Is virtualisation ready for the SME?

Virtualisation technology has allowed large companies to slash costs without compromising their IT effectiveness. But can small businesses also benefit from the technology?

Virtualisation technology has allowed large companies to slash costs without compromising their IT effectiveness. But can small businesses also benefit from the technology?

For example, the technology allows companies to operate multiple servers from one piece of hardware. This cuts the cost of hardware and saves on energy bills.

The virtualisation market is dominated by VMware, whose core products are targeted at larger companies.

But packages aimed at small businesses are now hitting the market, in an attempt by suppliers to court small and medium-sized enterprises. This year Microsoft brought out an SME package, with Citrix and VMware also taking more notice of the mid-market and small-business opportunity.

"Virtualisation will become a natural and fundamental part of small business IT as we go through 2011," said Dale Vile, analyst at Freeform Dynamics.

Manufacturing company J&H Bunn is an example of a small business that has adopted the technology. John Fuller, IT director of the family-owned business, said the company implemented VMware's software as rapid expansion meant it needed to double its server capacity.

"In the past we thought virtualisation was something that only applied to larger companies," he said. The company estimates the move to virtualised servers cost £50,000 and will save £47,000 over buying new hardware.

But only small businesses with dedicated IT professional resources are likely to have enough server infrastructure to justify the adoption of virtualisation.

"A working level to think about is 50 employees and 10 servers, but the small business space is highly variable, so we need to be careful about generalisation. We know of much smaller businesses, especially technically oriented professional services companies, that have been active with virtualisation, but this isn't normal," said Vile.

"It is not that virtualisation does not have potential here, but it is going to be something that [the SME's local service provider] puts in as part of a deployment or managed services engagement," he added.

As cloud computing takes off, disposing of servers altogether, and having them managed by a supplier in the cloud, could become an increasingly popular alternative for SMEs, according to Bob Tarzey, analyst at Quocira. "This is often a cheaper option as the service providers have better economies of scale. And they would probably do a better job at managing disaster recovery than the small business usually could," he said.

But many small companies with IT professional resources are reluctant to relinquish control of their servers, with a recent survey revealing that data security remains the top concern for companies regarding the cloud.

For Fuller, this move was not on the agenda. "We wanted to maintain control over our servers. It is something we might consider in the future, but we want to walk before we can run," he said.

When the upturn comes and small companies begin to expand, virtualisation could provide a low-cost alternative to buying and running more servers. Virtualisation may also act as a compromise for businesses looking to receive some of the benefits of outsourced IT, but without letting go control of their servers entirely.

Effective SMEs are vital to economic recovery

According to the UK department for Business, Enterprise and Regulatory Reform (BERR), in 2008, SMEs together accounted for 99.9% of all enterprises, 59.2% of private sector employment and 51.5% of private sector turnover.

Figures from the British Bankers' Association show lending to small businesses declined by £269m to £598m in June, compared to the same month last year. As the terms of bank lending remain prohibitive for many SMEs - making large investments in technology difficult - virtualisation could become an increasingly popular way to keep capital expenditure to a minimum,

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