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I'm working on the design of the enviroment for an enterprise application. There is a plan to host the application in several VM's on one Hyper-V host.

The host server has limited CPU and memory capacity, distributed between VMs.

Is it a good idea to use load balancers in order to improve performance of the VM's hosted in a Hyper-V environment or is it better to allocate more resources to a VM?

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This really depends on what the application is, the OS, and how (together) they manage resources and deal with load.

It absolutely can be more beneficial to have several lower spec VM's than one high spec VM, but whether it's a 'good idea' for you simply depends.

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For instance, I have following application components hosted under Windows 2008R2: 1. Web UI runned under IIS 2. Web Services hosted under IIS 3. Database Chain of calls following: UI -> Web Service -> Database All components are planned to be deployed in several VMs, on one Hyper-V server. Are there any benifits in intoducing load balancer between Web UI and services? – Vadym Fedorov Feb 24 '12 at 10:25
I'm not really up on the finer details of IIS WebApps, but add the detail to your question and I'm sure someone will be along who is! – Dan Feb 24 '12 at 10:33

Its also worth bearing in mind that the main reason to use a load balancer is for high availability. They are great at monitoring your application servers and re-directing traffic if you have an application sever failure.

Better performance is a side effect, as for the single Hyper-V host... yes you will still probably get a performance boost but you would be better off utilizing two of them to increase your availability and performance. When it comes to the actual load balancer to use I would recommend either Kemp Technologies Hyper-V based appliance or the Hyper-V based load balancer.

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