5 Cost Optimization Focal Points for VMware ELA Purchases and Renewals

By Gregg Spivack

Vice President of Client Services, NPI

December 20, 2019

Interested in learning more about NPI’s services?

Contact Us

Clients submit thousands of purchases to NPI for price benchmark analysis. Because we service large enterprises, there are certain vendors and agreement types we see over and over.  A good example is VMware ELAs (both new and renewals). These deals are typically seven figures and encompass a growing number of offerings.

If you have a VMware ELA purchase or renewal coming up, here are some of the tricky bits that NPI helps clients navigate successfully:

Your token mix may offer discounting leverage.

VMware offers Subscription Purchasing Program (SPP) Credits in addition to the standard Hybrid Purchasing Program (HPP) and Enterprise Purchasing Program (EPP) Tokens. VMware’s SPP specifically relates to the vendor’s subscription (aka cloud) products. Similar to HPP/EPP, customers prepay for tokens, receive a front-end discount and then exchange the tokens at a later date for specific subscription titles. With that alphabet soup understanding, here’s what you need to know: Currently, NPI is seeing more conservative discounts on SPP credits – or, in some cases, zero discount. Depending on your overall VMware landscape with respect to SPP and HPP/EPP, there are some creative ways to optimize discounting – NPI can help you plot this out.

Think twice about global pricing.

NPI is seeing a growing number of offers that are based on VMware's Global Price list (vs. U.S. Price List).  While the premium for this global deployment right may have a business justification for companies with a truly global footprint, VMware isn’t quick to point out the 10 to 20 percent additional cost involved. For those companies with limited global requirements, this is an area where some financial analysis needs to happen – in some cases NPI is able to help clients get the best of both worlds.

Prevent support fee over-charging.

An increasing number of VMware ELAs reflect some number of upgrades. It can be between editions of the same title or to more robust titles. For the most part, VMware has specific Part Numbers and prices for these upgrades, minimizing any subjective aspects. However, the support fees for the upgrades are another matter. They don’t have a Part Number and can be quoted several ways, including some that are cost-detrimental to customers. NPI helps clients ferret these out, and correct them before the purchase is made..

Demand transparency for how tokens will be accounted for during true-ups for Support and Subscription (SnS) contracts.

NPI sees varying degrees of transparency in VMware ELAs governing how the exchange of HPP tokens for licenses will be accounted for during the SnS true-up process. NPI believes VMware's system likely performs the math correctly, but customers should be sure they understand the mechanism and the support percentage being used. Customers often focus on negotiating the initial token discount and don't focus on this cost dynamic – NPI can step you through it.

Beware of disparity when exchanging PSO credits for actual services.

Some clients purchase the right to exchange prepaid PSO (professional services) credits for actual services. Clients receive front-end discounts, but those can be compromised when VMware allows customers to exchange PSO credits for a specific role (e.g. an Architect). NPI has seen inconsistency in how many credits it “costs” for a particular role.  This can effectively eliminate or certainly reduce any front-end discounts.  Customers should be aware of this “follow-on” negotiation that can occur when PSO credits are cashed in.  Again, this is something that NPI can step you through so you are well-prepared for maximize the value you receive for the PSO credits.