Midmarket CIOs want to see what the management of a virtual environment will look like down the road. CIO Barry Kadets of the Gem Group Inc., a Lawrence, Mass.-based maker of promotional products, has a server virtualization project under way using VMware, and software management is his top concern. "You need software that can manage more than one use of a machine," he says. "It's not hard, but it's not simple."

As companies continue to push virtual servers deeper into the data center -- by having them handle more mission-critical applications -- IDC foresees a portfolio of uses that will drive some of the biggest trends in technology. If applications are no longer tied to underlying hardware, for instance, companies can more easily create and manage a service-oriented architecture, or SOA.

"Virtual servers are a foundational technology," says Elliot. "This is one of those technologies that can trigger cultural change and cause enlightenment of IT."