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Server consolidation is crucial to improving a corporation's bottom line by providing savings in hardware, software, maintenance, facility, and labor costs. In today's cost-cutting environment, consolidation efforts can provide significant savings in IT expenditures. Overall potential consolidation benefits include: lower total cost of ownership, improved service levels and availability, and reduced business risks, resulting from consistent business management and resiliency. To fully realize consolidation benefits, businesses must focus on the performance and service levels provided to users in addition to reducing unused capacity. We present a new way to analyze consolidation alternatives using performance modeling and stepwise refinement, a methodology for efficient and effective modeling.