Let me share a funny (at least to me) story. Last year, when I was taking a VMware course, I posed this exact question...
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to the class during one of our downtimes. "How can you convince a reluctant business unit that they should virtualize a server, and that it is costing them more to run it as a standalone?" One of my classmates shared his situation. He had spent months trying to convince a business unit to move their server into a virtual space. The arguments against it were, "I will lose control, I don't want to share, and if another virtual machine fails it will affect my application." The IT staff spent hours trying to convince the business unit that their perspective was unfounded FUD, as the virtualization space was sufficiently stable and mature. Months went by, and the discussion remained on the docket of this business unit. The business unit finally acquiesced with a list of caveats for a back-out plan and their version of what SLAs should be. The punchline: The IT staff had virtualized the servers two weeks after the discussion began, and the business unit didn't even know it.
Now, I'm certainly not condoning this approach, but I find it interesting that perception isn't always reality!
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