Data centers play a crucial role in the delivery of cloud services by enabling on-demand access to the shared resources such as software, platform and infrastructure. Virtual machine (VM) allocation is one of the challenging tasks in data center management since user requirements, typically expressed as service-level agreements, have to be met with the minimum operational expenditure. Despite their huge processing and storage facilities, data centers are among the major contributors to greenhouse gas emissions of IT services. In this paper, we propose a holistic approach for a large-scale cloud system where the cloud services are provisioned by several data centers interconnected over the backbone network. Leveraging the possibility to virtualize the backbone topology in order to bypass IP routers, which are major power consumers in the core network, we propose a mixed integer linear programming (MILP) formulation for VM placement that aims at minimizing both power consumption at the virtualized backbone network and resource usage inside data centers. Since the general holistic MILP formulation requires heavy and long-running computations, we partition the problem into two sub-problems, namely, intra and inter-data center VM placement. In addition, for the inter-data center VM placement, we also propose a heuristic to solve the virtualized backbone topology reconfiguration computation in reasonable time. We thoroughly assessed the performance of our proposed solution, comparing it with another notable MILP proposal in the literature; collected experimental results show the benefit of the proposed management scheme in terms of power consumption, resource utilization and fairness for medium size data centers.