There are two ways to implement it: asymmetric (a.k.a. "out-of-band") virtualization, versus symmetric ("in-band") virtualization.
In-band is the most popular method, with StorageApps, DataCore Software, Vicom Systems Inc.,
and FalconStor Software Inc. and others playing in this space. Here the idea is to have an appliance sitting between the server and the storage systems. The device handles the the exchange of all information required to move the data between the two, taking the burden off the devices at either end of the system.
The downside to this approach, critics say, is that the appliance itself can become a bottleneck on the network.
Which is why StoreAge claims its out-of-band approach is superior. With this method, the virtualization software resides on the server and the storage systems, with an appliance "on the side." The read/write commands go directly from server to storage and back, in theory making throughput much faster as the network is not burdened with any decision making.
The control information about the data -- i.e., when it was created, what its for, and so on -- resides on the appliance and can be updated when necessary. Unlike in-band systems, this control data does not have to travel with the actual data across the network each time it is accessed.