When it comes to SQL Server consolidation, do you put multiple databases onto a single server (such as an HP DL980)? Or do you host multiple instances on a single server (in which case a large server is even more important)? Or do you go the virtualization route, hosting multiple instances on a VM?
The advantage of multiple instances is security isolation. You can divide sysadmin responsibility among instances for databases that have higher security requirements, for example. Multiple instances also help with global conflicts, such as conflicting linked server names. However, each instance must have its own global memory, master, msdb, tempdb, and so on.
Here's where virtualizing small SQL Server instances makes sense. The HP Database Consolidation Reference Architecture (RA) for Microsoft SQL Server gives you a reference for the hardware and software that you can use to build your own private cloud infrastructure to host SQL Server virtual machines (VMs). Each VM has full security isolation, not just for SQL Server but also for Windows administration. Common resources are rarely shared, so you can say goodbye to isolation problems, recovery problems with common databases, and naming conflicts between shared server objects such as linked servers and msdb jobs.
True, you will need more resources to keep the entire operating system and SQL Server stack isolated. However, when it is time to upgrade, you will have full isolation and can upgrade the database and operating system without invalidating warranties for third-party products that you might host. And you won't need to test a large batch of applications simultaneously before you can perform an upgrade.
You can use the RA to build a high-performance system that reliably hosts the VMs in your data center. Then you can think about moving assets between on-premise and hosted VMs in the cloud, or to your private cloud.
Data: http://www.hpmicrosoftprivatecloud.com/joint-offerings/using-cloud-sql-server-consolidation