• HigherGround

Virtualization: Reducing Costs

Updated: May 21, 2019

By Licia Wolf

In our last blog we discussed what Virtualization is, how it works, and the benefits of migrating to a virtualized environment. Here we will explore how organizations can save costs through virtualization. Although there may be some initial expenditures to set up virtual machine servers (e.g., VMware licensing and support), the overall long-term cost savings can be significant.

Reducing the Overhead of Physical Servers

When an application is virtualized, it runs on a shared server equipped with the appropriate hypervisor or virtual machine management firmware. With this capability, the need for a dedicated server and any other ancillary support equipment for a given application is eliminated. This not only reduces the initial cost of hardware acquisition and installation, but also the ongoing cost of time and maintenance of the IT team.

One study in 2014 estimated a 40% cost savings of hardware and software from virtualization. Reduction in server numbers also increases availability of floor space, which can be utilized for other purposes.

Software and Licensing Costs

The cost for software licensing is another area where expenses are reduced in a virtual system. Whereas the standard model was one license for each server, licensing models with virtual applications have become more diverse and cheaper. With multiple virtual servers running on a single physical server, it is impractical to require a 1 to 1 license. For example, Cisco states that they allow over 150 virtual server licenses per physical server, with unlimited operating system guest licenses. This new system allows customers to save up to 80% in licensing expenses.

Electrical Costs

This feature may not appear to be a large component of cost savings, but electrical costs factor into the entire package. A study in 2012 from the Uptime Institute found that decommissioning a single 1U rack server can save $500 annually in energy. VMware found that server consolidation can reduce energy cost up to 80%.​

Decreased Time for Server Provisioning and Deployment

With a virtualized server, system provisioning and deployment can be done in a fraction of the time compared to setting up a new physical server. Not only is the time spent requisitioning the server, obtaining approvals, and sending out a PO eliminated, but the hours it takes to install the operating system and application are reduced to minutes when cloning an existing virtual machine. All this time savings can add up to a substantial savings in labor costs.

This chart from Energy Star compares estimated 3-year Cost of Ownership between using severs with and without Virtual Machine systems.


What are your thoughts on cost savings of platform virtualization? We would love to know!

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About the Author - Licia Wolf is the Marketing and Communications Manager at HigherGround. She holds a Ph.D., and a professional background in electronics, internet marketing, and print/imaging technology. Click here for more information on Licia and the rest of the HigherGround team.

HigherGround, Inc. provides best-in-class, reliable data capture and interaction storage solutions that enable clients to easily retrieve critical information. Our interaction recording and incident reconstruction solutions transform data into actionable intelligence, allowing optimization of operations, enhanced performance, and cost reduction.

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