The increasing computing power needed to carry out day-to-day business functions has pushed more and more companies to turn to data center specialists to provide network connections, capacity and sometimes Web operations support.

Houston has benefited from the growth that has made Texas the second-biggest market in the country for data centers, according to industry analysts. These operations provide computer server space and critical backup service to keep clients running round the clock, even in the event of a disaster,

Last winter, executives at Universal Weather, could see the Houston-based company was getting close to outgrowing its computer network. They decided to act before the company experienced computer problems, which would compromise the service required by their clients, who fly corporate jets worldwide. They rely on Universal for crucial in-flight information, said David Feller, senior manager of infrastructure.

"Our infrastructure wasn't enough," he said. "A lot of it was older, at the end of its life."

Universal Weather did what many companies are now doing. To save money on new equipment and to get more reliability in the case of a power outage, it outsourced its computing power needs, choosing CyrusOne, a Houston company that is among a handful of data center businesses in Texas.

As corporate computing power needs have grown — especially in the energy industry — the data center business has thrived in Texas, said Daniel Golding, an analyst at New York-based Tier 1 Research.

In a report earlier this year, Golding found Texas came in second only to California in the number of data centers. Data center demand tends to follow the needs of the dominant regional industry.

Silicon Valley drives the California market. Energy does in Texas. Financial markets push the No. 3 data center market covering New York and New Jersey, and government demands in Washington, D.C., have made northern Virginia No. 4.

Growth in the Houston area industry has caught the attention of investors and spurred acquisitions, Golding said.

In July, the Boston-based private equity firm Abry Partners snatched up CyrusOne. Two weeks ago, Pennsylvania-based SunGard bought VeriCenter. In May 2006, Dallas-based The Planet picked up a $175 million investment from a California private equity firm and purchased Houston's EV1 data center and Web-hosting business.

Katrina's significance

Although Dallas remains the leading data center city in Texas, low real estate costs and convenient access to electricity make Houston a friendly environment for data center companies, said Rich Miller, editor of the online publication Data Center Knowledge.

Fear and government regulation also are driving the move to data centers. Hurricane Katrina made companies realize the importance of having their data backed up off-site. Sarbanes-Oxley prompted businesses to put in continuity plans in case of a power outage, terrorist attack or natural disaster, said Golding.

"Power reliability has gotten a lot of attention after the 2003 East Coast blackout," Miller said. "That's very important for customer backup."

In hurricane-prone Houston and more stable climates, data centers feature walls and roofs built to withstand hurricane-level winds, and backup generators to provide power in the case of a black-out.

The high cost of building and operating data centers, which use a lot of electricity for servers and air conditioners, makes it worthwhile for companies to outsource to the specialists.

CyrusOne has tried to attract oil company business by going so far as to feature backup trading floors within its weather-proof building. CEO David Ferdman said the company also is attracting a lot of business from banks and hospitals, two more industries with big data needs.

"We look for companies that have a significant dependence on automation," Ferdman said.

This article was originally published online at The Houston Chronicle

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