"That has changed the nature of the business," Bittman says.

Porter estimated that, a year ago, no more than two percent of his company's infrastructure was virtualized. That figure is now approaching eight percent and will likely increase to 15 percent to 20 percent over the next 12 or 18 months, he predicts. Customers range from a five-person software development startup to Fortune 100 companies, Porter says.

Contegix uses VMware's products for corporate customers that want enterprise-type features, such as high availability, through the vendor's VMotion technology, which gives users the ability to move running VMs from one physical server to another. The hosting provider uses Xen open-source technology to provide services more cost effectively to SaaS customers and other users that don't need to see the virtualization layer.

"Internally, we need much more fine-grained access to the underlying virtualization subsystems, because we're developing into that. We're not just developing on top of it," says Porter. "To SaaS enable and deliver an application in 10 to 15 minutes after the order is placed, you actually have to be able to get into the underlying layers."

Third-party tools also help Contegix in its virtualization environment. The hosting provider uses 3tera Inc.'s AppLogic for dynamic scheduling in the SaaS environment. It purchased Hyperic Inc.'s HQ Enterprise for monitoring and delivering performance metrics across its virtual and physical systems, effectively replacing its problematic SNMP-based system.

"That was never going to drive value for our customers-us becoming SNMP experts," says Porter. "We wanted to become experts in taking the metrics that we got from the systems and providing answers to our customers."

Contegix promises its customers round-the-clock, year-round access to engineers, a 30-minute hardware replacement SLA, and an "unprecedented" level of monitoring. Hyperic understood those needs and has been up to the task, according to Porter.

But virtualization may not be the right answer for every workload. Environments with high I/O requirements are not good candidates, Porter says.

"If you're already using hardware to the utmost capability, and that system is very intense on the resources-the CPU, the RAM, the hard drives-it is not going to make sense to virtualize it. You're going to get a performance penalty hit," Porter says. "There's no reason to add that extra layer onto it."