Has your business been affected by the Broadcom acquisition?

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Article written by Invictus Partners.

What is Broadcom?

Broadcom is one of the world’s leading infrastructure technology companies and their technology powers the most complex IT environments in the world (many of which we use every day without realising!). Broadcom deliver semiconductor and infrastructure software solutions for its customers so they can build successful businesses into the future.

Here are just some of the things they’re involved in:

Source: Broadcom

In November 2023, Broadcom’s acquisition of VMware was completed, creating several key implications for VMware clients, including changes to the channel, as well as changes to licensing structures. Perhaps the most significant licensing change is the shift from a perpetual to subscription-based model.

Broadcom’s Managing Partner, Doug Gibson outlines the key licensing changes in video form here.

As companies adjust to VMware’s transition from perpetual licensing to a subscription-based model, it’s crucial for them to understand their current VMware usage and the impacts of these licensing changes on renewal discussions. This shift in VMware licensing can carry significant financial and legal ramifications for organisations who do not have a clear understanding of their licence position in the context of current and future usage, versus changing contractual entitlements.

Understanding Current VMware Usage

Before delving into renewal talks, clients must thoroughly assess their current VMware usage. This involves:

  • Evaluating the specific VMware products and editions being utilised, including identifying end-of-availability (EOA) exposures (the published list of EOA dates for VMware products is significant)
  • Assessing the organisation’s current and likely future VMware licensing requirements
  • Identify any existing gaps in usage versus entitlements, which present an immediate licensing exposure risk.

Assessing the Impact of Licensing Changes

The shift to a subscription-based model has brought substantial alterations to how clients access and use VMware products. Clients should:

  • Understand changes to the licensing options across all products and editions being utilised, to effectively gauge the impacts on operations and costs.
  • Evaluate the availability of current products and new subscription-based offerings, along with considering the implications of EOA products on their infrastructure.
  • Estimate the potential cost increases due to the transition, including the introduction of add-on services and limitations on certain product requirements.

Preparing for Renewal Negotiations

With a comprehensive understanding of current VMware usage and the impact of licensing changes, clients can effectively prepare for renewal negotiations by:

  • Engaging in informed discussions with VMware representatives or partners.
  • Addressing uncertainties or concerns regarding licensing changes and seeking clarity on available renewal options.
  • Exploring possibilities to align requirements with VMware’s updated portfolio during negotiations, potentially discussing alternative solutions or add-on services that fit business needs.

Navigating VMware’s licensing changes with Broadcom necessitates a clear understanding of current and likely future VMware usage, so as to achieve optimal outcomes in renewal negotiations. By conducting a thorough assessment and preparing for discussions, clients can successfully navigate the renewal process, ensuring that their VMware licensing aligns with their operational and financial requirements.

A proactive approach to managing VMware licensing empowers organisations to make informed decisions during renewal negotiations, and ultimately optimise VMware licensing to meet ongoing business and financial needs.

Article provided by Invictus Partners 2024.

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