Server Virtualization is not a monolithic approach – there are a few different ways of going about it. The three main methods of executing server virtualization are On-premise, Cloud and Hybrid models.
On-premise: This model of server virtualization is most familiar to IT managers – it’s the traditional data centre approach, where the virtualized servers are hosted on-site at the company’s own data centre, and the company owns and maintains its own servers. The primary benefit of on-premise server virtualization is that it gives the company a greater degree of control over the daily management of its servers. The main drawback is that the company continues to pay the full costs of running the data centre – energy, security, maintenance, license fees, etc.
Cloud: With cloud-based server virtualization solutions, the company’s IT resources are hosted and accessed online, either in a "private cloud” (dedicated for the use of only one company) or a "public cloud” (a multi-tenant arrangement where the cloud resources are shared by multiple companies). The biggest benefits of cloud server virtualization is that the costs are typically lower than an on-premise data centre, since IT resources are hosted online instead of taking up physical space at the company’s location, and companies are able to convert their IT spending to a "pay per usage” model. The disadvantage of cloud solutions is that some companies perceive them as being a higher risk for information security. Especially for strategically sensitive information, some companies prefer to control their own dedicated servers, or create their own "private cloud,” either with an internal cloud (created via on-site servers) or external cloud (hosted off-premises on dedicated servers). Cloud computing is clearly the wave of the future – according to the IBM Tech Trends survey published in October 2010, over 65% of IT professionals expect that by 2015, cloud computing will overtake on-premise computing as the primary way that organisations access information technology.
Hybrid: This model of server virtualization enables companies to develop a customised blend of on-site data centre hosting and off-site cloud-hosted services, with different resources available to different users. For example, with a hybrid approach, a company could develop locally-deployed servers (on-premise at its own data centre) for office staff, and subscribe to hosted cloud services for mobile staff who need access to different information. A hybrid approach makes it easier for companies to adjust the levels of IT service available for different users with different needs. One consulting firm profiled in a Microsoft study saved over $500,000 by shifting to a hybrid approach to server virtualization.