When to Virtualize your servers, what to consider in making the decision

As virtual machines become more ubiquitous, both vendors and managers will need to focus on managing the utility infrastructure to get the most value for this technology. Innovative IT decision-makers should be using this technology to create more agile and cost effective data center infrastructures.

Executive Summary

I see virtualization as a critical component of building flexible and responsive utility IT infrastructures. As virtual machines become more ubiquitous, both vendors and managers will need to focus on managing the utility infrastructure to get the most value for this technology.

This research note analyzes the current trends in small to mid-sized enterprise (SME) virtual machine adoption and looks at how virtualization adoption will continue to grow in 2008. Discussions include:

• How virtualization has come to mean x86/x64 processor virtualization in 2007.
• The current adoption of virtualization and how it is being used by SMEs.
• Longer term potential for virtualization for IT/business alignment.

Processor virtualization has rapidly gained a foothold among SMEs as these enterprises seek to costeffectively manage server infrastructure consolidation and growth. Innovator IT decision-makers will be using this technology to create more agile data center infrastructures.

Trend Analysis

Processor virtualization has rapidly gained a foothold among SMEs as these enterprises seek to cost effectively manage server infrastructure consolidation and growth. The likelihood of virtualization in the enterprise increases with infrastructure size and complexity. However, the infrastructure impact of x86/x64 processor virtualization is greater for small to mid-sized enterprises than for large enterprises.

The most immediate practical benefit of virtualization can be found in the savings on server hardware
purchases through greater utilization. The application testing and development realm is an especially
strong candidate for virtualization though an increasing number of enterprises are using virtualization in a
production environment. Among surveyed enterprises ranging from 250 to 5000 employees, 22% are
using virtualization in production environments and a further 13% plan to use it in a production
environment within a year.

Virtualization adoption is much higher among IT departments that focus on innovation for strategic
advantage than those that focus solely on cost control. I see virtualization as a critical
component of building flexible and responsive utility IT infrastructures. In a utility IT infrastructure,
virtualization is used to abstract processing and storage from the underlying hardware and allocated to
applications as required. This flexible and dynamic structure improves IT agility by allowing for the quick
provisioning of resources to business initiatives when and where they are needed.

Moving forward, enterprises seeking to gain continued benefit from virtualization will need to focus on the
management layer. Virtual machines are becoming a commodity item, an out-of-box feature of server
hardware. Maximum value will be gained not from deploying virtual machines but from efficiently
managing the virtual infrastructure.

Current Analysis

Processor virtualization is the sharing of one physical processor (or cluster of physical processors)
among more than one running operating system and software stack. Each operating system runs as if it
is on its own dedicated processor(s) “ one real machine running multiple virtual machines. This is not a
new concept. In managing mainframe computers, for example, it has long been possible to divide
processing, memory, and storage among multiple logical partitions, or LPARs. IBM first introduced logical
partitioning in 1976.

Currently, however, the term virtualization is most often associated with the running of virtual machines
on x86/x64 processors. Even more specifically, it typically refers to using VMWare to run virtual
machines on x86/x64 servers. This is a relatively new development as the x86 has normally supported a
single operating system (such as Windows or Linux). Traditional distributed processing infrastructures
normally add a new x86 box for each new user (PC) or workgroup/enterprise application (server).

Not Just a Trend

Processor virtualization for x86 hardware has been a hot trend in 2006. Virtualization has gained a
significant foothold in the SME space (in this instance we equate SMEs with staff sizes of between 250
and 5,000 employees). Two thirds of enterprises surveyed by Gartner in this employee numbers range
are using virtualization in some capacity and a third are using it a production environment or will be doing
so within a year.

The growing use of virtualization is in line forecast that virtualization of Windows/Linux servers would be a dominant trend in 2008. Virtualization will be pervasive on x86/x64 servers and also desktops by the end of the decade. Reasons for this included:
1. Continued move to server consolidation. Virtualization of Windows/Linux servers and workstations is a critical component of next generation centralized service-oriented IT infrastructure. With virtualization, an enterprise can boost hardware utilization to between 60% and 80% by consolidating multiple virtual instances on a few powerful multi-processor servers.
2. Maturing of product offerings and competition. VMware has been the most successful pioneer of virtualization. The company, which was acquired by EMC Corporation in December 2003, continues to lead the market with up to 20,000 enterprise customers. However, VMware will experience stiff competition by 2008 from Microsoft Virtual Server and Virtual PC, as well as from the open-source alternative Xen from XenSource, now owned by Citirx Systems.
3. Processor enhancements for virtual machines. Virtual x86 machines typically run entirely in software emulation with hardware calls interpreted by the virtualization software. Intel and AMD have both debuted processor technologies that allow their processors to do some of the work of the virtual machines, boosting performance of the virtual machine instances.

Centralization and Consolidation a Key Driver

Server consolidation and the move toward centralized management of servers and storage as utilities
continues to be a key driver of virtualization adoption. I have found that most SMEs are pursuing
a centralized server strategy, with the emphasis on centralized management growing with industry size.

Virtualization adoption is highest amongst enterprises in the Manufacturing, Business Services and
Financial Services sectors, all of which are heavy spenders on servers and likely candidates for
infrastructure consolidation.

Virtualization Investment Point

The smallest enterprises, those with 100 or fewer employees, are not using virtualization to a large
extent. There is a clear tipping point between 100 and 250 employees toward virtual machine testing and
deployment. In enterprises of 100 or fewer employees, fully 75% of survey respondents are not using
virtualization. That proportion drops to 50% among respondents of 101 to 250 employees.

Typically, virtualization starts to make sense when the number of servers passes 15 with 30 servers or
more leading to greatest and most demonstrable cost savings and benefits. It is interesting to note, and
indicative of the strength of this trend, that even among the small enterprises and enterprises with simple
back office infrastructures, there are still a solid minority (in the range of 25%) that are using virtualization
even if mainly in a testing mode.

Greater Impact for SMEs

Though the adoption of virtualization increases with size and complexity of enterprises, we see
virtualization as a more important development for SMEs than for large enterprises. This is because
x86/x64 virtualization stands to have a larger impact on SME infrastructures than on large enterprise
infrastructures. Enterprises of all sizes can benefit from using virtual machine technology to counter the problem of server sprawl which has resulted form a proliferation of one app one server x86 servers in distributed processing environments. Large enterprises have more x86 servers and are therefore more likely to be adopting x86 server virtualization.

However, large enterprises with complex infrastructures are also more likely to have additional layers of
processing capability such as mainframes and high performance Unix-based systems. The x86 portion is
only a part of a larger whole. Although adoption penetration of virtualization is greater in larger
companies, the proportion of their environment that is virtualized with x86 virtual machines is much less
significant. The greatest benefit of x86 virtualization can be seen in SMEs.

Test/Development Infrastructure “ Virtualization™s Low-Hanging Fruit

Virtualization is not the best solution for every server application instance. For example, high I/O
applications which utilize large databases have often encountered performance bottlenecks in a
virtualized environment. The most recent version of VMware has greatly increased the amount of
memory that virtual machines can access in order to alleviate these database I/O problems.
Production-level performance is not as much of a consideration when testing and developing software. A
portion of enterprises are therefore using virtualization in their test/development environments for the
time being and holding back on moving virtual machines to a production environment pending
improvements in both the software and server horsepower.
The test/development environment is a natural place to start with virtualization implementation.
Traditionally, test bed physical machines were needed for software testing and development. Application
developers might typically spend up to 25% of their total project time acquiring and configuring hardware.
With a virtual server infrastructure, a new server instance can be created from a standardized template.
Weeks of development time can be collapsed into minutes.

Innovators Embrace Virtualization

In Gartners IT decision maker survey, respondents were asked to identify whether they are more
focused on cost control or innovation for competitive advantage. Innovators are far more likely to adopt
virtualization than those that are focused on cost control. This is somewhat surprising as a major shortterm
benefit is hardware cost reduction. So why is virtualization not more popular with cost-cutters?
Though virtualization by itself is not a strategic differentiator, I believe that using virtualization
to move to a utility-style infrastructure is an effective way for IT departments to improve their capacity to
be innovative. Utility infrastructure is more cost-efficient and can rapidly provision new or changing
applications that the business needs.

Virtualization of the x86/x64 Infrastructure Will Continue

In enterprises of 250 to 5,000 employees, 13% are planning to move virtualization to a production
environment within a year and a further 22% are testing the technology. We expect that nearly all of
those testing the technology will use it either in a production environment or as a means to streamline
application development/testing by virtualization the development infrastructure. Even without new midsized enterprises choosing to test virtualization, this would mean fully two thirds of enterprises of midrange size will be using virtualized infrastructure for either production servers or for a test/development
environment next year.
ServiceXen expects that additional SME decision makers will investigate virtualization in 2007 as part of a
planned server refresh. Vendors will be taking advantage of both virtualization software and better
support for virtualization in x86/x64 architectures. If you are looking to buy a server anyway, the
question will go, why not buy one that can support multiple Windows or Linux OS instances?
Virtualization will be an out-of-box feature of most new servers and even some PCs. PCs are benefiting from the same advance architectures as servers “ powerful dual core processors and chipsets that support processor partitioning with virtual machine hypervisors will become standard on many PCs through 2007. Forward looking IT departments will begin to explore the potential of virtual machines for desktop management, disaster recovery planning, and out-of-band security management.

Management Will Be the Differentiator

VM creation is rapidly becoming commoditized and will soon be an out-of-box feature of vendor
offerings. The challenge going forward will be to manage a virtualized utility infrastructure in order to
deliver appropriate service levels and achieve maximum utilization of physical resources. With virtual
machines becoming more ubiquitous in the data center, IT departments will also need to be able to
ensure that the potential problem of server sprawl in a traditional distributed processing environment
does not get replaced with the problem of virtual server sprawl in a consolidated and centralized
processing environment.
Market leader VMware, for example, has combined its virtual server hypervisor product (ESX Server)
and its management suite (VirtualCenter) into a combined offering called Virtual Infrastructure 3. This is
implicit recognition of the fact that VMware sees its future competitiveness in the management of the
virtual infrastructure not in the creation of virtual machines.

Vendor Landscape Will Become More Competitive

VMWare continues to be the undisputed lead vendor in virtual machine creation and management on
x86/x64 hardware. A subsidiary of EMC Corp. VMWare holds a commanding market share with more than
20,000 enterprise customers for its products. But as virtual machines become more of a commodity,
VMWare will see more competition from Microsoft and open source Xen-based products in 2007.
One of VMWare™s technical advantages, for example, will soon be nullified. VMWare has been the leader
in offering a bare metal hypervisor (a virtual machine monitor which does not need a host operating
system) in its ESX Server product. Microsoft™s Virtual Server requires Windows 2003. Microsoft will debut
a bare metal hypervisor, as well as licensing for unlimited virtual machines per physical host, with
Longhorn toward the end of 2007.

Key Takeaways

1. Processor virtualization on x86/x64 hardware is no longer an emerging or experimental
technology. It is being used increasingly in mid-sized enterprises in consolidation and
management of server infrastructures. For mid-sized enterprises, which are more dependant on
x86/x64 Windows servers, virtualization is having a significant impact.
2. Adoption of virtual machines will continue to grow among SMEs through 2007. As virtual
machines become a standardized commodity, and innovative IT departments seek to use
virtualization as a component of agile utility infrastructures, the focus will shift strongly from virtual
machine creation to virtual infrastructure management.
3. All enterprises which depend on x86/x64 infrastructure should explore processor
virtualization. In particular, enterprises with more than 250 employees and 15 servers should
look at virtual machines. Enterprises already using virtualization for server management should
also explore the possibilities of managing virtual machine instances on the desktop.

Bottom Line

Processor virtualization has rapidly gained a foothold among SMEs as these enterprises seek to cost effectively manage server infrastructure consolidation and growth. Innovative IT decision-makers will be
using this technology to create more agile data center infrastructures.