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Is it a good practice to consolidate databases that are currently running on different virtual guest machines to one virtual server to save licensing cost and administration? What would be a recommended approach?
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Yes, virtual servers can result in huge cost savings. But it would depend upon your environment how much that would be. Microsoft allow you to run as many virtual instances of Microsoft SQL 2008 on the same server that you bought a license of the product for. So the more Microsoft SQL instance you need that can run on the same physical server the more money you can save. The CORE benefits are You will Save Space, Hardware, Power and Its not just about saving, but you get a lot of extra protection and availability An inherent benefit of VMware virtualization is that it facilitates a distributed computing model in multi-server environments, such as those that may include a database server, an application server, and a web server. Using the virtualization features that you can manage the resources that support these systems as a pool, rather than as individual components. Live migration of virtual machines from one physical server to another is possible, with no effect on the running applications. VMware High Availability (HA) clusters provide continuous service availability in both planned and unplanned system downtime situations. Distributed Resource Scheduler (DRS) dynamically load balances all of the VMware virtual machines across the entire pool of available resources. VMware Consolidated Backup offers a simplified virtual machine backup solution. So there are quite a few benefits but the implementation is quite complex and may not give you the optimal performance if not configured correctly.
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I agree with @usman, but I want to add the performance aspect. Not every database is suited for consolidation, like your business critical database that require ultimate performance. Sharing resources often means that you can't get all resources you need, when you need it because you have to share. That's the concept of shared resources. To find out if you are going to handle the database load you could do a benchmark test like the one described at http://sqlservice.se/sql-server/sql-server-performance/a-sql-azure-tip-a-day-17-my-laptop-is-faster-than-sql-azure/ With a benchmark test you can compare different configurations and choose the best for you, your application and your budget. You'll get what you pay for.
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