Running VMM inside a Virtual Machine is a fully supported way of running VMM. Our team tests this scenario and we have some customers deploying VMM in such an enviroment. If you would like to deploy VMM in such an environment, it is recommended to place the SQL server in a separate server, especially if your environment size will be substancial. SQL server can either be on a physical machine or on a virtual machine. Guidance on running SQL server as a virtual machine on Hyper-V can be found here: http://download.microsoft.com/download/d/9/4/d948f981-926e-40fa-a026-5bfcf076d9b9/SQL2008inHyperV2008.docx.
Because the VMM server component does not offer any high availability options, you can't make VMM a highly available application. However, there is a way to accomplish that by running VMM inside a Hyper-V Virtual Machine that is highly available. That way, when that VM fails over to another host, the VMM server fails over as well and can survive a hardware failure on the source host. This is a supported configuration for VMM. However, there are some gotchas that you have to be careful of in this scenario:
- Make sure you don't migrate the Virtual Machine VMM is residing on from within VMM. This will fail the task and kill the VMM service in the process.
- As per my comment above, the same restrictions on the DB apply here as well. Keep SQL in a remote server. SQL can also be clustered for high availability.
By keeping the VMM component inside a VM that is highly available, it means that on failover the VMM server's name and identity are left intact. Users can still connect to it and the host machines will authenticate the same server, so everything from a VMM perspective will work the same.
Update: With VMM 2008 R2 and Hyper-V R2 in Win2k8 R2, we are able to add two more scenarios to running the VMM server inside an HA VM:
- Now the VM containing the VMM server can be live migrated from one host to another without any loss of service and no Jobs will fail
- If you have installed the Administrator Console to a remote machine, it will not lose connection to the HA VM containing the VMM server during the live migration