Virtualization: A Key Area to Invest IT Dollars

Updated: November 02, 2010


If you haven't been living under a rock for the past 5 years (or were somehow awoken from a cryogenic sleep), you probably have heard the terms: Web 2.0, virtualization, cloud computing, software as a service, thin clients. With such a confusing jumble of acronyms and reusable words, how can one know the difference between virtualization and cloud computing?

Imagine I run my own company and own a large office building in central New York. If that company is very small, I most likely have a lot of extra office space available to rent. While I only use one "office" for my company, the rest of the "offices" can be used by other organizations. If I rent out these offices, I then ensure that my building is being used for its full potential. Even in the case my office grows; I can always expand into other areas in the same building. Think of virtualization as the offices. On a single piece of computer hardware (building) I can run "virtualized pcs" (offices). I might have one virtual machine running a web server (office for a marketing firm), another virtual pc allowing me to play video games (office being used for an arcade), and yet another virtual workstation allowing me to efficiently edit graphics (office being used for a publishing company). I don't need 3 computers (buildings) to do all this work, I can do this all on a single computer using multiple virtual machines (offices).

Let us say I want to get out of the office building and start investing in real estate. To this end, I buy several convention centers in Los Angeles. Instead of managing offices I am now concerned with managing events. I can evenly distribute the events across convention centers, and I can schedule time to perform maintenance on different parts of the buildings. However, if I do not plan well, I might end up scheduling too many events at the same time. In this case, I might run out of room in a single convention center and have to split the event across multiple venues. To the people going to the event, it is all the same - they are attending their event; however, to the people who own the buildings, the same event is being coordinated between several convention centers. Cloud computing operates in the exact same fashion. Instead of offices, I deal with events, meaning that my "virtual pcs" no longer need to be located on a single piece of computer hardware, but can be spread out over many. To the person using the virtual machine, there is no difference whether the "virtual pc" is hosted on 1 piece of computer hardware or 100 - their experience and interface remains exactly the same.

Just like offices don't really care about the building, or event goers don't really care about the venue, internet users really don't care that much about virtualization or the cloud. To them, these are just technical terms that internet sites like to use to attract customers. For the end user, the most important aspect of all of this is the applications - the Web 2.0, thin clients, and Software as a Service (Saas). If you haven't used a thin client before, think again. Many users currently check their email through Google; in doing so, they are taking advantage of this thin client interface. There is no software to install, and most importantly, it is available anywhere in the world you have an internet connection. Other services, like online file sharing services (such as Dropbox allow users to access their files anywhere. In fact, for almost every piece of software installed on your pc, there is most likely an analog on the internet somewhere.


One of the biggest benefits of switching to a virtualized service is the removal of CAPEX costs and mitigation of these costs through the OPEX budget. This can, in many organizations, free up to 80% of the IT budget to be used in other areas. Since computational power is such a commodity, organizations are much better off virtualizing their server infrastructure than sticking with their old fashioned server rooms.

In addition to saving on both real estate and CAPEX costs by moving to a virtual environment, mobilizing your workforce (to access applications remotely) is another cost saving move that many organization should look into. While the brick and mortar office space will always be needed for a sense of centralization and conformity, more and more organizations are having their knowledge workers telecommute more frequently. An interesting study of major pharma companies shows that much of the IT innovations budget is being earmarked for mobilization of their sales force. By increasing their salesforce access to data remotely, and reducing the amount of time the sales manager needs to stay in the office, the overall efficiency of the workers on the road is increasing by a factor of 50-60%.

Organizations who are able to capitalize on this movement, by mobilizing and enabling remote access, are saving costs in both real estate space, travel expenses, and are starting to provide the fringe benefit of allowing many of their workers to work from home - increasing efficiency and employee motivation - in addition, this allows them to tap into different employment market segments that may have been hard to before (single parents, disabled workers, and off shoring agents), without having to invest heavily in accessibility tools or other essential services.

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