New Research Finds Only 5% of Enterprises are Fully Ready for The Great Virtualization Reset

Key Terms

virtualization technical

Virtualization creates software versions of physical computing resources—such as running multiple independent “virtual” computers, storage pools, or networks inside a single physical machine—allowing firms to do more with less hardware and to scale services quickly. It matters to investors because it lowers capital and operating costs, speeds product deployment, and supports cloud and security strategies that can improve efficiency and profitability; think of turning one big building into many flexible apartments.

hybrid cloud technical

A hybrid cloud is a computing setup that mixes a company’s own servers with rented services from public cloud providers, letting businesses choose where each application and dataset lives. Think of it like keeping valuables in a private safe while also using a nearby storage unit for overflow; this matters to investors because it influences a company’s costs, flexibility, regulatory risk and ability to scale or offer new services, all of which affect profitability and competitive strength.

public cloud technical

A public cloud is a service that provides computing resources, like storage and software, over the internet for multiple users or organizations. Think of it as renting space in a shared digital storage unit or using a shared utility, where the provider manages the infrastructure. For investors, public clouds enable flexible and scalable technology solutions, often at lower costs, making them a key component of modern business operations.

private cloud technical

A private cloud is a computing environment reserved for a single organization, where servers, storage and software are dedicated rather than shared with other companies. Think of it as a private utility or fenced yard for a business’s data and applications, offering greater control, security and customization. Investors watch private-cloud use because it affects costs, capital spending, regulatory risk and how quickly a company can scale or launch new products.

AIOps technical

AIOps (Artificial Intelligence for IT Operations) uses machine learning and data analysis to monitor, detect, and resolve problems in an organization’s technology systems automatically. It matters to investors because it can cut downtime and operating costs, speed up fixes, and make digital products more reliable—similar to an autopilot that notices and corrects issues before they disrupt service, which can protect revenue and reduce operational risk.

hypervisors technical

A hypervisor is software that creates and runs multiple virtual computers on a single physical server, letting one machine behave like many separate computers. Think of it as a building manager that leases out self-contained apartments inside one large property. Investors care because hypervisors drive cloud services, data-center efficiency, software licensing, and security models—factors that affect a tech company's costs, revenue scale, and competitive position.

cyber recovery technical

A cyber recovery program is the set of plans, isolated backups, tools and tested procedures a company uses to restore its computer systems and data after a cyberattack or major IT failure. It matters to investors because a strong program reduces the chance of prolonged outages, large recovery costs, regulatory penalties and reputational damage—think of it like an emergency generator and evacuation plan that helps a business get back to work quickly and with less loss.

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HPE survey reveals that more than two thirds of enterprises are planning material changes to their virtualization strategy within the next two years as pressure mounts from AI, cost uncertainty, and performance demands.

In this article:

• Next 12-24 months marks an inflection point for virtualization as enterprises move from planning to active transformation
• AI readiness–not solely virtualization licensing costs–is the primary force reshaping strategies in favor of a flexible, hybrid operating model
• Security, observability, and data protection rise as essential pillars of modern virtualization

HOUSTON--(BUSINESS WIRE)-- As AI increases operational complexity and cloud costs, enterprises are rethinking whether their infrastructure is equipped to stay competitive, according to a new survey from HPE (NYSE: HPE). The survey of nearly 400 global enterprises examines how organizations are responding to changing virtualization needs amid pervasive licensing changes.

The virtualization market is at a tipping point.

More than two thirds of enterprises are planning material changes to their virtualization strategy within the next two years; however, only 5% are fully ready, highlighting a significant gap. CIOs and IT teams are increasingly worried about cost unpredictability, AI readiness, and the need for speed as they assess new virtualization alternatives to stay ahead of the curve. Budget constraints (28%), technical complexity (24%), and migration risk (21%) followed closely by skills gap (20%) are cited as the top barriers slowing progress of the Great VM Reset.

Companies are overhauling their IT operations—not because of price alone.

Fewer than one in 10 enterprises (4%) cite licensing costs as the single biggest catalyst for virtualization, underscoring the urgency is less about cost, and more about transformation to a hybrid operation model and AI readiness. Companies are taking a deliberate approach and not looking to just swap hypervisors. Data shows that more than half (57%) of enterprises are taking a phased approach to futureproof their IT, with hybrid cloud emerging as the preferred path forward to support AI performance demands. Today, 78% of provisions are in the public cloud, 61% in virtualized clusters, 48% in private cloud and 32% at the edge.

Enterprises overwhelmingly see advanced AIOps as essential to modern virtualization strategy.

IT leaders are racing to build systems that can meet the performance, data, and scaling demands of AI, with over a quarter of IT decision makers putting AI readiness at the top of their list. When shaping future virtualization and private cloud strategies, enterprises say access to unified backup and cyber‑recovery (70%), cross‑platform governance (61%), and integrated observability and AIOps (55%) are very important or business critical.

“We’re seeing enterprise leaders reassess longstanding IT assumptions to balance cost predictability, AI readiness and performance. This isn’t just a rush to rip and replace, but a deliberate shift toward a more flexible and simplified operating model,” said Brian Gruttadauria, CTO of Hybrid Cloud at HPE. “What the data makes clear is that AI readiness now depends on how well virtualization evolves. Our role is to help customers modernize by closing the gap between AI ambition and operational reality.”

Why Leaders are Choosing HPE for their Virtualization Needs

“From the outset, we saw a change in virtualization strategy as a chance to future-proof our operations both for simplified cloud operations and the AI era,” said Sune T. Baastrup, CIO at Danfoss. “As part of our HPE Private Cloud Enterprise solution, we benefit from the HPE Morpheus Software, which enables us to run our environments—from data centers to factory floors—with simplicity, agility, and reliability. It’s the kind of stable IT foundation a global industrial business needs.”

“Control and predictability in virtualization now matter more than ever,” said Scott Steele, COO at Thrive. “Our customers rely on us to architect agile IT environments built for change. By partnering with HPE, we can provide reliable virtualization, cost optimization, as well as observability, management, and the right hybrid operating model to meet each customer’s unique needs while preparing their infrastructure for what’s next.”

For more information on IT virtualization market trends, read HPE’s The Great Virtualization Reset report.

Frequently Asked Questions

How are enterprises thinking about their virtualization strategy?

The virtualization market is at a tipping point. HPE’s research finds more than two thirds of enterprises are planning material changes to their virtualization strategy within the next two years, but only 5% say they are fully ready, highlighting an execution gap. This is no longer about a vendor swap. Just 4% cite licensing costs as the primary driver but a desire to rebuild hybrid operating models for AI.

Is the great virtualization rest just about rising VM costs and switching hypervisors?

VM cost increases were the forcing function, not the root problem. They exposed deeper issues already in place: hybrid complexity outpacing operations, vendor lock-in, skills gaps, and an operating model that no longer scales. The answer is not a hypervisor swap. It’s an operating model shift—agnostic to hypervisor, hardware or hyperscaler—and a decision about where workloads live and how confidently the business can run them. If the choice only changes the hypervisor, the reset hasn’t happened.

What matters most when modernizing IT strategy for AI?

To support AI workloads, organizations should prioritize operational capabilities over the hypervisor itself. HPE’s survey finds enterprises rank these next-generational virtualization features as essential for modern virtualized environments: unified backup and cyber recovery (70%), cross-platform governance (61%), and integrated observability and AIOps (55%) are very important or business critical.

Who helps companies modernize their IT operations?

HPE helps enterprises modernize virtualized environments across networking, hybrid cloud, AI and compute to transform IT operations for AI readiness, improved resiliency, and reduced operational risk through a simplified hybrid cloud operating model.

Methodology

The findings in this release are based on primary research conducted by HPE between December 15, 2025, and January 4, 2026. The study surveyed nearly 400 IT decision‑makers—including CIOs, CTOs, and senior technology leaders—who participate in the global Business Transformers Community. This community is managed by C‑SPACE, an independent research partner. Respondents are responsible for, or directly influence, decisions related to enterprise IT infrastructure, cloud strategy and virtualization platforms.

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About HPE

HPE (NYSE: HPE) is a leader in essential enterprise technology, bringing together the power of AI, cloud, and networking to help organizations achieve more. As pioneers of possibility, our innovation and expertise advance the way people live and work. We empower our customers across industries to optimize operational performance, transform data into foresight, and maximize their impact. Unlock your boldest ambitions with HPE. Discover more at www.hpe.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260210947512/en/

Media Contact:
Sanah Sadaruddin
sanah.sadaruddin@hpe.com

Source: Hewlett Packard Enterprise