Government agencies are savings billions of dollars from virtualization; and those savings are projected to grow as workloads in virtualized server and desktop environments are expected to double by 2015. But agencies must overcome funding uncertainties, concerns about legacy systems and other barriers to achieve virtualization’s full potential, according to a new industry survey of government IT executives.

The new study found that 82% of federal and 77% of state-and-local IT professionals say their agencies have already implemented some degree of server virtualization, where computing work is done in artificially-created, software-controlled work spaces.

By using physical hardware more efficiently, virtualization has helped agencies realize an average estimated savings of 19% of their IT budgets – or about $15 billion across government — the study reported.

The study, based on an online survey of 302 government agency CIOs, CTOs, IT directors/supervisors, IT managers, and data center managers, was conducted in October 2011 by MeriTalk and underwritten by Microsoft and NetApp, both of which have large stakes in virtualization and cloud computing. The results were released to the public earlier today.

The study captures a snapshot of how virtualization is evolving in federal and state and local government and concludes that virtualization initiatives are picking up momentum in government agencies.

Based in projections from respondents, virtualized workloads are expected to nearly double, from 37% to 63%, by 2015. That would boost the savings to an estimated $23.6 billion government-wide, according to the study’s projections.

The survey found that efforts to virtualize desktops, however, is moving at much slower clip.

It found that 57% of federal and 64% of state-and-local respondents reported that server virtualization takes priority over desktop virtualization, for instance. While government agencies have plans to implement desktop virtualization to some extent, the study found that less than one in 10 plan to virtualize all applications for all users.

However, the study’s authors said, if desktop virtualization provides just half of the savings of server virtualization, agencies could save 9.5% of their IT budget or about $7.5 billion.

“The more opportunities that agencies are able to recognize and incorporate (virtualization) into their modernization frameworks, the greater their long-term benefits.”said Mark Weber, president, U.S. Public Sector, NetApp.

Those benefits have been hard to take to the bank.

Despite documented results and savings potential, only half (48%)of federal and 39% of state-and-local respondents believe that they have the funding needed to meet their server virtualization goals. But that is only part of the challenge.

Agencies continue to face the issue of what to do with legacy systems and how to pay for application migration.

Security concerns, as with most IT migration issues, also presents a deterrent, although more so for federal agencies than for state and local agencies: 41% of federal respondents cited security concerns, compared to 24% of their state-and-local counterparts.

Management support is another hurdle. Only 63% of respondents say their management fully supports server virtualization adoption. Fewer than half report that their agency has a formal policy or common framework for server virtualization.

“Virtualization and consolidation are critical components of an effective cloud strategy, resulting in tangible benefits,” said Susie Adams, Microsoft Federal’s Chief Technology Officer.

“If agencies are thinking vigorously and broadly about combining server consolidation, data center consolidation, and private cloud infrastructures, the industry can realize tremendous leaps in scalability, cost savings, improved services, and integrated management. In many ways this begins with a smart approach to virtualization.”

The report also found that while virtualization yields big savings, the payoff takes time: 57% of participants said they expect to wait one year or more to realize savings once a server virtualization solution is fully implemented and operational.

Among other findings, the study found that the top four virtualization challenges were:

  • 43% Legacy application migration
  • 39% Time required to implement
  • 36% Capital costs
  • 32% Network security/training support requirements

A presentation of the main findings of the study, entitled “Virtualization Vacuum: The 2012 Government Virtualization Study,” can be downloaded to those who register to receive it.