The financial cost of server virtualisation

If you don't have to invest in a new SAN, then the recoup time is just more than a year. Indeed, the single largest outlay for virtualisation is shared storage - a virtualisation requirement. If you don't have shared storage, you have to build an iSCSI SAN, a Fibre Channel SAN, or a network file system. You'll need to refresh your host servers every two or three years, but you can keep the other SAN hardware longer, so over time, your refresh costs per year will be lower in a virtualised environment than in a physical one; how much depends on a bunch of factors specific to your environment, but it's a safe bet that you won't refresh your SAN any sooner than every 5 years, and likely less often.

Less predictable cost
Even if the basic numbers tell you that virtualisation's ROI is neutral or positive, note that the actual cost of virtualisation varies greatly on the path you choose.

Costs that get short shrift in the financial forecasting process include software and hardware management. Because virtualisation changes the management scenario, you might need different lifecycle management tools. Many companies also upgrade to Windows Server 2003 or Windows Server 2008 Data centre edition when they virtualise, says Burton's Wolf. "That has to creep into the equation."

Also, you'll likely need to bring in a consultant to review the virtualisation architecture, no matter what size the deployment. And then there's the cost of actually migrating physical servers. Consulting and migration fees vary widely.

The good news is that a 20-server virtual environment probably won't need a special virtualisation staffer who commands at least $80,000 or even an additional sysadmin, after everything is up and running. virtualisation vendors understand that small and midsize businesses often employ a single admin who wears many hats, so they've made their tools as easy as possible to learn. "One admin could get up to speed on virtualisation," Wolf says. "Often, small organizations will develop their own talent there."

But the larger your virtualised environment, the more you will need such experts. You might recoup their costs by needing fewer server admins, but you might not. After all, you also have a SAN to manage.

Another cost that can be hard to estimate is virtualisation training, warns Prigge. The admin, for instance, will need to know how to reboot a virtual machine without restarting the whole host. "In some situations, the customer's inability to dedicate time to learn how to use a system suggests that sticking with physical servers with all of their limitations is actually a better course of action," he says.

Many but not all these costs can be inputted into good ROI calculators for server virtualisation from VMware and Microsoft. These calculators can bring some clarity to a potential investment. Moreover, their predictions are often on the money with the actual ROI, says Wolf.

Virtualisation's elusive ROI
If your reason to invest in virtualisation is just about the numbers, you may be disappointed - especially if you're a smaller business. Consultant Prigge figures that many smaller businesses that adopt virtualisation pay 10 to 15 percent more when all is said and done.

But this extra cost, he says, "is justified by the increased capability to recover from a hardware failure. If you're not paying attention to business continuity gains, of which server redundancy is just one, you're sort of missing the boat," says Prigge. After all, virtualisation's greatest benefit is flexibility and simplicity of business continuity for the entire datacentre - not merely reduction in server boxes.