In his blog, Ken Hess talks about how some companies complain that they're not realizing the savings in hardware, software and management that they hoped to from server virtualization. While he eventually points out that they can, in fact, benefit from "greening" (power, cooling and real estate) and service contract savings, he misses the fact that companies can realize significant savings in each of these areas -- if they implement the right solution.

• He says: "You don't save money on licensing the commercial Operating Systems you run in virtual machines."  Let's look at the obvious candidate, Windows Server. (We'll look at WS2008 -- but the numbers are similar for WS2003.)  It's certainly true that if you took ten servers with Standard licenses and 5 CALs and moved them to ten virtual machines on one server, you'd still pay (10 * $999 =) $9990. But you could also license that same configuration with a two-processor Datacenter Edition license ($5998), which supports an unlimited number of virtual machines on one box, plus 50 CALs (two 20-CAL packages at $799 each plus two 5-CAL packages at $199 each, or $1996) -- for a total of  $7994.  That's a savings of $1996, or 20%.  Add an affordable virtualization platform, like Citrix XenServer Standard Edition, and you're still ahead of the mark.  (NOTE: these prices have been corrected based on the per-processor licensing model of Datacenter Edition.)
• Next: "You don't save money on the host hardware---it is typically a very high-end server running into significant money territory." But that assumes that (a) organizations will run their business on bare-bones kit and (b) there's no excess capacity.  But, of course, a consolidation strategy depends on excess capacity, and most businesses buy decent servers even for their lower-end deployments.  And, for that matter, the price of "very high-end servers" isn't what it used to be.  You can get a pretty beefy box -- dual quad-core processors, 32GB memory, 3TB internal storage -- for about $7K, and consolidate ten or more servers onto it.
• And furthermore: "And you won't save any money by getting rid of system administrators---since those virtualized systems still need patching, software installation, user account maintenance, security sweeps, and so on." Well, most companies wouldn't admit to anyone other than the occasional shareholder that they're looking to get rid of system administrators -- but what they will admit, and what really drives the savings, is that they're spending a higher percentage of their IT budgets than ever before on maintenance and management of existing systems (many companies are reporting that the number is approaching 80%), and that they'd like to be able to free up IT staff to innovate their systems and use IT to drive the business faster. And that's not an easy one, for the most part -- it's true that in most cases ten virtual machines still means ten things to patch and manage... But... That doesn't take into account innovative approaches such as the provisioning capabilities in Citrix XenServer, Platinum Edition.  With Platinum Edition, multiple virtual servers (and physical ones, too) can be streamed from a single pristine golden master, with applications streamed into the virtual machine. One golden master means one image to patch and maintain -- and significant reductions not only in storage costs but in management costs as well.

The benefits are there -- you just have to know how to realize them.  Consider the best approach for you -- or make a Citrix Solution Advisor your trusted partner in developing your solution.

 Do the math.