Family Behind Data Systems Worldwide Willing To

hen Data Systems Worldwide opened its first retail computer store in September 1982, it was the right move, at least at the time.

Making the right move at the right time has always been important to the Woodland Hills, Calif.-based solution provider, said Phil Mogavero, president and CEO. Data Systems has made a point of changing with the times, and that's what has kept it going, he said.

Indeed, Data Systems has evolved several times in its 30 years in existence. And tracing its shifts in business strategy over that time reveals a lot about the evolution of the entire channel -- from a word processing system dealer to computer retailer/reseller to network integrator to e-business solution provider and managed service provider.

Mike Mogavero, who joined the solution provider eight years ago, sees an opportunity for Data Systems to sell its hosting solution through other VARs.

The company, founded in 1971 by Phil's father, Frank Mogavero, started out by selling accounting machines and furniture to banks. By the time Phil joined the company in 1979, Data Systems also was selling Commodores and word processing systems. Then came its launch into retailing in 1982.

By the mid-1980s, Data Systems had built up four stores in Southern California that sold Commodores and IBM-compatible systems, and offered software and training. But margins on systems already were slipping, and the writing was on the wall: Data Systems needed to change.

Eventually, the solution provider combined the four stores into one "superstore," which later closed, ending the retail phase of its business. But by then, Data Systems had built a LAN practice that was thriving, said Phil Mogavero. The company launched into LAN integration in 1985, centered on technology from vendor SynOptics. In the late 1980s, it focused on Unix and Novell NetWare and created custom applications for the networks it built. A big focus of the value add was terminal emulation; using one PC on the desktop, users could connect to a VAX, a mainframe or a Novell server, Phil Mogavero recalled.

Data Systems spent the first half of the 1990s adding WAN capabilities to its customers’ LANs, said Phil’s brother, Mike Mogavero, who joined the family business eight years ago.

The next significant change came in 1995, when Netscape Navigator was released, said Mike Mogavero.

Later, Data Systems added relationships with Sun Microsystems and security vendors. The computer reseller had morphed into an integrator with four distinct practices: application development, security, networking and systems.

While riding the e-commerce application wave of 1998 and 1999, Data Systems took another bold step. In early 1999, the company launched B2n, which stands for business-to-net. The unit provides hosting facilities, equipment, software licenses and services for its clients for a fixed fee per month.

The unit now accounts for about 10 percent of Data Systems’ total revenue, the Mogaveros report. The company posts annual revenue of approximately $30 million.

B2n has focused on building a base of non-dot-com clients, said Phil Mogavero. "These are brick-and-mortar businesses doing business over the Web, and we support the whole environment," he added.

To grow that business further, the Mogaveros are preparing for yet another evolution. Recently, Data Systems signed an agreement with Ingram Micro to sell B2n services through other solution providers.

"Now, we're a regional outsourcer becoming a provider of solutions to a channel," said Mike Mogavero.

Whether Data Systems is successful at this next phase of its business remains to be seen. But one thing’s certain: This is one solution provider that is not held back by the past.

"About 18 months ago, I heard a group of resellers talking about how the business model has changed to a high-volume, low-margin model," said Mike Mogavero. "That concept has always been foreign to us."