According to Forrester and Gartner, consolidating servers through virtualization can result in up to 50% savings on hardware costs¹ and a 15-20% reduction in total cost of ownership² once a project is complete and project costs have been included. I’d wager most IT managers would agree that virtualization has been a cost saving strategy for their organization.

However, we’ve recently come across some large enterprise customers that are looking at cloud computing to leap frog stalled virtualization projects. Although some high priority virtualization workloads have been tackled, they are struggling to get past organizational inertia and budget approval for new projects.

In these organizations, they have recasted virtualization initiatives as cloud initiatives and are striving for optimum cost savings by utilizing cloud resources instead of further building out internal physical or virtual platforms. Public clouds are being suggested for new projects that are dynamic in nature, such as IT lab environments or load testing projects.  Internal virtualized environments are maintained, but with an eye to migrate these to the cloud over time.

This flexible approach not only overcomes challenges to virtualize all internal systems, but also reduces capital expenditures in a climate of reduced budgets. As the year progresses, it will be interesting to see how many other organizations adopt this approach. 

¹ Forrester Research, Inquiry Spotlight: Server Virtualization, Q3 2008
² Gartner, Inc., “25 Ways to Cut IT Costs”, Gartner Symposium, October 2008

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