Cloud computing, in which companies move key services out of their office servers to outside locations run by Google and other giant tech providers, isn't just consolidating business computing in the hands of specialists. It's also creating more demand for local data centers to handle rapid connections among smaller businesses and more complex service networks, says Keao Caindec, a 1991 Wharton grad who was back in Philadelphia recently, making his rounds as chief marketing officer for 365 Data Centers, which operates cloud services centers in Philadelphia and 16 other tech markets far from Silicon Valley.

"New business applications - for example, medical imaging - are driving the need for content to move closer to the end user," says Caindec. "Every 60 miles represents one millisecond of latency (delay) over the fiber lines." A few milliseconds can be the difference between making an application efficient at linking employees, customers and custom data services, or useless.

The company said yesterday it has raised $16 million in new expansion funding, from its earlier investors Crosslink Capital and Housatonic Partners, plus up to $55 milllion in credit from Fortress Investment Group's credit unit. That will help 365 try to set itself apart in a fast-growing data-center environment that includes Philadelphia-area facillities run by companies like Maryland-based TierPoint (new owner of the former Philadelphia Techology Park data center at the old Navy Yard), Digital Realty Trust, Atlantic County-based Linode, and others.

Up til now, "data center providers have tended to provide space and power," said Bruce Cronauer, 365's business development chief. Customers, including software providers and network operators, want to sell their own small-business clients access to servers that are near their own offices, with added services like compliance auditing ready to hook in for users' convenience and providers' profit.

"This is the notion of a hybrid cloud data center that is more attractive to midsized businesses, which are looking to migrate to the cloud, but not to go all in," Cronauer said. "You may move some of your hosted Microsoft Exchange or Sharepoint or e-mail into a cloud environment, while your customer-relationship management goes to Salesforce.com -- but your core applications that run your business go to our data center that's close to your office, that you can get to physically."

It works for Inerail, a Wilmington-based firm that acts as a sort of connectivity broker for small and midsized companies. "Our clients are looking for everything from e-mail for five or 10 employees, to high-speed wholesale services with Microsoft and Netflix," said Inerail boss Chris Rogers. "We rely on partners like 365 to supply those services. You see they are located in a part of town with a lot of colleges and hospitals, which have a guaranteed power supply. Data centers love to be near hospitals."