The UW System Board of Regents approved the change in August after UW-Madison sought a replacement for its contract with US Signal, which is set to expire in early 2029. Rob Cramer, the university’s chief financial officer, told regents the new arrangement is intended to support research computing and provide backup capacity for administrative computing. He estimated the total cost over the next decade at about $60 million.

Cramer said the deal will increase computing capacity and support more demanding research equipment, including systems that use liquid cooling. Board materials also said the added capacity could help the university pursue grants and contracts.

Data Holdings is a subsidiary of Potawatomi Ventures, owned by the Forest County Potawatomi Community. The company opened a two-story, 46,000-square-foot data center in Milwaukee in 2013. Its customers include organizations in government, health care and hospitality, according to company chief technology officer and general manager Ryan Brooks.

The agreement comes as universities and communities weigh the growth of computing infrastructure amid rising demand from artificial intelligence. Data centers can require substantial energy and water resources, and proposals for large facilities have become a point of debate in Wisconsin. Data Holdings’ Milwaukee facility is much smaller than some proposed projects in the state, including a Meta facility planned for more than 500 acres in Beaver Dam.

UW-Madison has also maintained smaller, specialized data centers on campus, including facilities serving computing programs and research that processes satellite data and produces weather models. University spokesperson Greg Bump said those campus operations will continue to serve particular research and administrative needs.

Kyle Cranmer, a physics professor and director of UW-Madison’s Data Science Institute, said some research benefits from keeping data and computing resources close at hand, while centralized facilities can be more cost-effective and energy-efficient for other projects. Artificial intelligence is contributing to increased demand for data center capacity, he said, though not every AI application requires a large facility.

The university has expanded its AI work through initiatives including RISE-AI and a new College of Computing and Artificial Intelligence. But campus leaders and faculty have also raised questions about how broadly AI should be adopted, including concerns about privacy, ethics and students’ views.

Interim Chancellor Eric Wilcots said the university would not take a position on large data center proposals across Wisconsin, but could contribute expertise to public discussion on energy and water. Faculty members have questioned whether the university should assume that broader AI adoption is inevitable, and urged leaders to consider when the technology is useful and what consequences it may bring.