SMBs Hop on Virtualization Gravy Train

Mentioning virtualization technology to typical computer users in a work environment will get you a puzzled look. Despite the apparent obscurity of this IT trend, virtualization is making an increasingly large impact on small to medium-sized businesses.

Some type of virtualization was reported in place by 77 percent of firms with 500 or fewer employees who responded to a recent survey by a group of nationwide Cisco partners. Of those SMB respondents using virtualization, 95 percent reported seeing an immediate impact on efficiency and cost reductions.

The survey of SMB IT managers, directors and CIOs found that 40 percent of information workers had not heard of server or desktop virtualization, according to the Cisco-sponsored white paper detailing the results.

However, as virtualization zealots are quick to point out, when it is integrated properly into a company’s computer systems, worker adoption is seamless, requiring few or no changes in training and usage practices.

“Ultimately, the end-user in an SMB work setting will not work any differently than with a non-virtualized computing set up. It is a very transparent operation,” Eric Ringelberg, CEO of technology company Next IT, told TechNewsWorld.

Virtualization Rationale

Why Virtualize? In a word: money. Virtualization is a process that employs special software that enables one physical computer to host any number of virtual or guest computers. Virtualization is very efficient and thus is an effective technology that reduces purchasing and support costs for hardware.

Running multiple virtual machines on one physical computer is far more cost-effective than buying and maintaining a large server farm. That was the conclusion reached by Cisco’s nationwide survey, which was conducted by the Blackstone Group.

The online survey was conducted in September 2013 among 150 IT professionals at manager level and above, employed by mid-size organizations with 50 to 500 workers. Its conclusions are dead center with experiences Next IT’s Ringelberg has observed with his own SMB customers.

“Consider that when you ramp up hardware to meet fluctuating demand for more computing power, you never use 100 percent of all your hardware. For example, virtualization lets you take four separate servers and run them on one machine for a steady 80 percent usage,” he explained.

Money Board

As more business leaders learn about its capabilities, virtualization will quickly become a mainstay of the IT departments in companies of all sizes, according to the survey’s findings. Seventy-one percent of respondents said money budgeted for virtualization would increase up to 20 percent over the next two years, compared to just 25 percent who said the budget would stay the same.

“We are seeing increased reliance on virtualization. The biggest benefit for SMBs is the same as for larger corporations that have used virtualization technology for years. That is the money savings from reducing hardware purchases,” Joseph Cooper, an engineer at IT firm Emerging Technology Integrators, told TechNewsWorld.

Virtualization works well for SMBs and can be tailored to their needs, he explained. For example, small companies can have on-site virtualization. Larger SMBs and organizations with more than one office location can economize and streamline using cloud-based virtualization.

Savings Trends

“Our customers are regularly asking for it. Some 50 to 60 percent of our projects are with SMBs. I think that the Cisco study is a confirmation of the trend,” Ringelberg said.

One of the main benefits is that virtualization lets businesses operate with a lower hardware investment. The cost of utilities such as electricity for cooling and powering the hardware is less, he pointed out.

Average savings of US$15 to $20 per month per server are typical, Ringelberg said. Additional savings come from a reduction in floor space, since virtualization requires fewer computer hardware installations.

Cloud virtualization helps SMBs to avoid the added expense of upgrading through hardware refresh cycles. That applies to both local and cloud-based virtualization.

“The advantage that virtualization in the clouds brings is a reduction in the need for having to add more local equipment,” Min Wang, CEO and founder of technology consulting firm AIP US, told TechNewsWorld.

High Adoption Levels

A closer look at the 77 percent of the surveyed SMBs that already were using virtualization shows the adoption rates correlate closely with the size and budget of a company. About 65 percent of small businesses (50-100 employees) were currently using virtualization technologies. However, that number jumped to 79 percent with medium-sized businesses (100-500 employees).

The same correlation held true with IT budgets. About 65 percent of businesses with an IT budget of $100,000 or less had implemented virtualization. However, 80 percent of businesses with IT budgets greater than $100,000 already had virtualization technologies in place.

This leads to the logical conclusion that while smaller companies do realize the benefits virtualization can offer, many do not currently have access to financing or capitalization to adopt the technology, the study concludes.

“The trend towards using virtualization has existed for years in larger corporations. In larger enterprise operations, virtualization has been a given. Now the trend is also growing among smaller SMBs,” said AIP US’ Wang.

Virtual Options

SMBs have access to the same virtualization options as larger firms, but smaller SMBs may not need a full range of virtualization services. Smaller firms should let their essential needs determine how they deploy virtualization, suggested ETI’s Cooper.

Depending on business circumstances, SMBs can integrate virtualized servers on site or in the cloud. The size and type of business activities will set the pace for using server virtualization exclusively or desktop virtualization for multiple employee workstations, said Cooper.

“Similarly, SMBs have two options for managing their virtualized computing. One is using an outside firm to handle the set up and maintenance. The other choice is to use a qualified IT specialist in-house,” he said.

Larger SMBs use both server and desktop virtualization, but smaller organizations usually do not require multiple desktop installations. So the optimum benefit is derived from using server side virtualization, Cooper explained.

Tips for Virtual Success

Entrepreneurs need to look at the figures and make a comparison of the costs associated with each option, both with local and cloud-based virtualization. They need to look at two separate uses — server virtualization and desktop virtualization, Wang advised.

For example, some SMBs like having access to their virtualized machines on site. Typically, small companies can save money, even when they have to hire a provider to set up and maintain the process.

One of the driving factors for virtualization adoption among SMBs is the abundance of service providers available to them. Most smaller companies do not have the technical staff or time to devote to setting up and maintaining virtualization.

However, entrepreneurs must carefully evaluate what they need and what additional services are worth adding. Part of that equation is how many users they will pay for on a virtualized desktop service in the clouds, Wang added.

Locations Can Be Costly

All size SMBs can benefit from virtualization technology. The options and cost savings vary depending on whether the SMB virtualizes locally or via cloud connections, according to Ringelberg.

In metropolitan areas, for example, SMBs can benefit from cloud installations with easily accessible fast Internet connections. In more rural areas, the choice might be limited by the quality of the Internet available.

In rural areas, however, SMBs might have options from fiber or cable connections as well as traditional T-1 phone lines. If the Internet connection is not good, the SMB would be better off running virtualized connections locally instead, Ringelberg explained.

“That is not always a bad thing to set up local virtualization. Cloud service for virtualization is not always a cost savings over local installations” he noted.

Choose Carefully

There’s a nice adoption curve for SMBs, Wang observed, especially for commonly used applications like email and office apps. Also, cloud-based solutions are becoming very popular.

Still, SMBs should evaluate the applications they will use in a virtualized environment. That can be a crucial step when deciding between a local and a cloud virtualization installation, Ringelberg cautioned. “Not all applications are equal in the clouds.”