourcing initiative, to be executed over the next two months, is designed "to provide enhanced value, improve organizational flexibility and effectiveness of existing operations, and adapt resources more nimbly in response to changing business conditions." When Scott was hired, he said his role would be to leverage synergies wherever they existed.
The company says workers affected by the outsourcing will be offered employment at ACS or IBM. Some work will be done at Disney while some will shift to an IBM development center in Tulsa, Okla. An IBM spokesman declined to say whether any of the jobs would eventually be moved to the company's lower-cost offshore facilities.
Under a seven-year, $730 million deal, IBM will help Disney manage and maintain its SAP software, as well as other business applications. It also will run Disney's mainframe systems, 3,700 Intel- and Unix-based midrange computers, and storage systems containing about 1.4 petabytes--or roughly 20 million filing cabinets' worth--of data. For its part, ACS won a seven-year, $610 million deal to manage Disney's data networks and provide desktop and IT help-desk support.
How Enterprises Are Attacking the IT Security EnterpriseTo learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Infographic: The State of DevOps in 2017Is DevOps helping organizations reduce costs and time-to-market for software releases? What's getting in the way of DevOps adoption? Find out in this InformationWeek and Interop ITX infographic on the state of DevOps in 2017.
2017 State of IT ReportIn today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.