The Real Savings Behind Server Virtualization

Server virtualization has hit its heyday: 76 percent of companies across a wide range of industries have already deployed server virtualization in the data center or plan to do so, according to a recent survey of 700 firms by the Yankee Group. Only 4 percent indicated they have no plans for virtualization. One goal is clear: Save big. But many businesses fail to calculate virtualization’s real cost savings—and this can lead to poor planning for future hardware, software and service purchases.

The benefits of server virtualization (enabling a single server to function as multiple servers) are now well understood. Survey respondents praised the technology’s ability to reduce data center space requirements, slash staffing and power costs, and save the day at times of natural disaster or hardware trouble. Fifty percent of companies that have deployed virtualization believe the technology has yielded direct cost savings.

Yet among this group that has seen savings, 28 percent had not even attempted to measure those savings, and 25 percent were unsure of how to begin. Among this group, 26 percent indicated they saw immediate gains. But a whopping 39 percent overall were unsure how long it took to see virtualization’s ROI.

Surprisingly, many businesses fail to gather crucial information needed to calculate the total cost of ownership (TCO) of server virtualization, says Yankee Group Research Fellow Laura DiDio, who authored the study. Why? The majority of companies have no processes in place to perform in-depth data collection surrounding virtualization TCO, she says. And many companies, DiDio says, are simply unsure of how to measure it.

Companies must look beyond the costs of servers, storage and network infrastructure, she says: Too many IT organizations fail to measure how virtualization changes spending on security technology, staffing, training, application development, testing, consulting needs and support contracts.

Best Practices

Think beyond hardware and energy costs. To figure virtualization’s TCO, measure all the related costs—such as training, consulting needs and security improvements. Otherwise, you could see low ROI and botch your three- to five-year technology planning.

Review licensing contracts. Some of your software license costs could soar due to multicore processors. Basing pricing on a per-product rather than per-processing core basis may be the safest bet, as the number of processing cores in your servers will only go up in the next few years, Yankee Group Research Fellow Laura DiDio says.

Consider premium support services, if you have more than 1,000 users and multiple remote locations, and if you lack skilled administrators. Support from firms like Avaya, EDS, Hewlett-Packard and IBM can add about 20 percent to the TCO but can prevent costly mistakes in tasks from configuration to maintenance, DiDio says.