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Many enterprises are excited about server virtualization because it offers the ability to run multiple servers on a single physical machine. Server virtualization also offers the ability to consolidate servers, perform rapid deployments, do versioning and enable disaster recovery.
Virtualization is a best fit where you have to maintain multiple copies of an application. For example, if your customer's application requires testing on multiple versions of the OS and SQL Server, you could have a single machine housing multiple instances that comprise the complete matrix of combinations of OSes and SQL Server versions you have to support. You can spin these instances up on an as-needed basis. Also, if you are doing SQL Server consolidation and need to maintain an old version of the OS and SQL Server, you can install a virtual instance of this combination instead of having to dedicate a physical machine to it.
Server virtualization is not as good a fit for SQL Server consolidation, although it is quite popular because many of the virtualization vendors allow you to cap the resources an instance may use. This prevents a resource-intensive application from bringing down all instances running on the physical machine. The reason why SQL Server is not such a good fit for server virtualization is that SQL Server's performance is highly dependent on a responsive disk subsystem, and virtualized environments do not deliver these.
Virtualization is great for rapid deployments, especially in test or development environments. The administrator can create a template virtual server to deploy copies quickly, as opposed to installing them from scratch each time, or deploying from an image.
Server virtualization is often marketed as a solution for disaster recovery. While it is possible to copy the files which comprise your virtual server to a disaster recovery site, this often does not make sense if these images are large. Be careful to understand the customer's goals for server virtualization to ensure that it will meet them, and that there are no technologies that are a better fit to their goals.
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