Server virtualization: what to virtualize?

Several years ago we virtualized our "new" Windows Server 2016 with Microsoft Hyper-V Server 2016 on a Lenovo TS120 with a Xeon E3-1245, 32GB (4x8GB) and 2x2TB@7200RPM (RAID1) (the motherboard has 4 SATA ports). It runs a file server (30 computers accessing office files and small AutoCAD files locally, 10 devices accessing from the outside with a VPN), DHCP and DNS for a small network (~50-70 devices with computers, printers, mobile phones). We also have a small Windows 10 virtualized to run some small programs.

The company keep growing, Windows is getting slower with every update, so the HDDs are starting to show their age, especially while deduping. We are planning on adding or changing the storage system, probably adding SSDs. Maybe keeping the old HDD for backup purposes, or moving them to another system if we add more SSds than 2.

The questions are: What should be virtualized? OS only or OS+DATA? I mean, should DATA be located on a virtual hard drive file or it's best to let them be on a couple of drives where the Server 2016 can access them directly? The motherboard has softRAID so maybe we can use Storage Spaces instead. Maybe keep the 2 HDDs adding an SSD allowing Storage Spaces to accelerate the system. Keep in mind low-cost!

What are your thoughts?

Virtualization is a great tool for decoupling your software from your hardware.

In a way, it provides an abstraction layer that let's you stop caring about the underlying hardware.

You might be moving to a completely different server in the future - decoupling your virtual machine from your disks lets you move the virtual disks from one storage medium to another in the future, eg. in case of server failure, or in case that you decide to move to faster or larger disk will save you the hassle of fiddling with physical disks.

Stick with "just big enough" virtual disks as well. 40 to 60 gigabytes is plenty for most VM use cases, with additional virtual disks for other data.

There are use cases where passing hardware through straight to the VM is desirable, however, I do not believe your use case warrants such action.

Also - regarding the softRAID - I would recommend sticking with disk management features of your hypervisor - in your case Hyper-V - as this makes it easier to eg. recover data in the case that your motherboard fails, as this will allow you to recover data on, in theory, any other machine that you can install Hyper-V on.

That said - don't forget to make (and test) your backups!

It might be tough in a no-budget case, but even a cheap, external HDD is better than nothing, and, these days, they cost pennies.

To summarize - use virtual disks, keep them small, and make backups!