what's the best approach to replacing local servers on my network?

I would say it makes sense to look at both virtualized and hosted solutions. Depending on your needs...and requirements (PCI, HIPPA, Sarbanes-Oxley, etc.) (not to mention disaster recovery, high-availability, contingency planning, etc.) it makes more sense in terms of cost price point and man/woman power. If you're already leveraging MS O365, it might make a little more sense to explore virtualized, in the cloud servers.

If PaaS isn't a viable solution for you, I would still explore virtualization in-house, as it does afford some of the benefits of PaaS, Saas, and IaaS.

There's really only one way to move forward and that's with virtual machines running on a hypervisor whether Hyper-V, VMware, or other.

All Windows Server licensing is based on the host. Windows Server Standard yields 2 Operating System Environments (OSEs - fancy way of saying VM) while Windows Server Datacenter yields an unlimited number of OSEs. Core counts are also a consideration.

So, in this case you would purchase two licenses that would yield four OSEs to run on the host.

What's the baseline performance needed for SQL? If you don't know, LiveOptics.Com is a freebie that allows you to scope out your CPU, memory, and disk subsystem IOPS/Throughput needs.

Once you have a scope for performance needs the next step would be to configure a server setup to host the OSEs.

With SQL in the works a solid-state drive setup would be recommended. SQL is sensitive to the "parasitic performance loss" the hypervisor introduces.

I have two very thorough EE articles on all things Hyper-V:
Some Hyper-V Hardware and Software Best Practices
Practical Hyper-V Performance Expectations

Some PowerShell Guides:
PowerShell Paradise: Installing & Configuring Visual Studio Code (VS Code) & Git
PowerShell Guide - Standalone Hyper-V Server
PowerShell Guide - New VM PowerShell
PowerShell Guide - New-VM Template: Single VHDX File
PowerShell Guide - New-VM Template: Dual VHDX Files

Here are some focused articles:
Set up PDCe NTP Domain Time in a Virtualized Setting
Slipstream Updates Using DISM and OSCDImg (keep your Windows Desktop/Server .ISO files up to date)
Protecting a Backup Repository from Malware and Ransomware
Disaster Preparedness: KVM/IP + USB Flash = Recovery. Here’s a Guide

Hello Philip Elder,

Thanks so much for your input. It's very informative.

Why is it better to use a virtual environment on a small LAN? Is it because it's cheaper for the OSEs, because when you purchase a license, you're getting two OSEs?

Is the cost of the virtual environment much less than the cost of the OSEs?

One of our concerns is the cost of maintaining the devices and software on the network and there will be some learning curve associated with moving to a virtual environment.


Best wishes, Kris

I can't think of any situation where you would NOT want to virtualize.

Even the cheapest server you buy will be overkill for a specific task. Not too long ago it was best practice to buy a $5,000 server for your domain controller. Another $5,000 for a SQL Server. Another $5,000 for a file server. Not only do these physical servers take up space and lots of electricity, but when they're all up and running you look at the process monitors of each server and discover they are barely breaking a sweat. What a waste!

Virtualization is the best thing to happen to computing in a long time.
It's very mature. It's here to stay. It's a safe bet that every Fortune 1000 company is using it. And it's the basis of all cloud platforms. Virtualization is VERY affordable and the best thing a small/medium business can do.

If nothing else, it will reduce your physical footprint. One server instead of 3 or 5 servers. Less noise. Less power. And because each VM runs independent of the other, you can still shut down your sql server (for example) for maintenance and everything else will still run.  

So, that being said, you can see that your physical box (the host) is now your single point of failure.

Definitely spec out a server with redundant power supplies, plenty of RAM, and depending on your budget or needs, either load up the chassis with fast drives (which you will then configure as a RAID) - or - attach a storage device such as a high end NAS or a SAN.

For additional peace of mind, if your current servers are able to run virtualization, keep one around as a spare host. If in the unlikely event your new server is down, just migrate the VMs to your old server and you're back up and running. Try that with a physical server migration!

Hard drive performance is often the bottleneck so be sure to plan out what you need and then work with a server specialist at Dell or HPE (for example) so they can help you find a solution. (i,e. RAID controller, type of RAID, speed and capacity of disks, or NVMe).

Going the virtual route is a no brainer.

Consider this: EVEN IF you bought a new physical server and only planned on setting up one Windows Server, I would recommend that you STILL make it a VM. VMs are portable, resilient and easy to work with.

With a physical server: If you have everything running on a physical server (vs a virtual machine) and you run into issues, then your entire server is down until you get it back up.

Whereas with virtualization: If a VM was giving you a problem your hardware is still up and running where you can spin up a new VM.

One more BIG consideration is a backup solution. Simply put, backing up and restoring VMs using software such as Veeam is VERY VERY easy compared to trying to do a manual backup or bare-metal restore on a non-virtualized system.

I could go on and on. There's just no reason NOT to use virtualization. Pick your flavor - VMware or Hyper-V.

Make sure you don't hyper focus on licensing costs. The TCO (total cost of ownership) is what you want to consider, including the intangibles that aren't realized out of the gate.

The only valid reason (these days) to stay in-house with your hardware and/or software would be that you have some sort of administrative control that demands it. Otherwise, there aren't many valid reasons to stay in-house.