Disney restructuring its theme park technology group

The Niles quote is totally inaccurate. These changes are about accounting and acceptance that technology doesn't fit well into a cap ex project model. Software is never really "done," it just reaches states where it can do what you wanted it to do some time in the past, before you learned more about what you needed. You can't draw a line between sustainment and enhancement just to enable accounting advantages. It never works.

Would this restructuring/ outsourcing be a result of the My Magic + program? I never used the system, but I don't fully understand it. I read the stories about the issues that the Fast Pass + has caused. From my "armchair" perspective, I am disappointed in the billion dollar investment in the My Magic +. Did TDO really think this was smart investment? Imagine the attractions that could been added. Imagine adding a three new attractions at DHS themed to Star Wars, Indiana Jones and Cars.

I think it was the right thing to do, it was just incredibly poorly executed. From what I gather, there were so many layers of bureaucracy and a total lack of vision. Too many cooks in the kitchen all trying to connect a bunch of systems that were never really intended to be massively real-time and talking to each other.

Like I said, I think this is more about accounting, which is why the net loss in head count doesn't sound like it will be all that significant. Like a lot of big companies, Disney approaches software like building a new building or a roller coaster or something, accounting for it as a capital expenditure. Cap ex is supposed to land you a fixed asset in the end, and you amortize the cost over some years, deducting it as an expense over that time.

I'll be honest, I don't entirely understand the auditing and legal implications of this (nor can I say for sure that's how Disney accounted for NGE, but it would be consistent with other large companies), but the problem is that there's pressure on the unit to deliver something in a specific state by a certain time. Anyone who has ever built software knows how absurd this is, because you build only for what you understand to be the requirements at the time. Change will happen, and you have to constantly adjust for it. Needs and wants continually evolve, and if you're going to build stuff to meet those needs and wants, you have to keep changing the software. That doesn't at all fit into a cap ex project model. It's an on-going expense until you sunset the product.

But isn't a large part of what they are doing actually hardware, and therefore for in line with a capital expenditure?

Jeff said:

technology doesn't fit well into a cap ex project model.

How do you account for the money you could have saved if you'd used technology to improve your other business processes and practices?

The "silo mentality" is absolutely wrong in an integrated world (one that has very few absolutes, LOL).

The hardware cap ex is done as far as I can tell. I think most of it has been in place for a good two years, and I think the human labor cost dwarfs the hardware expense (see what I did there?). I've heard stories of weekly meetings that literally included a hundred people. I bet the blended rate for something like that was easily $100/hour per person. Yeah, a $10,000 meeting.

I have to imagine the silos have been in the process of disintegrating over the last two years. That's me being the eternal optimist, despite seeing the opposite in various Gigantocorp® companies. But IT is core to almost every line of business now... silos aren't sustainable.