Increasingly, data centers are no longer tied to a physical location, but instead offer flexible and scalable infrastructure that can be virtualized, growing and adapting with your business needs. Welcome to the world of the virtual data center.

By leveraging the power of virtualization technology, businesses can enjoy numerous benefits such as cost savings, increased productivity, and enhanced security measures. Let’s dive into the realm of virtual data centers and explore how they can transform the way your organization manages its IT resources.

Executive Summary

  • Virtual data centers leverage virtualization technology to provide centralized IT infrastructure with improved processing power and storage
  • Adopting a virtual data center can lead to cost savings, resource optimization, increased agility and scalability, as well as enhanced security measures
  • Successful implementation requires careful planning & design of the solution plus selection of suitable tools & platforms for continual monitoring & management

Understanding the Virtual Data Center

Virtual Data Center with Multiple Servers and Cloud Computing Resources

Virtual data centers use virtualization technology to create an abstract representation of a physical data center, offering a centralized framework for delivering IT resources as a service.

Benefits of virtual data centers include:

  • Renting virtual infrastructure from cloud service providers
  • Enabling remote employees to access corporate resources securely
  • Ensuring compliance with corporate policies
  • Providing a flexible and efficient IT infrastructure solution

With the ability to work in various cloud computing deployment models like:

Virtual data centers are revolutionizing data center architectures and maximizing the potential of cloud computing, processing power, and data storage.

Virtualization Technology

Virtualization is the foundation of virtual data centers, enabling the creation of multiple simulated environments or dedicated resources from a single physical hardware system. This technology is employed in virtual servers, also known as software-defined data centers (SDDCs), which are created from traditional, physical servers.

Hypervisors play a key role in virtualized data center solutions by facilitating the creation and management of virtual machines (VMs), allowing resources such as CPU, memory, and storage to be dynamically allocated among existing virtual machines or new ones.

The distinction between virtualization and the cloud is crucial to understanding how a virtual data center maximizes their benefits. While virtualization enables the formation of multiple simulated environments or dedicated resources from a single physical hardware system, the cloud is a platform that provides access to a pool of scalable resources over a network connection.

By efficiently allocating processing power among multiple virtual machines, virtualization can help organizations make the most of their IT resources and optimize their data centers.

Components of a Virtual Data Center

A virtual data center consists of:

  • Virtualized compute
  • Networking
  • Storage
  • Hypervisor (virtualization software)
  • Management and security tools

Server virtualization is a key component of the compute aspect, allowing for the efficient allocation of processing power among multiple virtual machines (VMs). Compute virtualization utilizes a hypervisor to generate multiple, separate VMs, while network virtualization abstracts network resources from their physical hardware, enabling IT administrators to easily migrate workloads across data centers without being affected by the physical hardware.

Storage virtualization is a vital component which helps in pooling multiple storage resources. This eliminates the necessity for using siloed storage systems. It also allows IT administrators to dynamically allocate capacity to each application on-demand, thereby improving flexibility and scalability.

By combining these components, a virtual data center can provide organizations with a powerful, flexible, and efficient IT infrastructure solution.

Advantages of Adopting a Virtual Data Center

Server Facility with Optimized Resources and Scalability

Adopting a virtual data center can bring numerous advantages, including:

  • Resource optimization
  • Agility and scalability
  • Increased security

These benefits not only lead to cost savings, but also enable businesses to adapt quickly to changing market conditions and scale their IT infrastructure as needed.

Let’s explore these advantages in more detail.

Resource Optimization

One significant advantage of virtual data centers is resource optimization, which enables cost-efficient allocation of IT resources and reduced management and maintenance costs. By allowing one resource to emulate multiple resources, virtualization technology helps organizations maximize the use of their IT infrastructure.

Virtualized data center services offer businesses the following benefits:

  • Cost-effective solution
  • Flexibility to pay-as-you-go, based on resource usage
  • Scalability to easily add or remove resources as needed
  • Improved disaster recovery capabilities
  • Enhanced security measures to protect data

Overall, virtual data centers provide a more efficient and flexible solution for businesses to manage their IT infrastructure.

These cost savings can have a direct impact on a business’ bottom line, as they enable more accurate forecasting of operational costs and effective financial resource management. With the ability to rent virtual infrastructure from cloud service providers instead of purchasing and maintaining physical data centers, organizations can enjoy a more cost-effective and capital efficient IT infrastructure solution.

Agility and Scalability

Virtual data centers offer businesses increased agility and scalability, allowing them to:

  • Rapidly adjust to fluctuating market conditions
  • Expand their IT infrastructure as required
  • Quickly respond to new market opportunities and changing customer demands
  • Boost their capacity to scale in accordance with the demands of a growing business
  • Procure additional IT resources in a matter of minutes when responding to changing business needs or new opportunities

IT administrators can further expedite the process of setting up virtual servers and desktops by utilizing pre-configured images or master templates, or by cloning an existing virtual machine. This allows virtual servers and desktops to be set up in minutes, providing businesses with agility and scalability.

Enhanced Security Measures

Virtual data centers not only offer cost and agility benefits, but also provide enhanced security measures. These measures include encapsulated data traffic (such as the VXLAN protocol), simplified governance, and centralized policy maintenance. By abstracting data traffic and network resources from their physical hardware, virtual data centers can provide an additional layer of security, protecting sensitive information from potential threats.

Moreover, having a strong security posture across all virtualized assets is essential to ensure the protection of business information assets and maintain compliance with industry regulations. By implementing cloud-native security solutions and maintaining agile security measures that can be mapped in real-time to virtual infrastructure management tools, organizations can effectively safeguard their virtual data centers and ensure the ongoing security and compliance of their IT resources.

Implementing a Virtual Data Center: Best Practices

Virtualized Data Center with Planning and Design Tools

Implementing a virtual data center requires careful planning, design, and ongoing monitoring to ensure a seamless integration with existing IT infrastructure and the maximization of its benefits.

Let’s take a closer look at the best practices for implementing a virtual data center, from planning and design to choosing the right tools and platforms, and ongoing monitoring and management.

Planning and Design

The planning and design process for implementing a virtual data center involves aligning business and technology goals, obtaining buy-in from stakeholders, and creating a roadmap for implementation. This ensures that the virtual data center aligns with the organization’s overall objectives and has the support of key stakeholders, setting the stage for a successful implementation.

Creating a roadmap for implementation is essential and it should outline the steps required to implement the virtual data center, including:

  • Selecting appropriate tools and platforms
  • Integrating with existing systems and processes
  • Monitoring and managing the virtual environment on an ongoing basis

Choosing the Right Tools and Platforms

Selecting the right tools and platforms for a virtual data center is critical to ensure its success. Some of the most widely-used virtualized data center platforms include VMware vSphere, Microsoft Hyper-V, Citrix Hypervisor, Oracle VM VirtualBox, and Red Hat Virtualization (RHV). These platforms offer unified management of virtual machines, networks, and storage, as well as self-service portals for users to access their virtual resources.

When implementing a virtual data center, it’s also important to consider the deployment options that best suit your organization’s needs, including on-premise, cloud-based, and hybrid deployments. Each option has its own advantages and drawbacks, so carefully evaluating your organization’s specific requirements and constraints will help you choose the most suitable deployment option.

Monitoring and Management

Ongoing monitoring and management of a virtual data center are crucial to ensure its smooth operation, performance, and security. Utilizing centralized tools and automation can simplify the management of virtual environments, reducing costs and increasing agility. Moreover, monitoring and managing system data can help detect and address any potential issues, such as system outages or data loss, ensuring business continuity.

Besides performance and reliability, ensuring proper security measures are employed is of paramount importance in a virtual data center. Some key security measures to consider include:

  • Implementing controls to safeguard the integrity of business information assets
  • Applying technology and physical measures to secure and protect the data center’s assets and resources
  • Maintaining continuous vigilance through monitoring and surveillance systems

Real-World Examples of Virtual Data Center Success

Virtualized Data Center with Successful Real-World Examples Case Study

Real-world examples of virtual data center success can provide valuable insights into the benefits of adopting this technology across various industries and use cases. Let’s explore two case studies that showcase the advantages of implementing virtual data centers and how they have transformed the way these organizations manage their IT resources.

Case Study on J.P. Morgan – Efficiency, Scalability, Cost Reduction

The first case study focuses on J.P. Morgan, a leading global financial services company, that was able to enhance efficiency, improve scalability, reduce costs, and strategically align with its modernization goals by implementing a virtual data center.

By outsourcing the maintenance and management of the physical data center to a cloud service provider, the company’s IT administrators were able to focus on more strategic tasks, leading to increased productivity. The virtual data center also provided a more cost-effective solution, as the company could rent virtual infrastructure from the cloud provider instead of purchasing and maintaining physical data centers.

More specifically, the virtual data center offered the following benefits:

  • Efficiency: Migrating 60% of its in-scope applications to virtual data centers has led to a 30% increase in efficiency for J.P. Morgan, reducing its hardware asset count by 16,000
  • Integration of Cloud: Virtual data centers and a multi-vendor public cloud strategy have become pivotal in J.P. Morgan’s IT architecture. Of the company’s total IT infrastructure, 38% now resides in the cloud, showing alignment between cloud integration and virtual data centers
  • Legacy to Virtual Migration: J.P. Morgan’s strategic shift to virtual data centers is evident in the ongoing migration. On track to move approximately 95% of its applications out of legacy facilities by year-end 2024, the company’s push towards virtual data centers is focused
  • Markets Regulatory Reporting Platform: This platform is J.P. Morgan’s public cloud-hosted data warehouse that leverages virtual data centers, allowing scalability to 2.5 billion trades per day. This migration has resulted in monthly running costs decreasing by over 50%

J.P. Morgan’s commitment to virtual data centers is at the core of its modernization strategy. From efficiency gains to cost reductions, the emphasis on virtual data centers has positioned the company for future innovation and growth.

Case Study on Carrier Global – Global Scalability and Cost Reduction

In the second case study, Carrier Global, a leader in HVAC and other building technologies, embarked on a mission to transform its IT infrastructure. They aimed to migrate 4,000 workloads to virtual data centers over 36 months.

The strategy involved leveraging virtual data centers and cloud migration services from Amazon Web Services (AWS). Throughout the process, Carrier:

  • Exited 1,300 servers supporting 350 applications and decommissioned 370 servers
  • Shut down 14 traditional data centers
  • Standardized its network across 675 global facilities

The virtual data center led to the following benefits:

  • Global Scalability: 70% of internal workloads moved to virtual data centers in eight global regions
  • Cost Efficiency: Achieved an annualized cost reduction of $2.4 million
  • Network Transformation: Transitioned from high-cost networks to software-defined networks, enhancing accessibility and security

Carrier’s adoption of virtual data centers marked a significant transformation in their approach to IT management. By consolidating data centers and embracing cloud technology (including collaboration with AWS), they successfully executed a strategy that led to cost savings and enhanced scalability.

Overcoming Challenges in Virtual Data Center Adoption

Server Facility with Proper Security Measures

While virtual data centers offer numerous advantages, adopting this technology also comes with challenges, such as ensuring proper security, managing complexity, and ensuring seamless integration with existing IT infrastructure.

Let’s explore these challenges in more detail and discuss potential solutions to overcome them.

Ensuring Proper Security

Ensuring proper security in a virtual data center is of paramount importance, as it protects sensitive business information and maintains compliance with industry regulations. Implementing cloud-native security solutions and maintaining agile security measures that can be mapped in real-time to virtual infrastructure management tools are essential for safeguarding the virtual data center.

In addition to securing the virtual data center, it’s also crucial to maintain a strong security posture across all virtualized assets. This includes:

  • Implementing controls to safeguard the integrity of business information assets
  • Applying technology and physical measures to secure and protect the data center’s assets and resources
  • Maintaining continuous vigilance through monitoring and surveillance systems

Managing Complexity

Managing complexity in a virtual data center can be challenging, as it involves dealing with various difficulties that arise when operating a virtualized infrastructure – such as scalability, high availability, and diverse workload management. However, by simplifying the management of virtual environments through centralized tools and automation, organizations can reduce costs, increase agility, and optimize the performance of their virtual data centers.

Ensuring Seamless Integration

Seamless integration of a virtual data center with existing IT infrastructure is essential for a successful implementation. This requires careful planning and design, selecting appropriate tools and platforms, and consistently monitoring and managing the virtual environment.

In addition to planning and design, organizations should also consider the deployment options that best suit their needs, including on-premise, cloud-based, and hybrid deployments. By evaluating their specific requirements and constraints, organizations can choose the most suitable deployment option and ensure a smooth and seamless integration of their virtual data center with existing IT infrastructure.


As Dgtl Infra has explored throughout this article, virtual data centers offer numerous advantages, such as resource optimization, agility, scalability, and enhanced security measures. By adopting virtual data centers and following best practices for implementation, organizations can transform the way they manage their IT resources and reap the rewards of this innovative technology. The future of data centers is virtual, and businesses that embrace this shift will be better positioned to adapt to the ever-changing landscape of the digital world.

Frequently Asked Questions (FAQ)

What is a Virtual Data Center (VDC)?

A virtual data center (VDC) is a pool of cloud-based infrastructure resources, such as computing, storage, and networking. These resources are pooled together and presented to users as a single, unified resource. It eliminates the need for an on-premise data center while providing the capability to deploy additional resources as and when needed.

What is a Traditional Data Center vs Virtual Data Center?

A traditional data center utilizes a physical location where computer systems and associated IT components store and process data, whereas a virtual data center utilizes cloud-based resources instead and is not confined to a specific geographical location. Virtual data centers are software-defined, requiring less equipment, power, cooling, and space than physical data centers, and also have the ability to quickly scale into either a public or private cloud when more resources are needed. This makes them more cost-effective and efficient than physical data centers.

What are some Good Reasons to Run a Virtual Data Center?

Running a virtual data center reduces the need for physical hardware, simplifies maintenance processes, and offers benefits such as cost savings, scalability and improved resource utilization.

Additionally, virtual data centers can offer faster application deployment times, increased security, and improved disaster recovery capabilities.

Is the Cloud a Virtual Data Center?

Yes, the cloud is a virtual data center. It provides the same capabilities as a traditional data center, but using a collection of remote servers that are hosted and maintained by a cloud service provider like Amazon Web Services (AWS), Microsoft Azure, or Google Cloud. This enables an organization to quickly deploy additional infrastructure resources as needed without having to purchase, configure, and maintain physical IT hardware.

Cloud computing offers many advantages over traditional data centers, including scalability, cost savings, and increased flexibility.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing. Mary has over 5 years of experience in research and writing for Data Centers.


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