Master the Secrets of VMware Licensing to Maximize Your Investment
Learn the essential steps to avoid overspending and to maximize negotiation leverage with VMware.
- A lack of understanding around VMware’s licensing models, bundles, and negotiation tactics makes it difficult to negotiate from a position of strength.
- Unfriendly commercial practices combined with hyperlink-ridden agreements have left organizations vulnerable to audits and large shortfall payments.
- Enterprise license agreements (ELAs) come in several purchasing models and do not contain the EULA or various VMware product guide documentation that governs license usage rules and can change monthly.
- Without a detailed understanding of VMware’s various purchasing models, shelfware often occurs.
Our Advice
Critical Insight
- Contracts are typically overweighted with a discount at the expense of contractual T&Cs that can restrict license usage and expose you to unpleasant financial surprises and compliance risk.
- VMware customers almost always have incomplete price information from which to effectively negotiate a “best in class” ELA.
- VMware has a large lead in being first to market and it realizes that running dual virtualization stacks is complex, unwieldy, and expensive. To further complicate the issues, most skill sets in the industry are skewed towards VMware.
Impact and Result
- Negotiate desired terms and conditions at the start of the agreement, and prioritize which use rights may be more important than an additional discount percentage.
- Gather data points and speak with licensing partners to determine if the deal being offered is in fact as great as VMware says it is.
- Beware of out-year pricing and ELA optimization reviews that may provide undesirable surprises and more spend than was planned.
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Master the Secrets of VMware Licensing to Maximize Your Investment
Learn the essential steps to avoid overspending and to maximize negotiation leverage with VMware.
EXECUTIVE BRIEF
Analyst Perspective
Master the Secrets of VMware Licensing to Maximize Your Investment.
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The mechanics of negotiating a deal with VMware may seem simple at first as the vendor is willing to provide a heavy discount on an enterprise license agreement (ELA). However, come renewal time, when a reduction in spend or shelfware is needed, or to exit the ELA altogether, the process can be exceedingly frustrating as VMware holds the balance of power in the negotiation. Negotiating a complete agreement with VMware from the start can save you from an immense headache and unforeseen expenditures. Many VMware customers do not realize that the terms and conditions in the Volume Purchasing Program (VPP) and Enterprise Purchasing Program (EPP) agreements limit how and where they are able to use their licenses. Furthermore, after the renewal is complete, organizations must still worry about the management of various license types, accurate discovery of what has been deployed, visibility into license key assignments, and over and under use of licenses. Preventive and proactive measures enclosed within this blueprint will help VMware clients mitigate this minefield of challenges. |
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Scott Bickley |
Executive Summary
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Your Challenge |
Common Obstacles |
Info-Tech’s Approach |
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VMware's dominant position in the virtualization space can create uncertainty to your options in the long term as well as the need to understand:
Make an informed decision with your VMware investments to allow for continued ROI. |
There are several hurdles that are presented when considering a VMware ELA:
Overcoming these and other obstacles are key to long-term satisfaction with your VMware infrastructure. |
Info-Tech has a two-phase approach:
A tactical roadmap approach to VMware ELA and the cloud will ensure long-term success and savings. |
Info-Tech Insight
VMware customers almost always have incomplete price information from which to effectively negotiate a “best in class” ELA.
Your challenge
VMware's dominant position in the virtualization space can create uncertainty to your options in the long term driven by:
- VMware’s dominant market position and ownership of the virtualization market, which is forcing customers to focus on managing capacity demand to ensure a positive ROI on every license.
- The trend toward a hybrid cloud for many organizations, especially those considering using VMware in public clouds, resulting in confusion regarding licensing and compliance scenarios.
ELAs and EPPs are generally the only way to get a deep discount from VMware.
Common obstacles
There are several hurdles that are presented when considering a VMware ELA.
- A lack of understanding around VMware’s licensing models, bundles, and negotiation tactics makes it difficult to negotiate from a position of strength.
- Unfriendly commercial practices combined with hyperlink-ridden agreements have left organizations vulnerable to audits and large shortfall payments.
- ELAs come in several purchasing models and do not contain the EULA or various VMware product guide documentation that govern license usage rules and can change monthly.
Competition is a key driver of price
Source: Datanyze
Master the Secrets of VMware Licensing to Maximize your Investment
Info-Tech’s methodology for Master the Secrets of VMware Licensing to Maximize Your Investment
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1. Manage Your VMware Agreements |
2. Transition to the VMware Cloud |
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Phase Steps |
1.1 Establish licensing requirements 1.2 Evaluate licensing options 1.3 Evaluate agreement options 1.4 Purchase and manage licenses 1.5 Understand SnS renewal management |
2.1 Understand the VMware subscription model 2.2 Migrate workloads and licenses 2.3 Manage SnS and cloud subscriptions |
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Phase Outcomes |
Understanding of your licensing requirements and what agreement option best fits your needs for now and the future. Knowledge of VMware’s sales model and how to negotiate the best deal. |
Knowledge of the evolving cloud subscription model and how to plan your cloud migration and transition to the new licensing. |
Insight summary
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Overarching insight With the introduction of the subscription licensing model, VMware licensing and renewals are becoming more complex and require a deeper understanding of the license program options to best manage renewals and cloud deployments as well as to maximize legacy ROI. |
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Phase 1 insight Contracts are typically overweighted with a discount at the expense of contractual T&Cs that can restrict license usage and expose you to unpleasant financial surprises and compliance risk. |
Phase 1 insight VMware has a large lead in being first to market and it realizes running dual virtualization stacks is complex, unwieldy, and expensive. To further complicate the issues, most skill sets in the industry are skewed toward VMware. |
Phase 2 insight VMware has purposefully reduced a focus on the actual license terms and conditions; most customers focus on the transactional purchase or the ELA document, but the rules governing usage are on a website and can be changed by VMware regularly. |
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Tactical insight Beware of out-year pricing and ELA optimization reviews that may provide undesirable surprises and more spend than was planned. |
Tactical insight Negotiate desired terms and conditions at the start of the agreement, and prioritize which use rights may be more important than an additional discount percentage. |
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Blueprint deliverables
Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals:
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VMware ELA Analysis Tool |
VMware ELA RFQ Template Tool |
VPP Transaction Purchase Tool |
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VMware ELA Analysis Tool |
Use this tool as a template for an RFQ with VMware ELA contracts. |
Use this tool to analyze cost breakdown and discount based on your volume purchasing program (VPP) level. |
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Key deliverable:
VMware Business as Usual SnS Renewal Only Tool
Use this tool to analyze discounts from a multi-year agreement vs. prepay. See how you can get the best discount.
Blueprint Objectives
The aim of this blueprint is to provide a foundational understanding of VMware’s licensing agreement and best practices to manage them.
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Why VMware |
What to Know |
The Future |
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VMware is the leader in OS virtualization, however, this is a saturated market, which is being pressured by public and hybrid cloud as a competitive force taking market share. There are few viable alternatives to VMware for virtualization due to vendor lock-in of existing IT infrastructure footprint. It is too difficult and cost prohibitive to make a shift away from VMware even when alternative solutions are available. |
ELAs are the preferred method of contracting as it sets the stage for a land-and-expand product strategy; once locked into the ELA model, customers must examine VMware alternatives with preference or risk having Support and Subscription Services (SnS) re-priced at retail. VMware does not provide a great deal of publicly available information regarding its enterprise license agreement (ELA) options, leaving a knowledge gap that allows the sales team to steer the customer. |
VMware is taking countermeasures against increasing competition. Recent contract terms changed to eliminate perpetual caps on SnS renewals; they are now tied to a single year of discounted SnS, then they go to list price. Migration of list pricing to a website versus contract, where pricing can now be changed, reducing discount percentage effectiveness. Increased audits of customers, especially those electing to not renew an ELA.
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Guided Implementation 1: Establish licensing requirements
- Call 1: Engage in a scoping call.
- Call 2: Assess the current state.
- Call 3: Determine licensing position.
Guided Implementation 2: Evaluate licensing options
- Call 1: Review product options.
- Call 2: Review licensing rules.
Guided Implementation 3: Evaluate agreement options
- Call 1: Review contract option types.
Guided Implementation 4: Purchase and manage licenses
- Call 1: Determine negotiation points.
- Call 2: Finalize the contract.
- Call 3: Discuss license management.
- Call 4: Evaluate and develop a roadmap for future licensing.
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