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Best practise for moving from conventional servers to virtual machines?

Hi Everyone

We are a college servicing 150 workstations, and we provide a large number of services to students and staff both internally and externally, this has created a large number of physical servers.

We have four rack mounted Dell PowerEdge 2650 servers which I want to consolidate to, currently only two are in use, one for a file server, the other for exchange.

Instead of using these rack mounted servers, the previous sysadmin has opted to use around 10 old desktop tower PC's to host services on, as many of them require a separate IP address and their own 'space' within which to run processes.

I want to move to virtualisation to create redundancy, and allow me to back up the servers, and have begun experimenting with VM Server since it is free. I would like to find out:

how / why is it free? what am I missing out on?
is this a viable option to base our infrastructure on?
what is the best way to move from a physical server environment to a virtual one ?
are there any tools to assist me in moving an entire server from a physical box to a virtual machine?

Thank you everyone for your help, I'm a bit of a novice thrown into the deep end so please be gentle :)
VMwareWindows Server 2003

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8/22/2022 - Mon