Virtualization works by freeing applications from the constraints of a single physical server. It allows multiple applications to run on one server, but equally important, it allows one application to use resources across the corporate network.
From a security standpoint, centralizing multiple applications on a single box creates single points of failure, both in the physical server itself, and in its network connection. When a virtualized server crashes, or its network connection slows or breaks, it impacts all the applications on that box.
This increases the need for strong network management. A highly virtualized environment lives or dies on the efficiency and dependability of its data network. Failure of a physical server, connection, switch or router can be very costly when it disconnects knowledge workers, automated factory floors or online retail operations from vital IT functionality.