Data Centers Reimagined: Why Mid-Market Firms Are Reassessing Infrastructure Strategy – NYI
By Lane F. Cooper, Editorial Director, BizTechReports
With artificial intelligence, edge computing, and real-time analytics continuing to push the capacity of digital infrastructure, mid-market enterprises are often caught between consumer-grade cloud services and enterprise-scale solutions to meet the emerging demands of their business requirements. Long considered secondary targets for infrastructure providers, leaders in these organizations are now confronting the limitations of one-size-fits-all cloud models and rediscovering the strategic relevance of regional data centers.
The shift is not a matter of nostalgia or resistance to modernization. Rather, it reflects a deeper understanding of cost structures, accountability, and the practical realities of operating hybrid environments in an era of ballooning cloud bills and increasingly fragile IT control. So says NYI Co-founder and COO Phillip Koblence.
“There is a growing recognition among mid-market leaders that their infrastructure strategy must now be tailored to fit not only individual workloads, but the evolving technology needs of their business,” he says.
Market Drivers: Cloud Saturation and the Cost of Scale
For many mid-market companies, the past decade has been shaped by the prevailing narrative that modernization equals cloud migration. In pursuit of agility and cost predictability, IT leaders embraced public cloud platforms under the promise of reduced CapEx, simplified infrastructure management, and infinite scalability.
But that narrative is beginning to falter.
“What started as a push for efficiency has become a source of financial strain,” says Koblence. “Cloud sprawl—where workloads proliferate without governance—has led to bloated bills, limited visibility, and rising operational overhead.”
Analyst reports and customer case studies alike have documented a growing wave of cloud repatriation. Companies are discovering that long-running, consistently used workloads—including many categories of enterprise systems, transaction processing-intensive workloads, and compliance-heavy applications—often cost significantly more to run in the cloud over time than in a colocation or on-premise model. These revelations are prompting IT leaders to reexamine what workloads truly benefit from cloud elasticity, and which are better suited to fixed-cost environments.
The Reemergence of Regional Providers
This reassessment by mid-market executives is driving renewed interest in regional data center providers—smaller, high-touch operators that offer colocation and infrastructure services in dense metropolitan hubs.
NYI, with facilities at 60 Hudson Street in New York and in Oak Brook, Illinois outside Chicago, positions itself as one such alternative. Unlike hyperscalers or multinational REITs that specialize in digital real estate, regional providers often take on a more consultative role, offering services that fill critical capability gaps for mid-sized enterprises: racking and stacking, hardware procurement and maintenance, managed connectivity, and proximity-based support.
The value proposition isn’t only technical—it’s operational. As Koblence notes, mid-market firms frequently lack the internal staffing to support complex infrastructure decision-making and deployment. That opens the door for data center operators to act as strategic partners rather than just landlords.
“In the event of an outage or performance issue, you’re not opening a ticket in some faceless system,” he says. “You’re calling someone who knows your business and is located in the same facility as your equipment.”
Vertical Demand and Technology Ecosystems
The appeal of regional data centers extends beyond cost control. Industry-specific needs around latency, data sovereignty, and regulatory compliance are also fueling demand—especially in verticals such as finance, legal services, and education.
In major markets like New York and Chicago, carrier facilities have become focal points for edge distribution. The rise of content providers, gaming platforms, and AI applications requiring low-latency access to end users is creating a gravitational pull toward these regional interconnection hubs.
Beyond this, regional data center providers are emerging as direct infrastructure partners for mid-market companies across a range of verticals—they’re also becoming essential engagement points for the broader technology ecosystem. These relationships enable a diverse set of technology vendors to deliver localized, high-touch services for mid-market customers that would be difficult to scale otherwise.
Independent software vendors (ISVs), managed service providers (MSPs), and even global infrastructure firms are increasingly relying on regional operators to strengthen their local presence.
For example, global “bare metal” providers are leveraging partnerships with regional data centers to establish in-market footprints that meet the growing demand for low-latency, high-compliance environments—without the overhead of building and managing their own facilities.
For these types of vendors, regional data centers serve as critical extensions of their service delivery models. In addition to space and power, they fill a crucial consultative role in helping partners fill technical and logistical gaps.
“We attract small to midsized companies that benefit from our ecosystem of trusted partners,” he explained. “This approach allows ISVs and MSPs to embed themselves more deeply in local markets, while offloading the operational burdens of infrastructure management.”
Infrastructure Literacy as a Competitive Edge
A less visible, but no less significant trend emerging from the data center resurgence is the issue of infrastructure literacy. As cloud platforms abstract more and more of the computing stack, a generation of engineers is entering the workforce without exposure to the fundamentals of physical infrastructure.
“In many organizations, systems administrators have become GUI operators,” says Koblence. “They know how to use dashboards and write infrastructure-as-code, but they’ve never physically touched a server.”
This knowledge gap poses strategic risks. As AI reshapes the IT workforce—starting with code-heavy roles—companies that retain or regain hands-on infrastructure knowledge may be better positioned to adapt to rapid technological shifts. Industry foundations and alliances like Nomad Futurist, which was co-founded by Phillip, are beginning to respond with education programs, but for now, data center operators with institutional memory and engineering depth may have an edge in both talent and trust.
For CFOs, CIOs, and operations leaders in the mid-market, these developments suggest a revised framework for infrastructure planning because hybrid solutions are not optional—they are inevitable.
“The future of IT infrastructure lies in hybrid deployments that blend cloud and colocation that are not based on ideology, but rather on workload dynamics. The distinction between bursty, exploratory compute and predictable, consistently used, heavily compliant workloads is paramount,” observed Koblence.
Moreover, In times of outage or change, access to on-the-ground support matters. Regional providers are betting that mid-market firms will prioritize this kind of proximity over theoretical economies of scale.
Finally, stated Koblence, technology CapEx is making a comeback.
“Especially in volatile economic cycles, the ability to amortize infrastructure investment and avoid unpredictable cloud billing is regaining appeal—particularly for firms managing tight margins or high regulatory burdens,” he said.
Outlook: Data Centers, Recast as Strategic Infrastructure
Mid-market enterprises, long treated as a peripheral opportunity for traditional cloud and colocation providers, are beginning to define their own paths.
As that happens, infrastructure decisions are becoming less about product selection and more about operational alignment. The providers that thrive in this environment will be those that can translate complexity into clarity—offering not just racks and power, but insight, relationships, and shared accountability.
“In that sense, regional data centers aren’t just making a comeback. They’re being reimagined as critical infrastructure for companies that want more than scalability—they want control,” concludes Koblence.
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