Metro Pulse/Cover/The Technology Issue

Comment
on this story

King of the Blogosphere
Glenn Reynolds: the most famous Knoxvillian you never heard of

Reinventing Wheels
Japanese hybrids are hitting the road, even here

Digital Crossing at a Crossroads

A look at the two-year-old technology facilitator experiment downtown

by Barry Henderson

Digital Crossing has its charms, its inestimable value to those around it, and its difficulties in managing itself all by itself. For all of its growing pains, it's looking ahead to greater things in a market for its services around Knoxville that is now steadily growing.

The computer rack space in the state-of-the-art data center that's at Digital Crossing's core is about 40 percent leased, and its office space is about 60 percent occupied.

Although that's enough to keep it at the break-even point, and its tenants are largely more than satisfied with its services, Digital Crossing's usage and revenues are a far cry from what was predicted as it was being developed.

There was the expectation, back when the dot.com bubble was still inflating, that such a center would derive enough revenue to pour some back into this area's info-tech coordinating agency, Technology 2020, its parent organization. With money and assistance from its founders and backers, including TVA, the city of Knoxville, the state of Tennessee, Lockheed Martin Corp., Science Applications International Corp. (SAIC), and the Community Re-Use Organization of East Tennessee, it was opened in October 2000 in the Summit Place building downtown.

As a matter of timing, Digital Crossing came on line just as the dot.com bubble was bursting. That unanticipated development can be looked at two ways, according to its executive director, Dennis Corley. It was bad timing in that there were suddenly fewer potential clients for its services, Corley says, but it was fortunate in that it didn't get open a year earlier and acquire tenants who were gone with the wind in late 2000 or 2001, leaving bad debt in their dust.

"Our customers are either start-up companies who have strong business models and have survived and thrived in a tough market, or they are regional or national companies of some significant size and/or maturity..." Corley says.

Yet, at the present level of occupancy, the Crossing needs new marketing ideas and should be advertised and sold more broadly, he says. "We refer to this as a regional asset, not just a downtown asset," Corley says.

Rhonda Rice, the Knoxville Area Chamber Partnership's vice president for economic development, says Digital Crossing's customer base needs work. The market is strong now for companies looking for reliable and secure data systems, both for operating and backup purposes, which Digital Crossing offers. And such systems are almost prohibitively expensive to install internally, especially for small private businesses.

The steep expense is in the sheer extent to which Digital Crossing's design and its own technological resources, representing a $1.8 million investment, allow for what Corley calls optimum safety and security for client data. Digital data needs extremely reliable electric power, for instance. At Digital Crossing, two switchable KUB substations provide electricity that is further stabilized through transformers. A diesel generating system backs up that source, with batteries behind the generator. The redundancy allows for consistent electric power, virtually free from outage risk, surges, or brownouts that could damage vital business data.

The Crossing's data center also provides rack space for business computers that must have instantaneous Internet access and the capability for massive blocks of data to pass through fiber optic cable connections.

Two large tenants, E. W. Scripps' new media unit and Pilot Oil Co., maintain "mirror" systems at Digital crossing to insure that they can continue seamlessly to run their computer applications there in case of a disastrous outage at their main operating locations.

URS Corp., the huge environmental service, architecture, engineering, and construction firm, has an Oak Ridge subsidiary, URS Solutions Host, that builds applications for clients on site at Digital Crossing. In a sort of reversal of pattern, it has its backup system in its Oak Ridge office, according to Don Nabb, its business line manager, who says, "We've had no problems [at Digital Crossing] at all."

Telecom and software companies make up the rest of Digital Crossing's client base. Alan Hill, who operates a telecommunications effort called ClearPath Group and serves as a telecom consultant through his own LookUp Solutions firm, says Digital Crossing gives him a downtown location with the conference room space necessary for an efficient group operation. Essentially, what Hill's services involve, he says, "fill complex telecom needs for companies who have no fulltime telecom manager."

That usually means smaller businesses or those just getting cranked up.

"We're looking at ways to court more small businesses," the Chamber's Rice says. She says that, while Digital Crossing "can be considered a recruiting tool" for new business prospects, "we've been conducting meetings with existing businesses, explaining how Digital Crossing can help them."

Corley agrees that the Crossing's appeal to small businesses may be its greatest marketable asset. He's also looking at the possibility of marketing the Crossing's conference center, charging users other than tenants or sponsors for its use.

The $800,000 budget he has for the 2003 fiscal year will be met by current revenues, he says. But the sweetheart leasing arrangement the Crossing has from the building's owner, TVA, is escalating annually under its original terms. So some revenue growth is necessary.

"We would certainly miss it if it went away," Rice says of the Crossing, which Corley says has been home to 73 jobs, both new and relocated to downtown, with an average annual salary of $53,000, and $10 million in corporate property added to the tax base. "That is a success," Corley says.

Corley's salary is paid by SAIC, the Oak Ridge IT presence that lent his services to Tech 2020 six years ago. He came to Digital Crossing at its inception, and the work of Corley and his staff is roundly praised by such tenants as Jeremy Crawford, chief of MarketLinx, the fast-growing real estate listing exchange service with offices in Farragut and its computer network lodged in the data center. "They've gone beyond the call for us," Crawford says.