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What is Network Virtualization?

Network virtualization transforms a hardware-based network into a software-based network, known as Software Defined Networking (SDN). The underlying physical hardware remains, but network virtualization allows you to use software to build or layer virtual networks (VNs) on top of that physical network. This enables administrators to do two critical things:

  • Combine separate physical hardware networks into one software-based virtual network
  • Run several separate VNs on top of a physical network

How Does Network Virtualization Work?

Network virtualization separates the services a physical network provides from the hardware. It allows administrators to allocate those services virtually to create a new network or several networks. Administrators accomplish this by using a network hypervisor that allows the creation of an abstract layer to host different virtual networks. Network virtualization enables the delivery of services using software. VNs, while sharing the hypervisor’s platform, are independent of each other with their own security protocols.


The components of network virtualization are:

  • Hypervisor: Serves as a platform for the VNs.
  • Controller software: Allows the automation or configuration and management of network infrastructure, thus avoiding manually designing devices and services
  • Host protocols: Used on Internet Protocol (IP) to provide a secure method for a host to connect to other networks
  • Virtual routing and switching: Virtual routing allows the existence of many virtual routers within one router, while virtual switching enables virtual machines (VMs) to communicate with one another
  • Management tools: This software connects VMs and physical hardware in network virtualization, thus cutting back on the administration of resources, allowing for more efficient data analysis and helping to shrink operations

Types of Network Virtualization

There are three types of network virtualization:

Network virtualization in data centers

Data centers have long used virtual networking with VLANs and Virtual Private Networks (VPNs). Businesses wanted to find ways to improve security and streamline control. SDN was one answer. It allowed for more centralized control and has evolved to include infrastructure code, a method of using software and automation to design and manage resources instead of doing them manually. It’s also been a champion of zero-trust security, which tightly controls access to resources and communication between VMs.

Network virtualization in the WAN

SDN allows wide area networks (WANs) to adopt virtualization. This allows for more appropriate bandwidth use for enterprise applications and business needs. Zero trust and Software Defined Parameters (SDP) are also now an essential part of network visualization in WANs.

Network virtualization in the LAN

VLANs are commonly used to build isolated VNs and to better control network traffic. SD-LAN software has adopted zero trust for more comprehensive security as the internet encounters increased security threats.

Internal Versus External Virtualization

These two terms describe the location of internal and external virtual networks in relation to a server. Internal virtualization uses software containers stored on a single network server. When you use containers, you can isolate applications or run different operating systems on the same server. External virtualization refers to combining systems on the same LAN into several VLANs, or several separate LANs into one VLAN.

Why is Network Virtualization Important?

Network virtualization allows enterprises to better scale their networks and improve security and disaster recovery. As a result, enterprises can deliver applications and services faster and more efficiently, have more secure networks and recover from disasters faster.

It also enables administrators to locate problems quickly and allocate bandwidth resources appropriately.

Benefits and Challenges

Network virtualization offers both benefits and challenges:


  • Significant improvements in speed, agility and security by using automation to simplify processes
  • Better management of security
  • Faster delivery of applications to clients and customers
  • Faster and more efficient disaster recovery
  • Ability to configure a VN faster
  • Saves money on hardware


  • IT departments need new skills and teams need to collaborate more often
  • When you move from a physical network to a virtual one, you need to calculate how this will affect resources, such as storage, as well as security considerations
  • Adding too many layers to your network virtualization, thus impeding the ability for monitoring tools to see different layers
  • As you add AI and automation strategies, you need to make sure they work together seamlessly

Network Virtualization Security

The need for enhanced security is a critical part of the design of any network, including virtual ones. However, when you have isolated areas of a network, it can be difficult for security administrators to enforce security policies across all networks. Network virtualization limits attacks on your networks and improves data security. Combining user and device authentication means that any user who wants to access data center resources on a LAN, for instance, must receive permission.

Examples of Network Virtualization

All public clouds use network virtualization, including Google Cloud, Microsoft Azure, SoftLayer on IBM Cloud and Amazon Web Services (AWS). A VLAN is another example of how software can bring different network devices together, regardless of their locations. This means that wherever your servers are located, you can combine them into one virtual network, resulting in greater efficiency, agility and security.

VPNs are also a form of network virtualization. A VPN provides a private connection to the internet for your device. A significant difference between VPNs and virtualization is that a VPN ensures your connections are secure. In contrast, virtualization is primarily a tool for businesses to improve security, reduce costs and create more efficient organizations.

How to Get Started

  • First, define how you want to use network virtualization and consider how it can improve your organization
  • Second, there’s a lot of network virtualization software out there, so make sure you find one that best suits your needs, whether improving security, enhancing disaster recovery, creating a specialized network quickly or reducing costs
  • Third, do some comparison shopping to find the right product for your organization

How to Choose the Right Network Virtualization Solution

Knowing how you want to use network virtualization is vital before you find an appropriate solution. Veeam can provide you with essential products and solutions that work with the network virtualization strategy you adopt. For instance, Veeam Backup and Replication software offers faster, reliable and flexible recovery. It provides you with the security of knowing that if someone tries to get into your network or you have a catastrophic server failure, you’ll be back up and running in no time. You can restore your hypervisor in minutes and recover files or applications with a simple search and restore.

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