Today your finance organization probably consists of offices, chairs, desks, people, and lots of computers, all of which are real, physical things. If you could virtualize some of those things, especially the computers, the organization stands to save real money.

Gartner has identified virtualization as the highest-impact trend in the infrastructure and operations market through 2012. Leading the virtualization wave is server virtualization, but it doesn’t have to stop with servers. Companies are starting to virtualize desktop computers for even more savings. Data storage and networks can be virtualized as well.

Heck, you can virtualize almost everything else, too. Some consulting firms virtualize offices by maintaining only minimal amounts of physical office space to be shared by consultants who work mainly outside the office. Temporary staffing firms enable companies to virtualize people, too. Usually they provide bookkeepers and accountants, but they will provide what amounts to a virtual CFO too.

Virtualization is an odd concept. (Mainframe computers have employed virtualization for decades.) Virtualization refers to conversion of something physical into something logical (or virtual). For example, the finance department undoubtedly runs a number of applications — AR/AP, GL, BPM, cash management, fixed asset management, and more. Each of those applications probably runs on its own physical server, often with its own storage attached.

Given the power of modern servers, this is tremendously wasteful. Each system does not need its own server, which is vastly underutilized running one application. However, it was set up that way because it was simpler and avoided potential resource conflicts.

So today, companies are saddled with dozens, hundreds, even thousands of individual physical servers. They may be nothing more than a computer board sitting in a big rack, but each needs to be administered and managed. The result is massive server sprawl that is not only costly but risky, by hindering the organization when it comes to disaster recovery and business continuance. It is a lot harder to back up, restore, and recover 100 physical servers than 10.

Virtualization inserts a layer of software, called the hypervisor, between the applications and the physical server resources. The hypervisor acts as the traffic cop that ensures that each application gets the server resources its needs without interfering with other applications. VMware , Microsoft Hyper-V and Xen/Citrix are the leading PC (x86-based) server hypervisors. Hyper-V is included at no charge with the latest Windows Server; Xen is open source and free.

Server virtualization brings flexibility and reliability to the IT operation as well as cost savings. Virtual servers can be added, removed, and moved at will. It allows the organization to consolidate large numbers of servers into a handful of physical servers and capture the savings.

Every major IT vendor has a virtualization story: IBM, HP, Dell, Sun (soon to be Oracle). You can check out what Cisco says about the Dos and Don’ts of Virtualization and what AMD says about virtualization going mainstream.

Maybe you won’t take virtualization so far as to virtualize the CFO, but you should at least consider virtualization to consolidate the servers running your finance applications. ###