Virtualization is hot, right? Just a couple of weeks ago, it led wiredFINANCE’s list of hot IT for 2010, and back in the spring, readers here were advised to virtualize finance to lower costs and improve performance.

Articles about the joys of virtualization from me and many others have been plastered across the Internet. Here’s one I wrote on virtualization do’s and don’ts for Cisco, and another for AMD, the chip maker, on virtual desktops.

But like every other technology, virtualization has drawbacks that go along with the benefits. Those thinking of pursuing a virtualization strategy in 2010 — a good idea overall — also need to be aware of the gotchas, the things that can undermine a virtualization investment. Here are five to note:

1 — Virtualization ain’t cheap: OK, you can do virtualization on the cheap using a free open source hypervisor and running it on an old, obsolete server. However, if you seek benefits like serious server consolidation, you will need to invest in powerful, richly configured servers with multiple, fast CPUs and lots of memory, and they can be quite expensive.

2 — Virtualization complicates backup and recovery even as it boosts system availability: The ease and speed of moving a copy of a virtual server to another host on the network does wonders for availability. However, backing up and recovering virtual servers and their data is not as simple as first thought. Disaster recovery remains a work in progress.

3 — Virtualization requires specialized skills: This is still immature technology that is complicated to implement. Care must be taken in balancing workloads to ensure acceptable performance, and troubleshooting problems is more challenging. Plan to hire experienced people or train the folks you have. Neither is easy.

4 — Virtualization complicates systems management: Effective systems management requires visibility deep into the workings of the system. Virtualization, however, masks much of the inner workings, making it difficult to see which applications are running and how they are behaving. Vendors are only just starting to bring out virtualization management tools.

5 — Virtualization complicates governance: As much as systems management, governance requires visibility. However, people are only just starting to think through the governance implications posed by virtualization. Best practices and tools are still a way off.

And there are others. For example, running servers at higher utilization levels may shorten the mean time between failures, or the ease of creating virtual machines (VM) may lead to VM sprawl like the server sprawl virtualization was intended to correct. The leading virtualization products, VMware and Microsoft’s Hype-V, are not interchangeable, which raises concerns about vendor lock-in.

These gotchas shouldn’t discourage you from pursuing virtualization. To the contrary, now that you are aware of them, you can move forward more fully informed. Good luck. ###