Small Businesses Are On the Road to Virtualization

Server virtualization is no longer just for large companies. Many small businesses now recognize the technology’s benefits and are adopting it with open arms.

Today, 25 percent of small businesses have virtualized at least some of their ­servers, according to the CDW Small ­Business Server Virtualization Roadmap, a recent report that surveyed 298 small-business IT professionals. And of those companies that have not implemented the technology, 73 percent say they are either investigating or planning to deploy it, with investments averaging 17 percent of their IT budgets over the next two years.

With virtualization, multiple applications run in their own environments on a single physical server. The technology improves hardware utilization by increasing the percentage of a server’s capacity that is actually used. It also simplifies IT management, improves disaster recovery and increases business agility — allowing IT staffers to launch new servers in hours instead of days or weeks.

Ray Boggs, vice president of small/­medium business and home office research for IDC, says small and large companies achieve the same benefits through server virtualization, just not on the same scale. The drivers for small businesses are different, he says.

For example, a large company that’s consolidating 4,000 servers down to 2,000 will save more absolute dollars on power and cooling costs than a small company that’s reducing its server count from four to two, he says.

Capturing ROI

Although the economic benefits of server virtualization are obvious to large companies, measuring results is more subtle for smaller firms, Boggs says.

“You will get some power and cooling savings, but that’s not where the excitement is,” he says. “It’s about better management and being more agile and efficient. It’s about looking ahead at how you can be smarter about your technology investment and squeezing the most out of every nickel.”

In fact, when small businesses were asked to name their top drivers for implementing server virtualization, 43 percent cited replacing aging hardware, 36 percent cited consolidation, and 35 percent cited improving disaster recovery and data backup. Twenty-seven percent said improving efficiency of IT infrastructure and 23 percent said reducing IT operating costs were driving forces behind their virtualization investments.

According to the study, 79 percent of small businesses that adopted virtualization have seen significant benefits, and 65 percent say it has significantly improved their IT organization’s return on investment.

For example, when healthcare web software maker Concerro virtualized in 2009, the company consolidated 100 physical servers into 16 new blade servers. Managing and maintaining the servers is much easier, which in turn saves time and money, says Systems Administrator Mark Vasquez.

“Before, we were buying all these off-the-shelf physical servers with no remote management tools. Now, with VMware and HP, I can manage the entire environment remotely from my office,” he says. “I can do most of it myself without having to expand our IT team. I can now reboot a virtual machine without having to drive over to the collocation site.”

The technology has also bolstered performance. VMware’s VMotion management software, for example, allows for live migrations of VMs from one server to another, Vasquez says.

“Say you have a physical host that has a number of VMs running on it, and the server resources are being taxed. With VMotion, you can move one or two VMs to another physical host that has the resources the VMs need with zero downtime,” he says. “It’s simple to move things around, so everyone is getting the performance they need.”

Adoption Trends

Virtualization is a work in progress. Small companies that have begun virtualization projects will continue to invest in the technology and virtualize more of their servers over time, the report found.

On average, they have virtualized 33 percent of their servers, but plan to nearly double that to 65 percent of their servers within two years. They will spend an average of 23 percent of their annual IT budget on virtualization technology over the next two years.

Consider Rio Grande Pacific, a railroad holding company in Fort Worth, Texas. It virtualized all its servers over a three-month period earlier this year, but it continuously looks to improve. “Virtualization is an organic process,” says Jason Brown, the company’s director of IT and network planning.

Rio Grande Pacific has one main data center and a backup facility. With virtualization and data replication, if the main data center goes down, the backup site will take over and keep applications running. Brown plans to build a third data center in January to further improve continuity of operations.

According to the CDW report, there are several steps IT departments must take to ensure a successful deployment. They include assessing the current data center environment, determining which applications are candidates for virtualization and identifying goals.

The report says another important step is persuading management to fund the project. And after deployment, IT staffers should measure ROI and look at hard benefits, such as reduced server and support costs, as well as soft benefits, such as improved IT productivity and increased uptime.