Server virtualization costs in the real world

Of course, these figures assume that you are starting from scratch. But hardly anyone is starting from scratch nowadays. So what's the cost and ROI to virtualize an existing datacenter?

If you have a 20-server datacenter with a 2- to 3-year server refresh cycle and upgrade the existing physical servers with new physical servers, you're buying 8 physical servers every year at a total cost of $40,000. Virtualizing all your servers instead costs $100,000, taking 2.5 years to recoup the initial virtualization investment -- the same as your refresh cycle. "Of course, organizations don't want to see an ROI that equals their hardware refresh cycle," Wolf says.

If you don't have to invest in a new SAN, then the recoup time is just more than a year. Indeed, the single largest outlay for virtualization is shared storage -- a virtualization requirement. If you don't have shared storage, you have to build an iSCSI SAN, a Fibre Channel SAN, or a network file system. You'll need to refresh your host servers every two or three years, but you can keep the other SAN hardware longer, so over time, your refresh costs per year will be lower in a virtualized environment than in a physical one; how much depends on a bunch of factors specific to your environment, but it's a safe bet that you won't refresh your SAN any sooner than every 5 years, and likely less often.

Virtualization's costs aren't so predictable

Even if the basic numbers tell you that virtualization's ROI is neutral or positive, note that the actual cost of virtualization varies greatly on the path you choose.

Costs that get short shrift in the financial forecasting process include software and hardware management. Because virtualization changes the management scenario, you might need different lifecycle management tools. Many companies also upgrade to Windows Server 2003 or Windows Server 2008 Data Center edition when they virtualize, says Burton's Wolf. "That has to creep into the equation."

Also, you'll likely need to bring in a consultant to review the virtualization architecture, no matter what size the deployment. And then there's the cost of actually migrating physical servers. Consulting and migration fees vary widely.

The good news is that a 20-server virtual environment probably won't need a special virtualization staffer who commands at least $80,000 or even an additional sys admin, after everything is up and running. Virtualization vendors understand that small and midsize businesses often employ a single admin who wears many hats, so they've made their tools as easy as possible to learn. "One admin could get up to speed on virtualization," Wolf says. "Often, small organizations will develop their own talent there."