Virtualization is a technology that decouples hardware from the software functionality of a computer or server. Server systems still exist independently, with their own CPUs, memory, disk space, and Ethernet, just as they did when they had their own physical box.
However with virtualization, an independent server system becomes data, existing in a flexible environment that allows it to be provisioned, updated, or even moved from one physical server to another almost instantly.
When it comes to expending capital on hardware, this has a major impact. Server consolidation means that where there once may have been dozens of individual physical boxes, there may now be only a few.
For businesses of all sizes, this means a favorable adjustment on capital costs related to server hardware.
Virtualization technology also offers options for small and medium size businesses (SMBs) that want to avoid using capital for server hardware.
It is now unnecessary for smaller organizations that have only a few servers to own and maintain their own hardware. Independent server environments can now be hosted and virtualized, with the maintenance and monitoring of the system outsourced to a data center.
For the SMB, this means IT budget for servers can become an operational expense matched to the capacity requirements. Hardware refresh costs are eliminated.
Additionally, instead of trying to maintain an on-premise server environment in a less than optimal physical location, the servers now exist is an efficient environment that runs with maximum uptime, redundancy, and security.
For organizations that operate internal data centers, the benefits of virtualization technology and server consolidation are clear.
VMware, a major provider of virtualization solutions, has reported a consolidation ratio of better than 10 to 1 by using their solutions. This means 90% fewer physical servers to be purchased out of a capital budget.
In addition, server consolidation brings higher capacity use and greater energy efficiency. Many data centers have hardware that runs under capacity, using less than half the memory and disk space of individual servers. VWware reports being able to increase this utilization by 80% through consolidation of inefficient servers into environments that run at higher capacity.
This also lowers the operational costs of the data center. Housing, energy use, and cooling cost are all reduced when there are far fewer physical servers to maintain.
Using server hosting with virtualization technology shifts budgets from capital costs to operational expenses.
Capital outlay for server hardware is eliminated, as well as costs associated with cooling and housing server equipment onsite.
However, a monthly operational expense will be incurred based on how much capacity requirements.
At first look, some business owners are wary of taking on an additional operational expense. However, because of the rate at which technology changes, it is worth considering. Although there is a monthly fee for hosting, a business will not get stuck with legacy equipment that becomes outdated before real ROI can be realized.
With the constant increase in the amount of IT infrastructure that is accessible via the Internet, owning hardware infrastructure has questionable value, both from a management and cost perspective.
When it is time to update server hardware, most organizations will benefit from a cost analysis to compare—both short and long term—what budgetary impact of hosting and virtualization will be.
Written By: Scott Yoder