GRAND RAPIDS — Growth in the number of companies outsourcing their information technology management led US Signal Co. LLC to plan the development of a new data center outside of Detroit.
Slated for a site in Van Buren Township in western Wayne County, the 100,000-square-foot data center would become the Grand Rapids-based US Signal’s fourth in Michigan and eighth in the Midwest. US Signal targets the data center to open in the fourth quarter of 2019.
US Signal has been running out of space at a data center in Southfield “mainly due to a very large push by a current and future customer base to get out of running their own data centers, get out of worrying about the facilities and the electric power and the up time, and a lot of the nuances of that so they can focus on their core business,” said Dave Wisz, the company’s executive vice president of operations.
One driver of the trend is the cost and resources required to operate and maintain I.T. facilities that “are kind of on the periphery of the business or potentially aren’t aligned with what their core functions as an operating organization are,” Wisz said.
“Say you’re a car parts manufacturer. You want to be the best car parts manufacturer out there. You don’t want to have to focus on necessarily having to run a physical building infrastructure,” he said. “In our consistent technical evolution, there are ways to reduce those cost centers.”
As well, businesses can purchase I.T. services on a shorter-term basis, pay for it monthly, “and be able to be agile and evolve as quickly as technology evolves,” Wisz said.
To illustrate the trend, US Signal cites its own 2018 resiliency study that shows clients increasingly are using third-party data centers and cloud service providers to manage their I.T. on a daily basis.
In another indicator, an annual survey of global outsourcing by Deloitte that involved more than 520 executives in the U.S., Europe and Asia noted that 93 percent of respondents are considering or adopting cloud computing.
The security and compliance issues that come with operating an in-house data center are serving as a driver of the outsourcing movement, as is the need to recruit and retain the talent to run I.T. departments and keep up with constantly changing technology.
“I.T. to the business anymore is definitely trying to be an organization or a group within a company that provides value in moving the business forward,” said Amanda Regnerus, executive vice president of marketing and product development at US Signal. “You’ll find a lot of research around companies that have an I.T. outsourcing initiative. They want to take those FTE (full-time equivalent) dollars and realign those to the business to help in their digital transformation as far as application development and the initiatives that organizations have to service customers better in terms of applications or services.”
At Holland-based I.T. staffing firm Paragon Recruiting LLC, principal Beth DeWilde has seen third-party vendors trying to add staff as more companies gradually migrate to the cloud and generally outsource their operations. The movement is not focused in any size of company or particular industry, and “depends on where they are in their technology capital cycle,” DeWilde said.
Perhaps a bigger driver for outsourcing has been difficulty attracting and retaining staff, DeWilde said.
“Companies are saying maybe our better option is outsourcing this function instead of continuing to try to attract and to retain an individual in that position,” she said.
US Signal declined to say how much of an investment the new data center represents, other than “it is a large investment and definitely reiterates our continued investment in the state of Michigan and economic growth in the state,” Regnerus said.
In addition to the four Michigan facilities, including two in the Grand Rapids area and one in Southfield, US Signal has data centers Oakbrook, Ill., Madison, Wis., and Indianapolis and South Bend in Indiana. Data centers are at least 200 miles apart and operate on separate power grids to minimize potential disruptions from natural disasters.
US Signal also operates more than 14,000 miles of optic fiber in 10 states. The company employs about 200 people and has clients nationwide, about 70 percent of which are based in the Midwest.