Businesses move to off-site computer-service operators

When floods of data - linking patients to doctors, gadgets, images, and medicines - used to surge through two aging computer centers near Thomas Jefferson University Hospitals' Walnut Street headquarters, senior director Paul S. O'Connor Sr. worried his network could be "one waterpipe-break away" from paralysis.

That's why, over the last two years, Jefferson contracted two off-campus computer-server operators to link its network to Verizon, Comcast, and a half-dozen specialty telecom carriers.

The computer-service operators are Philadelphia Technology Park, at the former Navy Yard in South Philadelphia, and SunGard's facilities in the old North Broad Street factory district.

"To build our own facility wasn't financially or logistically feasible," said O'Connor, citing data demand and the need to connect to smartphones and other proliferating work tools. Replacing its old system with two "resilient and redundant" networks helps Jefferson exploit competition among the rival carriers, keeping costs lower.

Around Philadelphia, Penn Medicine, big law firms such as Fox Rothschild L.L.P. and Drinker Biddle & Reath L.L.P., and financial companies such as Legg Mason Capital Management have also moved away from in-house data centers to off-site operators that can connect to a choice of commercial networks.

So too are small and midsized businesses, which has prompted Comcast Corp. to grow beyond its residential cable system and extend its Comcast Business Services, now one of the company's fastest-growing units.

At Penn Medicine, back-office information-technology functions are managed by Computer Sciences Corp. (CSC) at a Christiana, Del., computer facility.

But Christiana, just 50 minutes down I-95, is too far for the networks that transport e-mail, heart images, and other extra-time-sensitive data, says John P. Donohue, associate chief information officer at Penn Medicine.

Philadelphia Technology Park's South Philly site is close enough to run those functions ungarbled, so that's whom Penn Medicine hired when it closed its data center at 3440 Market St. last year.

"Data centers in general are moving to lower-cost or lower-density locations, as well as to the 'cloud,' " said Stephen S. Tang, who runs the University City Science Center, landlord for 3440 Market and nearby offices. "Another issue is data security. When the hurricane hit us last year, a lot of people began seeking alternative locations."

Comcast linked the Navy Yard business center and its 10,000 workers to Comcast's business fiber network in January - a move that was welcomed and assisted by the center's landlord, Liberty Property Trust.

"This [the Navy Yard] has been a Verizon-dominated market. Competition from Comcast improves that," said Liberty vice president Brian Berson. When the Navy Yard was a government facility, Comcast never bothered to stretch its cables past I-95 and the rowhouse neighborhoods of South Philadelphia. The company changed its focus after Tastykake, Urban Outfitters, GlaxoSmithKline, and other companies opened at the Navy Yard in recent years, and as Philadelphia Technology Park expanded its clientele to include many regional companies that Comcast wants to connect.

"Comcast is a big part of our growth for the future, and their presence has made it easier to go after some other markets they serve, like South Jersey," said Corey Blanton, chief operating officer at Philadelphia Technology Park.

Comcast has focused more on business services as the growth rate for residential TV has slowed. The company plans to expand from regional to national clients later this year, said Mike Louden, vice president of business sales at Comcast Business Services and one of a number of former Verizon managers who are helping build Comcast's rival service.

Computer services matter more to business as smartphone applications, "Big Data" Internet targeting, and 'cloud'-based services have come to define corporate America's approach to workers and customers.

"Information technology used to be this thing you had in the back of the company. But now, you can't have a competitive business, even for a hospital or an educational institution, unless you're really good at IT," said Michael Dell, founder and boss of Dell Computer, in an address Thursday at Philadelphia's Franklin Institute. "IT has become the differentiator, and it's gobbling up the economy, as it moves into the mainstream of how all business is done."