Virtual servers are quickly becoming more and more popular as faster, better, and more efficient technologies hit the market. Cisco and VMWare now compete with a host of cloud servers and technologies, each of which offer a range of pricing, capabilities, tech stacks, and compatibility. This makes it easier than ever for organizations to virtualize and potentially cut costs at the same time.

While virtual servers and databases can reduce costs, it’s important to perform a cost analysis of what you have, what you’re switching to, and where you will save. Virtualizing saves most organizations a considerable amount in terms of power, IT management, hardware maintenance, and deployment, but it isn’t right for every organization. This is especially true if you have non-standard server needs, a great deal of existing network infrastructure, or very strict security or compliance regulations.

Understanding where virtualization reduces business costs will help you get started and will help you decide if making the switch is right for your organization.

Server Consolidation

Server consolidation is the primary tactic used by organizations to reduce hardware and hardware maintenance costs. Here, organizations identify problems including server under-utilization, high maintenance costs, high server to administrator ratio, and low efficiency.

Server consolidation involves switching server capacity to a few high-capacity physical servers and virtualizing the rest. This reduces total hardware on premises, minimizing issues with server sprawl and forcing increased server utilization.

One study by Info-Tech Research Group showed that virtualization can reduce server asset requirement and server administration support costs by as much as 40%. In their example, an enterprise spending $50,000 in annual server acquisition could reduce total acquisition costs to $30,000, reduce total maintenance, cut staff by 40%, and see a yearly cost savings of up to $400,000. While these numbers are very organization specific, Info-Tech showed that organizations could see considerable savings by consolidating as few as four servers on a virtual host machine.

Reduced Direct Costs – Minimizing local hardware means reducing direct costs paid by your business. Servers require energy to run, cool, and maintain. They also require direct IT management, which can be costly (An IT Systems Administrator costs an average of $65,000-$85,000 per year and can manage 60-75 servers). While these costs will go elsewhere, you might see a savings depending on the contract.

Reduced Downtime

Most studies show that virtual servers are consistently repaired and maintained more quickly than physical servers. In one study, it was shown that 79% of virtual servers are repaired in 2 hours or less, with 10% of virtual server issues being repaired in less than 10 minutes. This is a stark contrast to physical servers, which have average repair times hovering around 4 hours.

Reduced downtime means reduced risks for organizations, less need of redundancy systems, and reduced costs to customers and the organization.

How big will this gap be in your organization? It largely depends on your existing solutions, the ICT provider you outsource to, and whether your service provider offers automated management and monitoring. Most managed service providers will include automated monitoring and immediate fixes as part of service, as well as the ability to seamlessly move to a new server should something go wrong on an existing one. This moves your biggest risk to fiber cables, especially if all services are moved through a single cable.

One of the primary advantages of virtual servers is the ability to perform live migrations of running machines. This means fully configured applications, operating systems, BIOS, and virtual hardware can be moved within a few seconds to a new server, enabling planned updates, resolving unplanned downtime, and enabling zero-downtime maintenance. While this sort of redundancy is incredibly costly for organizations to maintain on their own, it’s often part of contracts with cloud servers.

This will reduce administration time and costs per instance, will reduce the cost of upgrades and maintenance, and will reduce the total cost of unplanned downtime.

Staffing Efficiency

Staffing and administration are among the costliest aspects of server administration. Most organizations don’t specialize in servers or networks. Instead, they are a support service. Investing into highly trained specialists and staff to maintain internal servers is incredibly costly because those experts have to build everything from the ground up, continuously maintain it, and invest in new technologies and training with no payoff other than those support services. This results in high staff to server ratios (typically 1:77), reducing the administrator’s ability to invest time into optimizing and improving.

VMWare showed that switching to virtual servers with automation tools reduces staff to server ratios for about a 10% increase in efficiency.

Faster Deployment and Migration

Virtual servers are essentially “plug and play”, with very little needed in terms of setup, hardware optimization, or administration. Enterprise Systems Management Associates estimate this results in average deployment times reduced to nearly 5% of physical installations, with best-case scenarios reducing that further. This saves countless hours in wages, application downtime, and management.

Virtual servers also enable organizations to approach software and applications from a new angle. Without the need to rely on costly and time-consuming physical hardware migrations, businesses can test new builds on a daily basis, enabling tactics like continuous deployment.

Improved Backups and Disaster Recovery

Virtual servers support faster and more efficient backups through technologies including server clones, server snapshots, and near-instant migration to new servers. Snapshots allow organizations to restore the server to a previous iteration by simply wiping any new additions from the server. Backups allow an exact duplicate of the server to be booted on a new virtual server in seconds. And, migration allows organizations to simply move to a working server when an existing one goes down. While capabilities will heavily depend on your vendor and software, most offer fairly strong backup solutions.

Virtual servers and databases are quickly becoming the norm for organizations, because they offer reduced costs in terms of management, hardware, and infrastructure. If you’re considering implementation, run a cost analysis and needs analysis to determine if cloud is right for you. In most cases, a managed services provider should offer these services for free, although typically as part of a larger implementation, with the intent of eventually installing a solution.