What gets Matthew Porter, the CEO of Contegix, most excited about virtualization is the technology's ability to solve his customers' problems\u2014most importantly, their needs for better hardware utilization and speedier server provisioning and application delivery."If it wasn't doing that, there's no reason why we would ever do it," says Porter, who is also the founder of the St. Louis-based managed hosting provider. "We're not using it because it's an industry buzz word or it's showing up in a magic quadrant."Contegix provides the equipment and manages the infrastructure and operating system for its customers, who pay monthly fees for the services. The hardware is dedicated for single-customer use, so there's significant advantage for any customer who uses a server to its utmost capability. Because virtualization technology lets an administrator carve up a single processor to run multiple distinct copies of an operating system, the customer is able to use a greater percentage of the server's processing power. But, the virtualization benefit that is becoming perhaps even more critical for Contegix is the opportunity to provision servers and deploy applications and upgrades far more quickly\u2014a capability that is especially important for its partners and vendors that sell software as a service (SaaS). Sydney, Australia-based Atlassian Pty Ltd., for instance, offers its integrated Jira Studio development tool suite as a hosted service that can be deployed within 24 hours, or considerably less. Customers buy the suite from Atlassian, then Contegix, its partner, gets them up and running. Once it has a virtual machine image of Jira Studio to use as a template, Contegix can roll out the tool suite to new customers with ease."With the physical host already there, we can take that application and deliver it, from start to finish, with all the components that it needs, in 10 to 15 minutes," says Porter.Contegix dedicates hardware exclusively to Atlassian's Jira Studio users. Multiple customers may run the tool suite on the same box, but each has its own virtual machine image. "As their needs grow, it's easy to move them to larger boxes. There's a much greater degree of flexibility than without virtual machines," says Michael Knighten, manager of hosted services at Atlassian. The flexibility extends to fail-over, he added, because the standardized virtual images can easily be replicated and switched.Tom Bittman, an analyst at Gartner, says service providers used to promote superior practices and processes, but today, they're increasingly differentiating themselves based on quality of service and agility. Virtualization plays into that trend, because it can help users to deploy servers 30 times faster, on average, he added."That has changed the nature of the business," Bittman says.Porter estimated that, a year ago, no more than two percent of his company's infrastructure was virtualized. That figure is now approaching eight percent and will likely increase to 15 percent to 20 percent over the next 12 or 18 months, he predicts. Customers range from a five-person software development startup to Fortune 100 companies, Porter says.Contegix uses VMware's products for corporate customers that want enterprise-type features, such as high availability, through the vendor's VMotion technology, which gives users the ability to move running VMs from one physical server to another. The hosting provider uses Xen open-source technology to provide services more cost effectively to SaaS customers and other users that don't need to see the virtualization layer."Internally, we need much more fine-grained access to the underlying virtualization subsystems, because we're developing into that. We're not just developing on top of it," says Porter. "To SaaS enable and deliver an application in 10 to 15 minutes after the order is placed, you actually have to be able to get into the underlying layers."Third-party tools also help Contegix in its virtualization environment. The hosting provider uses 3tera Inc.'s AppLogic for dynamic scheduling in the SaaS environment. It purchased Hyperic Inc.'s HQ Enterprise for monitoring and delivering performance metrics across its virtual and physical systems, effectively replacing its problematic SNMP-based system. "That was never going to drive value for our customers\u2014us becoming SNMP experts," says Porter. "We wanted to become experts in taking the metrics that we got from the systems and providing answers to our customers."Contegix promises its customers round-the-clock, year-round access to engineers, a 30-minute hardware replacement SLA, and an "unprecedented" level of monitoring. Hyperic understood those needs and has been up to the task, according to Porter.But virtualization may not be the right answer for every workload. Environments with high I\/O requirements are not good candidates, Porter says."If you're already using hardware to the utmost capability, and that system is very intense on the resources\u2014the CPU, the RAM, the hard drives\u2014it is not going to make sense to virtualize it. You're going to get a performance penalty hit," Porter says. "There's no reason to add that extra layer onto it."