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System Center Virtual Machine Manager, sometimes referred to simply as VMM, is part of the Microsoft System Center suite. VMM, or Virtual Machine Manager, can be used to manage virtualization infrastructure of an organization.
You can manage virtualization hosts such as Hyper-V, Citrix XenServer and VMware ESXi via VMM. 
SCVMM setup involves installing VMM Management Server, VMM Console, Library Servers and integrating VMM with other System Center components such as Operations Manager and infrastructure servers such as WSUS Servers.
However, before planning an install of SCVMM 2012 R2 in a production environment, make sure you’re up to speed on several key considerations.
To start, if you need to manage up to 150 virtualization hosts, it is recommended that you install VMM Management Server on a computer with a 2.8 GHz or faster processor and at least 4 GB of RAM. For managing more than 150 virtualization hosts, it is recommended you use a computer that has at least 8 GB of RAM and a 3.6 GHz or faster processor.
As for disk space requirements, since it is recommended that you host VMM databases on a SQL Server running on a separate computer, a minimum of 40 GB of disk space will be required on the computer where VMM Management Server will be installed.
If you are planning to install VMM Management Server on a virtual machine and if the Dynamic Memory feature of Hyper-V is enabled, make sure to set the startup RAM for the VMM virtual machine to be at least 2 GB.
Installing the VMM Management Server
When installing VMM Management Server, you are required to select an option for storing encryption keys. Encryption keys can be stored either on a local computer or in Active Directory. Note that VMM Management Server can also be installed on a Windows Failover cluster to provide availability of VMM services in case of any failure with one node in the failover cluster. When installing VMM in a Failover Cluster, the encryption keys must be stored in the Active Directory.
VMM stores its configuration information in the SQL database. It is important to understand that Configuration Manager and Virtual Machine Manager Databases cannot be installed on the same computer. So if you are planning to use System Center Configuration Manager, make sure the SQL database is configured on a separate computer.
It is also worth mentioning that if VMM Management Server and SQL Servers are not part of the same domain, you must create a two-way trust relationship between VMM and SQL Server domains.
If you have licensed for System Center 2012 R2, it is important to note that not all System Center components can be installed on the same computer. Some products in System Center 2012 R2 will not function properly if other components are installed on the same computer.
For example, none of the following components can exist on the same computer: DPM Management Server, Operations Manager, Service Manager and Service Manager Data Warehouse Management Server. However, you can install VMM Management Server, App Controller and System Center Orchestrator on the same computer.
Integrating a Window Server Update Services Server with VMM
VMM allows you to integrate a Windows Server Update Services (WSUS) server to process security and important updates for servers that are being managed by VMM. For example, you can integrate WSUS Server with VMM to manage updates for servers such as virtualization hosts, Library Servers, VMM Management Servers, PXE Servers and file servers.
If you are planning to integrate WSUS Server with VMM, make sure to install the WSUS Server role on a computer that is running Windows Server 2008 R2 SP1 or later. If WSUS and VMM Management Servers are part of different domains, make sure to have a two-way trust relationship between the domains. It is also worth mentioning that VMM does not support integrating a WSUS Replica Server.
VMM can only support integrating a WSUS Server running either a downstream server or root server. WSUS Server can be installed on the computer where the VMM Management Server is installed, but in casees where the WSUS Server will process a very large volume of updates, consider installing WSUS Server on a separate computer.
As a best practice, you should not consider installing any other Server Role or System Center components on a computer where VMM Management Server is installed.
Integrating System Center Operations Manager with VMM
In case you need to integrate System Center Operations Manager with VMM to monitor the health and performance of virtual machines and virtualization hosts, make sure to install the version of Operations Manager console on VMM Server that matches the version of Operations Manager. Integration would also help you fetch forecasting reports on performance, but make sure to install SQL Server Analysis Services on the Operations Manager reporting server.
You also need to pay close attention to the network ports used by the different components of VMM. For example, when VMM Console is installed on a separate computer, you’ll be required to open network port 8100 between the VMM Management Server computer and the computer where VMM Console in installed.
Similarly, the VMM Management Server can communicate with the VMM agents installed on the virtualization hosts only if network port 4985 is opened. If you have integrated WSUS Server with VMM, network port 8102 will be required for VMM Management Server to communicate with the WSUS Server.
Nirmal Sharma is a MCSEx3, MCITP and Microsoft MVP in Directory Services. He has specialized in Microsoft Technologies since 1994 and has followed the progression of Microsoft Operating System and software. In his spare time, he likes to help others and share some of his knowledge by writing tips and articles on various sites and contributing to Solution IDs for www.Dynamic-SpotAction.com. Nirmal can be reached at nirmal_sharma@mvps.org.
