Another side benefit of virtualization is reduced network utilization. "If two of those servers on the same box talk to each other a lot, you're actually offloading network traffic," says NewEnergy's Tisdale, who claims that the performance gains from more powerful servers and virtual network connections overshadow VMware GSX Server's overhead of 7 percent to 10 percent.

Provisioning a mixed bag

Managing a virtual environment is a two-sided picture. On the plus side, the ability to quickly provision new servers simply by loading virtual images onto existing hardware produces tremendous savings in IT staff time and resources, not to mention improved business agility.

For example, Mornay Van Der Walt, vice president and systems architect at Ixis Capital Markets, a global financial services company, estimates that virtualization has reduced the time it takes to provision a new server to as little as five hours in the virtual world, from as long as 17 days for procuring and building a new server in the physical world. Labor costs associated with provisioning have therefore dropped 80 percent.

Management savings can also come from upgrading to more capable servers. For example, NewEnergy's Tisdale claims there were significant administrative cost savings from upgrading to higher-end servers with advanced lights-out management tools. And, of course, virtualization reduces the number of physical servers to monitor. Migrating existing applications and data from the physical to the virtual world is more of a mixed story, however.