Transactional Variables to Consider When Transitioning to Citrix Cloud from On-Premise

By Tyson Hendry

Senior Analyst, NPI

September 28, 2021

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Shifting clients from an on-premise license model to cloud subscriptions has been a priority for many software publishers over the last few years, and Citrix Systems is no exception. Historically, Citrix provided its desktop and application virtualization platforms through perpetual licensing and renewable maintenance. However, in mid-2015, Citrix first announced the release of its cloud-based platform Citrix Workspace Cloud (now referred to as Citrix Cloud) and has been committed to growing the offering since then.

For a long time, Citrix’s ELA program was the standard by which most Citrix transactions were priced. The program consisted of six ELA levels that were differentiated by a collection of thresholds that included size of initial purchase, term length, net renewal spend, and others. Each ELA tier included a programmatic discount that was applied to each incremental purchase or renewal as long as a client remained in that tier. Discounts ranged from 25 percent for ELA 2 (ELA 1 did not receive discounting) up to 45 percent for ELA 6. ELA 7 or “custom” discount was sparingly seen and was typically reserved for only the largest of spends.

But then came the cloud and increased urgency from Citrix to move new and existing clients away from on-premise licenses to its cloud offerings. Citrix sales teams began incentivizing Citrix Cloud transactions with deeper discounts and more flexible terms. Currently, over 70 percent of Citrix’s revenue is now based in recurring cloud subscriptions and management has indicated that they intend to push beyond 90 percent over the next few years.

Customers with existing on-premise Citrix footprints will most likely be reviewing proposals that include cloud transition options in the near future. Below are some considerations for IT procurement teams to consider as they navigate the transactional piece of the Citrix Cloud migration.

Volume, Volume, Volume

License volume has always been an important factor in Citrix pricing, with the main variables for ELA tier differentiation being license count and upfront spend amounts. With the advent of Citrix Cloud, volume has become an even more important part of the pricing structure with loosely defined volume tiers deciding a customer’s ultimate discount.

Hybrid Rights

One of the earliest hurdles that Citrix sales reps encountered while attempting to move existing customers to the cloud was client hesitation in re-architecting current licensing to function within the cloud. To counter this hesitation, Citrix began offering two years of Hybrid Rights which allows customers to reap the benefits of upgraded cloud licenses while still receiving CSS Select support for any on-prem licenses that hadn’t been transitioned yet.

While Hybrid Rights are still a big part of making the Citrix Cloud transformation, they are typically not “included” anymore and actually have their own SKUs. Customers looking to retain these rights must be sure to address the need with the Citrix sales team up front and request they receive their own line-item pricing on any actionable order forms.

Transition Path to Citrix Cloud

The majority of Citrix customers with on-premise footprints that are transitioning to the cloud have some mixture of legacy XenApp/XenDesktop or Virtual Apps/Virtual Apps & Desktops licensing. Citrix differentiates its cloud licenses by which legacy products a customer is migrating from and has created unique SKUs for each transition path. These SKUs have differing unit list prices so a transition path (or lack thereof) can affect overall price. NPI recommends clients request specific license SKUs up front in order to avoid proposals with bundled pricing and hidden margin.

Term Length

Citrix, like many software providers, prefers multi-year agreements on their subscription offerings. The majority of Citrix Cloud transactions that NPI analyzes for our clients are three-year agreements and committing to 36 months gives customers the best opportunity to receive attractive discounting.

Support and Implementation

All Citrix Cloud licenses come with Select level support intact, providing for access to updates, success planning tools, and a Severity 1 response time target of under 30 minutes. While Select support makes sense for some IT departments, others will often opt to upgrade support to Priority or Priority Plus. These premium level support add-ons are most popular for Citrix’s included dedicated Technical Account Managers which can make the cloud transformation process a bit smoother.

Along with Priority/Priority Plus support add-ons, customers also have the option to purchase consulting credits which can be used towards implementation consulting. These credits often come in packs of 46 hours so determining exactly how much implementation help will be needed can be a key to avoiding overpaying on services.

If you’re considering migrating away from Citrix’s on-premise licensing, or purchasing Citrix Cloud for the first time, NPI’s price benchmark analysis services can ensure you get the right deal. Contact us to learn more.