Typically, when IT departments decide to use virtualization in the data center, the big question is which workloads to virtualize. The conventional wisdom has been to avoid virtualizing anything that was too I/O-intensive, such as databases and e-mail systems.

However, EMC wants to put that idea to rest. The company, which owns virtualization market leader VMware, spent a lot of time at EMC World 2009 this week driving home the point to IT professionals that the entire data center can be virtualized.

“Virtualization is now ready to run the biggest applications,” said EMC CTO Chuck Hollis (right). “It’s ready for the biggest applications today.”

In fact, Hollis said that virtualization is already running a lot of the biggest applications for many of the world’s largest companies. America’s top auto makers are one example. Driven by intense economic pressures to reduce costs, the auto makers have recently accelerated their adoption of virtualization.

Another industry that is extensively using virtualization is oil and gas, where they have to deliver the same enterprise applications to both desktops and supercomputers. Plus, they also have a wide diversity of sites across the globe that need access to these applications. As a result, they’ve embraced virtualization to get the kind of flexibility they need on the backend.

EMC itself is committed to eventually moving its entire internal server infrastructure to virtualization, but CEO Joe Tucci said in his keynote on Monday that the company isn’t even halfway there yet. That said, Hollis noted that EMC is doing big stuff with virtualization. “We put big, hairy Oracle and Exchange workloads on VMware,” he said.

And, there are some companies that have taken the plunge and gone 100%. Hollis remarked, “We work with outsourcers that are now completely virtualized.”

In some cases, it’s happening very quietly in the background. Hollis told the story of an IT manager who had virtualized over 3,000 servers. Hollis asked him, “How did you get your users to accept this?” The IT manager smiled and replied, “I didn’t tell them.” Apparently, no one noticed.

That’s what EMC believes will happen in nearly all cases, when virtualization is deployed correctly. Meanwhile, virtualization gives IT a lot more flexibility in managing the company’s technology infrastructure.

Hollis said that the new premise of virtualization is “architecting for choice.” He characterized virtualization to a shipping container for server workloads. This was also reflected in Tucci’s slide on virtual infrastructure:

EMC is also trying to make the case that building a virtualization infrastructure inside the firewall will enable companies to create an “internal cloud” now, and better take advantage of the opportunities presented by cloud computing (“external cloud”) in the future. It’s all conceptual and a bit of a stretch, but it’s a fairly compelling idea. Here’s Tucci’s slide on it:

For this concept to really take off, it would likely require standardization and cooperation among the various enterprise vendors, including EMC, Dell, IBM, Oracle, Hewlett-Packard, Microsoft, and Citrix. It would require more than just compatible hypervisors in the virtualization layer.

That kind of collaboration is probably unlikely. EMC is one of the more open collaborators in that group and they show no interest in reaching out. Hollis claimed that VMware currently owns 97% of the virtualization market, so he argues that it is the de facto standard. While there’s some truth to that, it’s difficult to imagine that the virtualization market won’t get a lot more crowded in the years ahead because so many of the companies listed above are putting so much emphasis on it — especially since it can now handle virtually any type of server load out there.