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 – February 10, 2026 – As AI increased 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.
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.
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 in ways that close the gap between AI ambition and operational reality.”
Our role is to help customers modernize in ways that close the gap between AI ambition and operational reality.
Brian Gruttadauria
CTO of Hybrid Cloud at HPE
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, visit 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 reset 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.
MethodologyThe 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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