Government agencies are reaping the financial and efficiency benefits of virtualization technology, but still lag behind the public sector in adopting it, according to a new report by CDW.

Seventy-seven percent of federal, state and local agencies are implementing at least one form of virtualization, and of those, 89 percent are benefiting from the technology, according to CDW's 2010 Government Virtualization Report. The report is based on a May survey of 600 Federal, state and local IT managers.

Even though the public sector is embracing virtualization - especially for major IT projects like the agency-wide federal data-center consolidation ordered by the Obama administration in June - 81 percent of agencies said they are not leveraging the technology to its fullest extent.

Moreover, only 33 percent are leading with virtualization as a primary server strategy, which means requiring that new software is proven not to run in a virtualized environment before investing in a dedicated physical server for it.

The private sector is moving more quickly than the public sector to adopt virtualization, especially of the server variety.

According to the survey, 66 percent of federal, state or local agencies are using server virtualization. This is compared to 90 percent of businesses that are using the technology, according to the CDW Server Virtualization Lifecycle Report published in January.

Government IT managers reported several barriers to adopting virtualization that may explain why government agencies aren't using it even more.

Forty-six percent of those surveyed said the IT department is not properly trained or staffed to manage a virtualized environment.

Of federal IT managers surveyed, the number one barrier they reported that is impeding the progress of virtualization at their agency is lack of staff knowledge to manage the technology. That is followed by limited budget for necessary hardware investments and lack of staff and resources to make and implement a specific facilities plan, according to the report.

One previous stumbling block to adopting virtualization - security concerns - appears to be slacking, however, according to the survey.

In 2009, 35 percent of those surveyed saw security as a barrier to virtualization, compared to 24 percent in the 2010 report. Moreover, 47 percent of those surveyed saw security as a benefit to using virtualization, while 11 percent saw it as a drawback.

Those surveyed cited several factors that could increase future government investment in virtualization and ensure successful deployment of the technology. They said securing the support of the CIO, establishing analysis and performance metrics before deployment and improving staff training would facilitate more successful virtualization implementations.