Server Virtualization

Virtualization provides companies with cost avoidance savings as it improves the use and scalability of the entire infrastructure and avoids having to purchase additional hardware. It helps IT to be more responsive and agile when handling changing business needs. Virtualization is not limited to servers, but also is applicable to desktops, network, application, and storage environments. Implementing virtualization is an innovative way to use newer technology to reduce costs. Even though it is newer technology, server virtualization has similarities to the old days of partitioning mainframes.

Server virtualization saves money on rack space, power and cooling requirements, maintenance and support, and disaster recovery. Virtualization consolidates an average of six servers, but it can be 15 or more. Server virtualization is now mainstream technology and most IT shops use it to streamline capacity management, use resources more efficiently, save money, and provide improved scalability. In fact, just about every company interviewed had implemented some degree of server virtualization and had realized significant cost reductions. Many companies estimated that server virtualization saved them at least 35 percent of their server costs. If you have not investigated and started using server virtualization, you need to do so. Although it will require an initial upfront investment, virtualization savings are not necessarily short term (unless you are at server capacity), but more a long-term cost of ownership savings and cost avoidance when buying additional servers in the future.

Be sure to investigate the impact of virtualization on all your software licenses as it could increase or decrease your license costs depending on how you have agreements structured. You may be able to reduce the license costs for applications that you rarely access. Microsoft has made some modifications in software licensing to accommodate the move to virtualization. In September 2008, Microsoft changed the 90-day reassignment rule except for server operating systems. Previously, you had to assign server and other software to one server for at least 90 days before you could assign it to another server. For a virtualized server farm environment with load shifting between multiple servers, you would need to assign licenses to both servers, making it cost prohibitive. The new terms allow some Microsoft products to be assigned within a server farm in up to two data centers as long as they are in time zones no more than four hours apart. For example, if you were running Microsoft Exchange Server on a Virtual Machine (VM) and wanted to migrate the VM to two other servers in the farm, you would need three exchange server licenses and three Windows server licenses, which would be very expensive. With the rule change, you only need one exchange service license, which is a 66 percent savings, and enough Windows server licenses to cover the operating system running on the physical server and the VM machine. Therefore, you are able to take advantage of the VM failover capabilities and increase the utilization rate and capacity of the machines. From a licensing perspective, you can see by these examples that moving to a VM configuration can be confusing.

Virtualization also affects the type, or edition, of Microsoft licensees that is the most cost-effective for your needs. For example, Windows Server 2008 is available in five different editions with significant cost variation: Standard, Enterprise, Datacenter, and two other niche methods. The Standard edition comes with one physical instance and one virtual instance. The Enterprise edition has one physical instance and up to four virtual instances. The Datacenter version includes an unlimited number of operating system instances. If you plan to host more than three VMs on a server, the Enterprise or Datacenter editions are the most cost-effective. The Datacenter version is most cost-effective when the maximum number of VMs is greater than four times the number of physical processors in the server. Server licenses for all editions of Windows Server are assigned to physical servers, not to VM machines. Therefore, an enterprise edition on a physical server running two Windows Server VMs runs up to two more VMs without requiring additional operating system licenses. The bottom line is you need to determine the most cost-effective edition based on the number of VMs you have. Of course, you need to check with Microsoft, or any other vendor, for current licensing configurations and rules, but the examples outlined above show the complexity in Microsoft and virtualization licensing. It definitely is not for the faint of heart and takes time to understand and design the most cost-effective solution for your environment.

In addition to reviewing software licenses, the following are additional considerations that you should review when considering virtualization as they may have an impact on costs:
  • Impact to the network. Once an organization implements server or storage virtualization, the impact may be significant enough that you need to redesign the network to handle the new network traffic pattern.
  • Impact to storage. Virtualization impacts the storage architecture, particularly for direct-attached storage systems.
  • Server workloads. You need to have a good understanding of the server workloads and business priority to determine what you should consolidate into the virtualization platform and what you should not.
  • Tools for management of the infrastructure. You may require additional tools to manage the virtualized environment.
  • Training of support personnel. The virtualized environment adds a layer of complexity. Make sure you train the technical staff to cover design, implementation, and support. Identify these costs in the initial financial analysis of implementing virtualization.
  • Book life of assets. Equipment that is nearing the end of the life cycle and end of book life is the best candidate for virtualization.
  • Compliance and security requirements. Virtualization may not be the best option for heavily regulated industries or applications.
  • Consider virtualization testing. Microsoft's free Virtual Server and Virtual PC (see allow you to test virtualization, for example.
  • Consider open source options. For example, FreeVPS provides some free open source virtualization options.