In the wake of Broadcom’s acquisition of VMware, enterprise customers are facing renewal cost increases of 5X to 10X. The shift from perpetual licenses to subscription-only models has compounded the financial strain, leaving many organizations in a difficult position. Fortunately, by taking proactive steps, companies can minimize the financial impact and avoid being blindsided during their next renewal.
In this blog post, we’re sharing a few key insights to help you begin addressing the challenges of rising VMware renewal costs. These highlights are drawn from our recently published bulletin, How to Mitigate and Minimize VMware Renewal Cost Increases. If you’re a VMware customer, we highly recommend downloading the full bulletin for more in-depth guidance.
The most important piece of advice? No matter what your renewal date is, START TO PREPARE NOW. If you’re a VMware customer, we highly recommend downloading the full bulletin for more in-depth guidance.
Here are some actionable steps to get you started:
- Understand Broadcom’s Strategy
Broadcom’s acquisition of VMware in November 2023 brought sweeping changes, most notably the elimination of perpetual licenses and the move to core-based licensing. These changes are central to Broadcom’s growth strategy and are designed to drive revenue through subscription models and bundled product offerings. By understanding Broadcom’s motivations, you can anticipate future developments and better prepare for negotiations. For example, VMware’s vSphere and vSAN products are now available only in bundles, forcing enterprises into solutions that may not align with their current infrastructure needs. Recognizing these trends allows companies to develop strategies for adapting to or mitigating these forced transitions.
- Prepare for Renewal Price Hikes
VMware renewal costs are surging, with some organizations reporting increases of 5X or more. While there’s no way to completely avoid price hikes, planning ahead can minimize their impact. Begin by conducting a comprehensive review of your VMware environment several months before renewal. This allows you to assess how changes in licensing structures will affect your costs and to make informed decisions about optimizing your VMware footprint.
- Conduct a License Position Assessment (LPA)
One of the most effective ways to minimize costs is by performing a License Position Assessment. This detailed analysis provides several key benefits:
- Educates your team on how current products map to VMware’s new solution structure.
- Right-sizes your usage to optimize core density and capacity.
- Optimizes compliance, helping you avoid costly penalties during VMware’s aggressive software audits.Given the aggressive nature of Broadcom’s approach, understanding your compliance position is essential to avoid audit risks.
- Beware of Increased Audit Risks
Broadcom has intensified its software audit tactics, using them as leverage during renewal negotiations. If you delay or resist renewals, you risk triggering an audit, which can result in significant financial penalties. Many organizations lack the visibility into their VMware usage necessary to ensure compliance, making them vulnerable to costly surprises. Taking proactive steps, such as conducting a License Position Assessment, can safeguard against these risks. Ensuring compliance before entering into negotiations gives you the upper hand and reduces the likelihood of punitive audits.
Download Our Latest Research
For additional guidance and a more in-depth look at how you can mitigate rising VMware renewal costs, download our full bulletin. You’ll find expert guidance tailored to help you navigate the evolving VMware landscape while protecting your IT budget.
Do you have a VMware renewal planned in the next 12 months? Contact NPI today. We can help you achieve material savings.
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