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.

Scott Bickley
Practice Lead, Vendor Management
Info-Tech Research Group

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:

• The hybrid cloud model.
• Hybrid VM security and management.
• New subscription license model and how it affects renewals.

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:

• Evolving licensing and purchasing models
• Understanding potential ROI in the cloud landscape
• Evolving door of corporate ownership

Overcoming these and other obstacles are key to long-term satisfaction with your VMware infrastructure.

Info-Tech has a two-phase approach:

• Manage your VMware agreements.
• Plan a transition to the cloud.

A tactical roadmap approach to VMware ELA and the cloud will ensure long-term success and savings.

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

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.

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.

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.

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.

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.

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.