The Data Center Virtualization Market in 2022

Enterprise Storage Forum content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Data center virtualization is the dividing of physical hardware into multiple, virtual data centers. The virtualization process includes the storage, networking, and infrastructure elements that data centers normally need.

Virtual data centers enable businesses to access data remotely from multiple locations while optimizing the use of their hardware storage resources.

See below to learn all about the global data center virtualization market:

See examples of How Virtualization is Used by Nasdaq, Bowmicro, Nilkamal, Isala, University of Pisa, and AeC: Case Studies.

Data Center Virtualization Market

The data center virtualization market was estimated at $5 billion in 2020. It’s expected to maintain a compound annual growth rate (CAGR) of 16% over the forecast period from 2020 to 2027, reaching a value of $14.1 billion by the end of it.

Regionally, the global data center virtualization market is divided as follows:

  • The U.S. market was estimated at $1.5 billion in 2020
  • The Chinese market is set to maintain a CAGR of 15.4%, reaching a market size of $2.4 billion by 2027
  • Japan and Canada are each forecast to grow at 14.2% and 13.8% CAGRs over the period 2020 to 2027
  • In Europe, the German market segment has one of the highest estimated CAGRs at 11.8%
  • The Asia-Pacific market segment, led by Australia, India, and South Korea, is set to reach $1.7 billion by 2027

By industry vertical, the health care sector held the largest market share in 2021.

Other notable verticals in the data center virtualization market include:

  • Telecommunications
  • Government
  • Education
  • Media and entertainment
  • Manufacturing

“Cloud computing has revolutionized the way we treat valuable data. What was previously locked in safes is now stored on public or private servers and in virtual data centers,” says Dennis Turpitka, member of the Forbes Technology Council.

“According to the Goldman Sachs analysts, as of 2020, around 23% of all IT workloads are processed in the cloud. And by 2023, this number may be as high as 43%.”

See all about the Storage Virtualization Market.

Data Center Virtualization Features

Data center virtualization works by transferring physical data centers into digital spaces that carry virtual versions of the data center architecture. 

Virtual data centers are run on virtual servers, also known as software-defined data centers (SDDC), allowing for the abstraction of physical hardware into a digital imitation of its processors, OS, and hard disk, using a hypervisor.

Similar to other types of virtualization, creating a virtual data center requires the use of hypervisor software. It’s the part responsible for managing the hardware resources, pooling them, and granting virtual machines (VMs) access to allocated resources as needed.

Data center virtualization is the creation of multiple virtual data centers from one or more dedicated hardware systems for resource optimization and conservation. 

Most common data center virtualization applications include:

  • Data-centered services
  • Big data applications
  • Agile business intelligence (BI)
  • Single-view applications

Benefits of Data Center Virtualization

Data center virtualization aids companies in better using their hardware storage resources. Put into practice, the benefits of the technology can vary depending on applications, scale, and use case.

Here are some key benefits of data center virtualization:

  • Increases IT speed and flexibility
  • Reduces hardware infrastructure requirements
  • Reduced physical space and real estate requirements
  • Minimizes or eliminates downtime
  • Boosts speed and efficiency of upscaling
  • Optimizes hosting bandwidth
  • Reduces initial infrastructure investment costs
  • Improves data security and regulatory compliance
  • Enables business continuity and enterprise mobility

Data Center Virtualization Use Cases

See below how organizations in different industries are using data center virtualization to helps with the efficient and cost-effective storage and management of data:


Vizient is one of the largest member-driven organizations for improving health care performance in the U.S. Based in Dallas, Vizient is dedicated to supplying health care providers in 20 metropolitan areas with technical knowledge and solutions needed to boost operational performance.

Looking to migrate its health care systems from three separate data centers to the cloud, Vizient also needed to turn one of its data centers into a backup site for smoother infrastructure management and minimal downtime.

Vizient worked with Deft to migrate its entire technology infrastructure from numerous environments into a single, virtual data center architecture in under six months.

“For this project to be successful, we had to migrate over 225 servers (a mix of Windows and Linux) and convert over 30 discreet site-to-site VPN connections in less than six months. Making it even more complex, this effort spanned multiple teams at three separate companies, and there was a reliance on individual customer resources for site-to-site VPN cutovers,” says Mark McCully, infrastructure manager, Vizient.

Working with Deft, Vizient was able to shift to a virtual data center in record time, saving its IT team time and cost. Additionally, the infrastructure provided is designed with scalability and flexibility in mind.

Global Payment Services

Global Payment Services (GPS), based in Manama, Bahrain, is a payment processing organization that provides regional banks and financial institutions with numerous financial services. 

Poised to grow and planning on launching an aggressive expansion plan, GPS’ main obstacle was upgrading its data center environment in time to meet the growth challenges and added demand.

Collaborating with IBM and its business partner, Gulf Business Machines (GBM), GPS was able to update its server architecture using IBM Power Systems. It switched to a virtualized processing environment that is more accessible and able to keep up with transaction processing.

“The industry is changing. New payment methods, new banking methods, fintech, cryptocurrency, cross-border payment regulations. There are so many compliance and technical challenges that we need to navigate. And we need to meet these challenges while delivering a cost-effective service to our clients,” says Ali Arab, co-founder and general manager, GPS.

“By working with GBM and IBM, we can not only address these challenges, we can overcome them.”

Using virtualization, GPS was able to reduce the processing time by 50% and drastically cut database licensing costs.

Telefónica Tech

Telefónica Tech is part of one of the largest telecom service providers in the world, Telefónica, expanding on its portfolio of services by offering security, the Internet of Things (IoT), and big data, and a business unit dedicated to the cloud. With over 12,000 professionals and certified industry specialists, Telefónica serves thousands of customers across Europe and Latin America.

Telefónica has been a VMware partner since 2007, gaining the opportunity to participate in and use cloud evolution technology to aid its growth and expansion. In its next step, Telefónica looked to upgrade to a virtual data center to better meet customers’ demands.

“Our VDC hybrid cloud is a key product platform to continue to accelerate our growth in cloud services. … These new elements represent both our commitment to always offering best-in-class services and ensuring cutting-edge cloud propositions for our customers,” says Hugo De Los Santos, cloud director, Telefónica Tech.

Working with VMware, Telefónica Tech was able to ensure a state of deployment and build virtual resources using HTML alternatives.

Data Center Virtualization Providers

Some of the leading providers of data center virtualization solutions include:

  • Fujitsu
  • Adobe
  • IBM
  • VMware
  • Radiant Communications Corporation
  • Microsoft
  • Cisco
  • Citrix
  • AWS
  • AT&T

Looking for a server virtualization product?: VMware: vSphere Review.

Anina Ot
Anina Ot
Anina Ot is a contributor to Enterprise Storage Forum and Datamation. She worked in online tech support before becoming a technology writer, and has authored more than 400 articles about cybersecurity, privacy, cloud computing, data science, and other topics. Anina is a digital nomad currently based in Turkey.

Get the Free Newsletter!

Subscribe to Cloud Insider for top news, trends, and analysis.

Latest Articles

15 Software Defined Storage Best Practices

Software Defined Storage (SDS) enables the use of commodity storage hardware. Learn 15 best practices for SDS implementation.

What is Fibre Channel over Ethernet (FCoE)?

Fibre Channel Over Ethernet (FCoE) is the encapsulation and transmission of Fibre Channel (FC) frames over enhanced Ethernet networks, combining the advantages of Ethernet...

9 Types of Computer Memory Defined (With Use Cases)

Computer memory is a term for all of the types of data storage technology that a computer may use. Learn more about the X types of computer memory.