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Bill Baer on...
Predicting resource requirements for a new business application, especially one that is customer-facing is a tricky task. It's hard to know if you have the new Facebook or your hands. You make your best estimates, then spend money on new hardware and hope your estimates were right. Only actual usage tells whether your server infrastructure is running efficiently.
What makes this process more painful is the knowledge that your existing environment probably has the capacity to deliver this application if only the servers were used in a more efficient manner. Private cloud computing built on virtualization technology provides ways to reduce the capital cost involved in this process by allowing you to utilize more of your existing resources. Using Windows Server 2008 R2, Hyper-V, System Center Virtual Machine Manager 2008 R2 and System Center Self-Service Portal 2.0, you can convert your existing workloads into virtual machines and manage where and when they run.
Grouping servers together on hardware as a collection of virtual machines can lower costs and improve performance. The need to increase the performance of some applications to keep up with new demand has traditionally led to hardware purchases or going through a performance tuning exercise. Both involve additional cost that could be avoided with virtualization. Most environments have servers running well under capacity. Pooling these services on fewer servers using virtualization and sharing idle hardware resources across workloads can enable organizations to reduce capital and maintenance costs. Virtualization delivers a higher return on investment and more elastic IT service.
To take advantage of this cloud computing scenario requires some planning to deploy and configure the products to deliver true IT as a service in a private cloud scenario. Finding all the resources to implement this type of solution is can be time consuming. To help, TechNet has created a new virtualization scenario based hub. This one stop location has the resources and content to help you enable different virtualization scenarios. The site is updated regularly with new content and new scenarios.
The scenario mentioned is covered in more detail on the How to Improve Server Utilization and Reduce Infrastructure Costs with Virtualization page.
This is a very nice, simple post that explains server virtualization. One thing that I find when implementing server virtualization is the importance of thinking about the underlying storage infrastructure as well. Here is a post that reinforces your points on server virtualization:
Here is a page that talks about some of the tradeoffs in storage infrastructure when virtualizing: