Small and medium businesses (SMBs) that have previously considered virtualization in the cloud but decided that it is too expensive or simply not viable should think again. Virtualization and cloud computing enables SMBs to green their operations and build IT infrastructures that are agile, resilient and highly scalable.

Virtualization has been firmly embedded in the enterprise mainstream. Cloud computing is quickly catching up. By moving away from the one-application-per-server deployment model to a cloud computing model, enterprises have been able to reap a broad set of benefits including cost reductions, improved availability and increased agility. However, many SMBs continue to view virtualization as an enterprise-only technology that would not be viable in their smaller organizations – and that is a misconception. Cloud computing allows maximum use of resources and maintains the competitive edge.

In short, SMBs are now able to benefit from enterprise-class IT at a fraction of the normal cost.

The Benefits of Virtualization in a Cloud

The advent of high horsepower servers highlighted a fundamental problem with the one-application-per-server model: it was not efficient.   Dedicating a modern server to a single application is likely to result in that server being severely underutilized – in fact, many businesses find that their servers are running at anywhere between 5% and 25% of total capacity and, accordingly, a substantial amount of computing resources are unused.

Virtualization used in a cloud computing environment enables those previously untapped resources to be put to use. Because a physical server’s resources can be shared between multiple VMs (virtual machines), servers can be made to utilize much more of their capacity: a server that was running at only 10% capacity when non-virtualized may run at 85% capacity when virtualized. In addition, virtualization also enables SMBs to simplify their infrastructures. Disparate legacy applications and new applications that require different operating systems can all be run on the same physical hardware. Combined, these factors provide businesses with a broad and substantial set of benefits including:

• Reduced energy costs. The consolidation of workloads will mean that there are a reduced number of servers that need to be powered. This can lead to cost reductions of between $300 and $600 per year for each server that is removed from the infrastructure. In the case of data centers, the reductions will be in the region of $600 to $1200 per year when cooling costs are included.
• Reduced real estate costs. Because virtualization enables the installed server base to be reduced, rack/floor space requirements will also be reduced.
• Reduced management costs. Virtualization enables businesses to radically overhaul and streamline their IT operations. Time that previously had to be devoted to routine tasks such as provisioning and maintenance can be redirected to other areas, enabling IT staff to concentrate on core business functions.
• Improved agility and responsiveness. Deploying a physical server takes time: the server must be in order, wired into the network, and the necessary software installed and configured. Bringing a virtual server online is, however, a much easier and speedier process and one that can be accomplished in a matter of minutes, enabling IT to respond to business needs much more rapidly.
• Improved availability and business continuity. Because VMs can be brought online in a matter of moments and migrated between physical servers without downtime, virtualization can practically eliminate the need for maintenance windows and unscheduled downtime, ensuring high availability for the key applications that drive a business.

While server consolidation is often thought of as the main driver and benefit of virtualization, enhanced availability is nonetheless equally as important. According to The Costs of Downtime: North American Medium Businesses 2006[1], a study by research group Informatics, mid-market enterprises experience an average of 140 hours of unscheduled downtime each year at a cost of $867,000 (or 1% of their revenue).

In short, virtualization utilized in a cloud infrastructure enables businesses to do more with less.

Why SMBs Should Embrace Virtualization and Cloud Computing Sooner Rather than Later

The current challenging economic climate makes it necessary for businesses to seek ways of maximizing their use of resources, while simultaneously reducing their operational costs, and virtualization and cloud computing enables them to do just that. In addition to the obvious cost efficiencies already outlined, there are also a host of other compelling reasons for SMBs to consider virtualizing sooner rather than later and more specifically in a cloud computing infrastructure:

• Proving green credentials. Consumers are becoming increasingly environmentally conscious and are increasingly taking environmental considerations into account when making purchasing decisions. This means that companies need to be green and need to be seen to be green. If they are not, it could result in lost business. This shift in consumer priorities is also causing businesses to ramp up their own green initiatives. Today, it is not uncommon for larger companies to ask their suppliers and business partners about their environmental policies. And this is a trend that is likely to continue. Gartner recently predicted[2] that, by 2011, global enterprises will require that their suppliers be able to prove their green credentials via an audited process in order to retain their status as a preferred supplier. Gartner’s prediction is already becoming reality: a number of multi-national enterprises are now looking at ways of implementing auditing processes to establish the green credentials of their supplier.  While greening may currently be voluntary, it may very well soon become a business necessity.
• Incentives. Utility companies are starting to offer incentives to companies that make their IT operations more energy efficient. For example, Pacific Gas and Electric offers a rebate to businesses undertaking virtualization projects that result in the removal of server equipment [3]. The rebates are typically in the region of $150 to $300 and capped at 50% of the cost of the project. Furthermore, the removal of servers will, as noted above, result in a savings on the energy bill of between $300 and $600 per year per server removed.
• Rapidly escalating management costs. According to a 2006 study by IDC4, management and administrative expenditure in data centers is growing three times faster than expenditure on computing equipment. While data centers and SMBs may be very different animals, smaller businesses are nonetheless facing similar problems. As their reliance on IT has increased, so their IT infrastructures have become increasingly complex and increasingly time-consuming to manage.

Virtualization, whether offered in a cloud or not, allows SMBs to simplify IT and reduce management overhead. In a cloud environment, tasks such as provisioning, maintenance, configuration, monitoring and backup become considerably easier and considerably less time-consuming, enabling SMBs to combat soaring management costs.