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What kind of virtualization are you looking at, would be my first question. If you are talking server virtualization, which is what I suspect, the ROI is going to be rather quick. There is upfront savings from hardware costs from decommissioning and eliminating servers, and payback can usually be expected to take less than a year. One significant benefit is going to be increased server/computing resource efficiency. This will result is decreased expense for energy and cooling.
Georod Carfantan, who works at VMware, the company mentioned in jimlynch's post, helped come up with four methods of evaluating cost and performance of virtualization: 1. Activity based costing; 2. Tiered pricing; 3. Service cost vs. infrastructure costs; and 4. Weighting. If you would like a description of each check out: [url] http://www.cio.com/article/682614/Calculating_Virtualization_and_Cloud_C... [/url]