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State contract for IBM’s new facility is a boost for region’s infant tech sector

Buffalo’s undersized tech sector has gotten a boost with word that IBM Corp. has been selected to receive a key state contract that could bring about 100 jobs to the new technology center in the Key Center.

The facility is expected to result in 500 new jobs in the area by September 2021. While it still needs to be formalized, the state contract to provide technical support and solutions for state agencies will help IBM reach that goal.

The IBM Buffalo Innovation Center is currently housed in temporary space in the Key Center’s north tower. The company plans to move this summer to a permanent location on the top six floors of the building’s south tower, formerly headquarters of Delaware North Cos.

From there, IBM will offer a variety of clients the ability to crunch the endless streams of data companies collect from various sources, and use it to improve their businesses.

“We’re drowning in data. The key is using that data effectively,” said Jay Goodwyn, the center’s executive director.

Information from sources such as store loyalty cards and even the ubiquitous traffic cameras is valuable to businesses and government agencies if the important can be sorted from the inconsequential.

Someone has to make sense of it all, and why not have it done in Buffalo Niagara, where the quality of life is high and the cost of living relatively low?

This is the type of industry that requires specialized skills. The shortage of experts in the field will require hiring out-of-towners or ex-pats, but even that may change as the company develops relationships with colleges across upstate: University at Buffalo, Rochester Institute of Technology and the University of Rochester, along with Cornell University and Clarkson University.

This is just the incentive for UB, which does not have a specific data analytics major within its computer science and engineering school, to develop one. Until such time, the company will have to continue recruiting data analytics experts from Virginia, Seattle, Houston and elsewhere.

As News business reporter David Robinson wrote Tuesday, using information from the U.S. Bureau of Economic Analysis, the information sector is one of the fastest-growing parts of the national economy. Yet, it accounts for less than 3 percent of all economic activity in this region, compared with 5 percent nationwide.

The IBM technology center is being built with $55 million in state funding through Gov. Andrew M. Cuomo’s Buffalo Billion economic development initiative. In turn, the company has pledged to create 500 jobs, either direct IBM employees at the center or workers at partnering companies that will provide services to the center.

The Western New York Regional Economic Development Council has noted the region’s lack of entrepreneurs and its small technology sector. Jump-starting the industry is neither easy nor cheap. Convincing IBM to locate its innovation center here meant the state agreed to invest $25 million to buy, build out and equip the six floors in the Key Center to be used by the IBM facility, and spend an additional $30 million to acquire the software the center will use.

Howard Zemsky, the development council’s co-chairman at the time and now CEO of Empire State Development, said investments in IBM and life sciences companies address the fact that the region was “punching below our weight” on the innovation economy.

Buffalo will never be a tech heavyweight like Silicon Valley, but the new emphasis should start tipping the scales.