Data Warehouse - DB2 to SQL Server: how & what impacts on ETL?
One thing is hardware resources. The current server will use a certain amount of memory, CPU and IO to do its job. For a 1TB database this is likely to be non-trivial. If you move that work to a new server it is still going to need (more-or-less) the same amount of memory, CPU and IOPS. If the new server is already hosting applications and serving their needs it may not have capacity to also accommodate the new needs of the migrated application. Result: everything runs slowly; sadness abounds.

DW work tends to use big sequential reads. OLTP work usually has small random IO. If you mix these two on one hardware box it could prove tricky to configure the storage (SAN array?) for best performance for either, likely resulting in mediocre performance for both.

Each instance of SQL Server has a fixed overhead, such as tempdb and minimum memory. The more instances there are on one box the more overhead has to be paid for. Also you'll likely have to over allocate resources to each instance to accommodate peak load, again costing more. With everything in a single instance this cost can be spread. The flip side is that it can be more work to isolate normal work from a greedy task on the same instance, but not impossible. Making this decision would be a consultancy engagement, not a Q&amp;A post.