By John W. Verity

Virtualization has proven itself as a technically viable, highly reliable technology that's useful in a broad range of enterprise IT systems. But many CIOs still have one last series of questions on their minds: What are the financial benefits of this technology? What's the ROI? And how much can it save me?

The answer, in a nutshell, is that virtualization yields stellar savings in both capital and operational expenses, and remarkable ROI. This is especially true when IT managers properly plan the technology's implementation and ongoing monitoring and management. In fact, after factoring in savings on power, cooling and real estate, server virtualization typically pays for itself in just six to nine months, says Rob Smoot, Head of vCenter Product Marketing at VMware, a leading provider of virtualization software.

Such savings are bound to increase in coming years, experts say, thanks to steady improvements in hypervisor software from VMware and others, and to a new generation of multicore processors from Intel and AMD that have been architected specifically to enhance virtualization. Virtualization is "a golden ring that you need to grab," says Jack Santos, Executive Analyst at IT research firm Burton Group and a former CIO who has overseen virtualization projects. "It's definitely where you want to be."

Virtualization offers many economic benefits, Santos and other experts agree. The benefits start with a significant reduction in the number of physical servers that each enterprise will need to own, operate and maintain. From this reduction follow reduced energy usage, improved agility, lowered risk and improved recovery from everyday hardware failures as well as full-blown disasters. Also, because the basic building blocks of virtualization — known as virtual machines (VMs) — are defined purely in software, the technology opens the door to more extensive automation of data center operations, including provisioning. "Virtualization enables administrators to be much more productive and frees them to focus on strategic projects," says VMware's Smoot. "We have customers who now have a single admin manage hundreds of VMs, versus the industry average of [one admin for] 30 to 50 machines."