The Virtue of Virtualization

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Virtualization is the most important technology development for 2008 that accounting professionals know little about. It’s not a new approach to technology—it has been around for decades. Readers of a certain generation may remember the VM operating system for IBM mainframes, whose letters stand for the obvious words. But tax and accounting pros whose job is not keeping up with high tech probably think it has something to do with virtual reality.

Virtualization covers a lot of ground. But one of the most important has a lot of potential benefit to firms who need to keep copies of tax and accounting software packages of years gone by, such as all those past years of QuickBooks. Obviously, if you install the latest QuickBooks or tax software on one system, it replaces the older ones instead of leaving the user with the different versions.

The technology that enables applications past to live more peacefully together involves creating what are called virtual machines. The simplest explanation is there is more than one computer inside the housing of your system and each can have its own applications without getting in the way of the other. A virtual machine is one that exists as if it were a physically separate device.

Partner Insights

The phrase virtual machine may befuddle some people. But the opportunity to have copies of QuickBooks or your favorite tax software from various years on the same desktop has obvious appeal. If nothing else, it saves having to give up all the office space multiple machines occupy. As software gets more sophisticated it gets more complicated since heavier-duty accounting applications often require separate servers for each database or application. If you have favorite applications you might not otherwise be allowed to keep, a virtual machine could prove to be a good home for them.

But what is really important for accountants—and business people in general—is the potential savings.

At a recent vendor conference, one reseller noted his firm is collapsing 10 servers into one. And that makes a lot of sense even if you don’t understand all the technical concepts. Think of the cost of the hardware and maintaining one server instead of 10.

And not only do virtual machines enable users to run different applications on the same unit, they can handle different operating systems as well, useful if you want to use something besides the ubiquitous Windows platform. This technology is also quite useful for development work, since the nascent software can’t screw up the operations of the other “machines.”

It’s probably going to be a long time before partners at accounting firms talk fluently about virtualization and aspects not covered here. They may never understand anything besides the cost savings.

But rest assured that technical people in your organization probably have a good handle on the concepts. And even if the term virtual machine never becomes as common a hot term like document management software, it’s going to be hot enough.

**Need Insights?**

Editor Robert Scott also writes “Consulting Insights,” a free, twice-monthly electronic newsletter that addresses issues concerning the consulting and reselling market. It’s insight with an attitude. If you want to subscribe, put the following in your browser address line: subscribe.webcpa.com. You can also visit us at www.accountingtechnology.com

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