When Stephen Bakerman joined Owen Bird Law Corp., in Vancouver, British Columbia, nearly nine years ago, the IT infrastructure was a "mishmash of everything."

To clean things up, Bakerman -- Owen Bird's information technology manager and one-man IT department -- has taken the 88-employee law firm virtual. He is currently running 17 hardware servers and recently purchased four more to be dedicated to virtualization. His intention is to run 17 virtual servers on five hardware boxes.

But exactly what does it mean to have a virtual server? Basically, virtualizationis all about a server being a logical entity, not a physical one, and running one or more of these logical (or "virtual") servers on a single physical computer.

As Bakerman explains it: "To virtualize a physical server, you take another server that is normally used for another app; load on a virtualization program, then [load] a program like Virtual Iron that allows you to emulate little compartments on the physical server. You take the simulated computer and load your OS on it, and it runs in its own world independent of the other OSes that are also running on that box. Think of virtualization as creating little compartments on the physical server: One might run Windows, another may run Linux. If one compartment gets corrupted, nothing else is affected."

Even better, the configurations can be dynamic, automatically adjusting to changing loads and the availability of physical resources. Put it together and you've got an easy way to optimize your company's use of expensive hardware.

Owen Bird, a full-service, midsize law firm, uses virtualization technology from Virtual Iron, and it's made a big difference to Bakerman. "The infrastructure for me was key, and I worked at changing the servers that were problematic," says Bakerman.

DON'T MISS: 5 Simple Rules For Going Virtual

While all IT professionals seek ways to save time and money, for those at small and medium-sized businesses the quest can be even more critical. Small staffs are pressured to put out fires all day and still find the time to perform time-consuming yet mundane maintenance tasks. They also need reliable systems in place to protect their data and applications.

Bakerman is already enjoying virtualization's benefits. "It's easier than I thought it was going to be," he says. "One of the great things about virtualization is the live migration and live capacity. I can update the server during the day instead of at 3 a.m. For me, I will have less work in the middle of the night as part of an upgrade." Just as important, he adds, "through the use of virtualization, if we need to build a new server we can clone it, and it takes anywhere from a few minutes to a few hours instead of a whole day. And that time is completely seamless to the user."

Overall, though, smaller companies are just beginning to experience the benefits of virtualization. According to the Yankee Group, virtualization deployments among small and midsize businesses (SMBs) are expected to double during the next two years. Of course, it's not just smaller firms that are attracted to virtualization. IDCpredicts that more than 15% of all new hardware server shipments will be equipped with virtualization software in 2010, up from 5% in 2005. This is occurring as virtualization software vendors forge OEM deals with leading hardware server vendors.

The Evolution of Virtualization One reason for that growth is an amazing evolution in virtualization technology. At first it was primarily a development tool engineers used to test applications and operating systems. Then VMware, the virtualization software developer founded in Palo Alto, Calif., in 1998, leveraged the tool for x86 serversin the data center. Server consolidation was born; many companies adopted virtualization for consolidation and to help ease application migrations.

In the traditional physical server world, a business might have 20 hardware servers, with each server using about 20% of the machine's storage or processing capacity. But a hardware server running multiple virtual servers can use up to 80% of the available capacity. The increased efficiency means your systems can do a lot more work without having to add new hardware.

As physical servers age, companies can save money by putting the data they hold on virtual servers instead of paying to maintain the old machines or going out and buying new hardware. Another benefit: simplified server management, since IT folks can deal with virtual servers remotely instead of having to actually touch the physical servers.

DON'T MISS: 5 Simple Rules For Going Virtual

Today, though, "the biggest drivers for virtualization have become business continuity and data recovery," says Mark Bowker, an analyst with the Enterprise Strategy Group(ESG). According to a recent survey of 706 IT decision makers that ESG conducted, more than half of respondents said they plan to deploy virtualization for business continuity and disaster recoveryreasons.

Not surprisingly, the growing market for server, desktop, and application virtualization has attracted significant interest from hardware and software makers. (IDC predicts it will be worth more than $3.4 billion by 2011.)

Virtualization Is Hot In August 2007, EMCspin-off VMware went public. When VMware filed its first quarterly earnings report in October, it tripled net income to $65 million on a whopping $358 million in revenue. Last year, as part of EMC, VMware reported earnings of just $19.2 million on $189 million revenue in the same period.

VMware recently announced products specifically for the SMB market. The Infrastructure (VI) Acceleration Kits offer features such as disaster recovery, high availability, simplified IT management, and reduced energy costs, according to the company.

"VMware is no longer [just] a server virtualization product; rather, it has become a rich ecosystem of product vendors, service providers, IT professionals and software developers," ESG's Bowker says.

To keep up, rival Citrix Systems, a leader in application virtualization, unveiled in October a virtualization technology strategythat includes two new product lines (Citrix XenServer for server virtualization and Citrix XenDesktop for desktop virtualization). This announcement came on the heels of Citrix's $500 million acquisition of XenSource, a leader in enterprise-grade virtual infrastructure solutions and maker of the Xen hypervisor.

The free Microsoft Virtual Serverwill give way to Microsoft's next product, code-named Viridian. Also known as Windows Server Virtualization, Viridian will be a hypervisortechnology add-on for Windows Server 2008.

DON'T MISS: 5 Simple Rules For Going Virtual

Relative newcomer (founded in 2003) Virtual Iron, a leading hypervisor provider as well as virtualization management software provider, is a direct competitor to VMware and Citrix's XenSource. The company's three-pronged platformis aimed directly at the SMB market, says Tim Walsh, director of corporate marketing. "We want to provide a solution that's easy to install. The software should be less than the cost of a server," he says, "otherwise it doesn't make sense."

Finding The Right Virtualization Fit As with any new technology, organizations have varying expectations of virtualization. Administrative savings -- not hardware savings -- were the goal for John Dolan, principal consultant at Viant Solutions, when he began implementing VMware for his client, Georgia's Perimeter Church, two years ago.

The church, with 250 employees, was a pure Microsoft Windows shop without a development environment. "If we wanted to try out a new solution, we didn't have an environment to test that out; we would have to provision a server. Development didn't happen because it would be prohibitively expensive," Dolan recalls.

Dolan also saw that many of the church's 15 hardware servers were vastly underused. As user requests for services increased, Dolan thought virtualization would save the six-person IT staff hours a day on time-consuming tasks such as server setup and maintenance, freeing them to meet user demands.

Two years later they have 25 virtual servers running on three physical servers, as well as some additional physical servers that are not hosting any virtual machines. Retired physical boxes are not replaced by new physical machines, but by virtual servers, which do not require the purchase of additional hardware, he says.

Dolan says the goal was to recoup the cost of the church's $15,000 to $20,000 investment in VMware in a year or two, and it did so in one year. His time savings predictions also turned out to be correct: Dolan can provision a new virtual server in less than an hour instead of the two weeks it took with a physical server. And the church now has a valuable development environment.

DON'T MISS: 5 Simple Rules For Going Virtual

"To be able to test a patch or solution before it rolls out provides Perimeter with an exceptional cost savings -- although they can be hard to quantify," Dolan says. "With Vmotion, [a VMware tool that lets users move running virtual machines from one physical server to another with no impact to end users] if we need to add memory to a server we can do it at 5 p.m.; we don't have to wait for the server to be down. Being able to work on boxes during regular office hours is huge. [Before], if our print server was acting up and we needed to bring it down, we'd have to have our printer server down for five minutes. Now it's only down for 30 seconds and no one notices."

Reaping Virtualization's Benefits -- Incrementally Ron Whitling, senior systems engineer for E-chx, a payroll outsourcing company in Rochester, N.Y., ran several production projects on VMware starting in late 2004. But like Dolan, Whitling was careful to add new servers to the environment incrementally.

Whitling put Microsoft Exchange on a virtual server to "see how well this will run on a virtual server in a production environment. It worked pretty well," he recalls. "After that, in the last year we have really geared up and we [now] have a 'default policy.' When a server comes in, by default it has to be virtual. The only two things we don't put on VMware are Citrix and databases," Whitling says.

E-chx stores 90% of its product data on a pair of PS series storage arraysfrom EqualLogic, which is being acquired by Dell. Today, Whitling has 50 total severs running on 32 hardware boxes. In this environment, 29 of the boxes are standard physical servers, while four virtualized boxes host 21 VMware virtual servers.

Having as little downtime as possible is critical for E-chx, not only because the company is processing payrolls but also because its clients are on both U.S. coasts. "We have to be up from 8 a.m. to 8 p.m. I don't think there's an hour in the day we aren't processing payroll," Whitling says. "All the VMware images are on the storage area network [SAN]. If there's a problem, we can just pull the images from the SAN to a different VMware host and get right back up."

DON'T MISS: 5 Simple Rules For Going Virtual

Whitling says he's already getting a return on his investment. He estimates E-chx has saved at least $7,000 using virtual servers instead of purchasing new hardware. Even more important, he adds, "my development team needs to have a staging area" or they'd be troubleshooting in production. "We need four servers for development and four for staging," he estimates. "We couldn't do that with physical servers because the cost would be prohibitive. With virtualization, we were able to do it all with one physical server running VMware."

Like Whitling, many IT professionals at small and midsize businesses have discovered the benefits of virtualization. With server consolidation the initial draw, IT departments have quickly realized that virtualization also offers significant benefits in terms of easy server migration and maintenance as well as backup and disaster recovery. The servers may be virtual, but the savings are real.

Debra Bulkeleyis a technology writer based in Boston, Mass.