Nova Southeastern University
Wayne Huizenga Graduate School of Business & Entrepreneurship

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Title of Assignment: Case Study Analysis – Datavast Inc.: The Target Segment Decision

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(1) Describe the data storage industry in China in this case. Include comments on technology and issues in accepting new technology?

Backup copies of important data was a relatively new concept in China and a large number of companies that backed up their data used outdated storage methods. These storage methods were not very reliable and were sometimes very easily compromised.
It was estimated that approximately 20% of China’s small and medium-sized enterprises (SMEs) still used CDs as their primary source of data backup (Hao, 2012). CDs were used mostly for personal purposes and was inexpensive, they were however, not very desirable for businesses to store data, as they could be easily lost, scratched or broken and sometimes were unreadable after they were made.
Approximately 30% to 40% of the SMEs used portable external hard drives (Hao, 2012). These were user-friendly and mobile, with larger storage capacities than CDs as well as more expensive. They offered more reliability as information was less likely to be corrupted. But, like CDs these could get lost and they were susceptible to damage from shock and magnetic fields.
Other companies used various other methods of storage, such as USB Flash Drives, which were portable, rewritable and physically, were much smaller than the alternatives. These flash drives presented a large security risk to companies since their small size and ease of use could allow someone to smuggle out confidential information.
Larger companies used integrated backup systems which were offered by large multinational service providers, who usually bought hardware equipment from vendors such as IBM, to store core data, but this was usually very expensive. This was regarded as the most reliable form of data storage.
Cloud Storage, public cloud and private cloud, the process of saving data to an off-site storage system which is maintained by a third party. Information in this case is stored in a remote database rather than to a computer’s hard drive or other local storage device. Information in a public cloud can be accessed through the internet and in a private cloud, through the companies’ intranet. Due to fears of data leakage, this method of data storage was picking up slowly and the fear that small cloud storage companies might go bankrupt overnight and disappear with their clients’ information caused companies to not trust cloud storage. The concept of private cloud storage was unfamiliar to the Chinese population and most companies were not aware of it.

(2) Compare the buying practices of small companies versus large companies with respect to backup technology.

Information Technology (IT) solutions were either sold through a systems integrator (SI) or an IT supplier. SMEs mainly used IT suppliers while large businesses and government organizations used SIs. SMEs usually sought out IT suppliers looking for a particular product or solution and the IT supplier that could provide it at the lowest possible price is who they would generally chose, thereby having no loyalty to any one particular supplier. Large companies, on the other hand, generally used SIs. SIs collaborated with IT departments to provide IT solutions and companies were usually loyal to their SIs who were usually familiar with the companies’ needs.

(3) Compare and contrast IT suppliers and system integrators (SI). What are the implications for Datavast and the DSB technology?

IT suppliers and SIs both work directly with a Product Designer or Manufacturer to provide their customers with products and solutions. They both provide solutions to their customers but they have different approaches.
IT suppliers compete based on price and sell products a la carte, they carry a wide variety of products to sell and are not usually very knowledgeable about every product they carry, and they also do not generally make recommendations to their customers about any one particular Product Designer or Manufacturer and they do not provide technical service. SIs, on the other hand are very familiar with their customers’ infrastructures and needs, they make recommendations regarding areas that need improvement and recommend products and solutions to achieve these improvements. SIs generally get the products from the product developer, repackages them into a solution package and resells them to the company, as well as provide technical service for the products.
Product Developers, such as Datavast, rely a great deal on these IT suppliers and SIs to get their product to their customers. With the production of the Data Security Box (DSB), Datavast will need the SIs to recommend it to their customers and show how it will be of benefit to their infrastructure and will also have to educate the IT suppliers on the benefits of this technology to the SMEs.

(4) What is the decision Hao has to make? What are his alternatives? What are the risks of each alternative?

Mr. Hao needs to decide what his target market will be. The market could be segmented by geographical region, industry or by the size of the companies. There was not much difference seen among companies in different geographical areas or in different industries, however when looking at the size of companies it showed that the size largely affected the needs and purchasing decisions in each company. Therefore segmenting the market according to size would be his best alternative. SMEs were very price sensitive, so in order to be competitive Datavast would have to offer the Data Security Box at a low cost. SMEs generally require a standardized product, which would make it cheaper to produce than a more customizable product. The risks involved with this market segment would be that SMEs do not usually employ highly knowledgeable IT personnel and therefore Datavast would have to account for servicing the products after it was sold, an added cost and together with the low selling point would have a lower profit margin, even with a fast selling cycle. Large companies generally used integrated back-up systems, so the Data Security Box (DSB) could be marketed as an added solution for storage of non-core data. The DSB could be sold at a higher price, as it could be customized to each customer. In order to get into this market Datavast would offer to SIs a higher percentage margin than they were currently receiving for the other products they supply, as an incentive to push the DSBs. This in addition to a longer selling cycle would result in a low profit margin for Datavast.

(5) What do you recommend to Hao? Support your recommendations with rationales.

I would recommend that Mr. Hao develop two versions of the DSB, one targeted to SMEs and the other to large companies and government organizations. For SMEs, Datavast should manufacture a standardized product to be sold through IT suppliers and offer a service plan as an add-on. He should also implement a training program for the suppliers of his product and offer an incentive to them for them to push the DSBs. With a faster selling cycle, Datavast should be able to have a quick turnover of cash in order to cover overhead expenses. With the fast turnover from the sales to the SMEs and overhead being covered, Datavast can also produce a more customizable product for larger companies, which require more from their IT products and solutions. These DSBs, even though the selling cycle is longer would provide a higher profit margin for Datavast, as they could be priced according to the specific needs of each customer. References

Hao, M. (2012). Datavast Inc.: The Target Segment Decision. Ivey ID: 9B12A020. London,
Canada: Ivey Publishing.