1. Hardware. The prime mover of the virtualization trend is hardware savings, so make sure you actually get them when you virtualize. Use as much existing hardware as you can. Throwing out all your single- and dual-processor boxes and replacing them with refrigerator-sized monster machines probably isn't going to get you the savings you are looking for. Those big boxes have a much higher cost-per-processor than the smaller ones do. Your objective, when you virtualize, is to leverage resources that would otherwise be sitting idle. That, in a nutshell, is where most of your savings are going to come from.
2. Facilities. Power, floor space, UPSes, generators – all that good data center infrastructure that you have to have to keep the bits flowing, but that we tend to forget about. Look at it this way - if your data center is full, either due to lack of physical space or lack of available power, and if you could get all the equipment you have in that data center to do twice as much work by implementing virtualization and leveraging spare capacity, you would save your organization roughly the cost of a new data center facility. That ain't peanuts.
3. Software. First, understand that virtualization itself does not necessarily lower software costs at all. Software licensing schemes are in flux as vendors scramble to protect revenue streams and stay competitive in the new, more consolidated data center. You'll have to look at each license carefully and not only select the optimal plan for your new configuration, but also decide what software will go on what boxes to minimize costs. What happens if that expensive middleware that was running on 10 small boxes is now going to run on 10 big boxes? Would it be better to consolidate those applications so that you only need the middleware on 2 big boxes? Savings that you do realize here are also offset to some degree by the fact that high-end virtualization products have a cost themselves. Note that significant software savings can result from virtualization projects, but not directly. These are normally a product of the software review and optimization of the product portfolio that has to be done along the way, but that could have been done without any virtualization at all.
Notice that I didn't mention personnel. Virtualization generally trades personnel in one area for those in another. Sure, you won't need as many people for equipment MACs (Moves, Adds and Changes), but you'll need more effort and expertise to manage your new, even more complex server environment. In addition to the virtualization technology itself, you'll have increased needs for availability management and capacity planning. You might think that the smaller number of physical boxes would require less administration, but the fact is that a virtual server takes just as much as a physical one does.
The bottom line is that you'll get good savings on hardware and facilities costs, and possibly some peripheral benefits in the area of software costs. Don't expect any savings at all on personnel.
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