4 Things to Optimize Your VMware ELA Renewal

By Gregg Spivack

Director of Client Services, NPI

January 27, 2016

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NPI has recently helped clients optimize several significant VMware ELA renewals. Some common themes emerged:

Double-check the cost scenarios that VMware brings to the table – they may be exaggerated. VMware loves to underscore the merits of their ELA offer by creating a business-as-usual (BAU) scenario over the same term, which allows the ELA to look wonderful by comparison. While this type of comparison can be a valuable analytical tool, beware of BAUs that overstate the costs a customer would likely occur in these non-ELA transactions. Be sure that the BAU discounts reflect your historical non-ELA discounts or at least reflect standard programmatic discounts offered at various spend tiers within VMware's VPP (Volume Purchase Program).

You’re paying for support and licenses in advance of need. Do the economics make sense? Don't forget that one of the key reasons ELAs have deeper discounts is that support services for both the installed base licenses and new licenses are prepaid for the term (often three years). Customers are also committing to and purchasing licenses in advance of need, which poses the risk of shelfware especially when you are buying licenses that will be new to your environment.

Make sure channel incentives are making their way to your contract. If your ELA is full of upgrades vs. new license purchases, expect/request/validate that you are receiving even deeper discounts than usual (VMware is heavily incenting upgrades to their Vsphere with Operations Mgmt licenses for example). There are incentives being passed to the channel that should be reflected in your ELA.

Confirm discounts for token-based ELAs. If you are buying a token-based ELA, your discounts will fall somewhere between normal VPP discounts and full-blown ELA discounts. This is largely because there's an inherent cost for the flexibility (read: risk mitigation) involved in not committing to specific products and quantities, but rather being able to buy off a broader menu throughout the ELA term. During the ELA term, customers pay “list price” when buying licenses using their tokens (which were bought at a discount). Discounts vary – NPI can help you establish fair-market-value targets.