Following Broadcom’s acquisition of VMware, customers face significant challenges, including unexpected price increases, forced bundle purchases, and disruption to established partner relationships. With contract renewals approaching, many IT leaders are navigating these new realities without a clear framework for evaluating their options.
IT leaders need a structured approach to assess their VMware environment and make strategic decisions about their contractual options. This should include conducting a comprehensive inventory of current VMware products, analyzing actual usage patterns, understanding new licensing models, exploring competitive alternatives, and developing a phased migration strategy if needed.
Getting Ready for Renewal
If your VMware license renewal is right around the corner, here are three questions you should ask yourself to plan your next steps:
1. How does the new subscription model impact my total cost of ownership?
With VMware moving to the Broadcom subscription model, it’s essential to evaluate how this change will affect the overall cost of running VMware on-premises or in the cloud. The transition from VMware’s traditional licensing model to Broadcom’s subscription-based model will impact your total cost of ownership (TCO).
- For many customers, Broadcom’s restructuring of VMware offerings has resulted in higher annual costs, especially if they are consolidating previously separate products into bundled offerings. The subscription model eliminates the upfront licensing purchase costs but increases ongoing annual expenses, so it will be necessary to adjust budget planning to accommodate consistent annual payments instead of cyclical large investments.
- If you previously purchased VMware components à la carte, the new bundles may increase your costs and could potentially include some components you don’t need while excluding others that you do need. Additionally, you may also see impacts to support and maintenance levels. Though the new model integrates support into the subscription, extended support for older versions may be limited or unavailable, potentially forcing you to upgrade more frequently.
- Because Broadcom has refocused on enterprise customers, smaller businesses may find themselves pushed toward partner-led support models or cloud-based alternatives. This could potentially increase the costs for SMBs that had benefited from VMware’s direct engagement in the past.
- This pricing shift can be an opportunity to reevaluate your broader cloud strategy and start assessing competitive alternatives. Consider accelerating cloud migration instead of renewing on-premises infrastructure. You may want to evaluate hybrid approaches that could optimize costs. Despite Broadcom’s emphasis on long-term innovation benefits with this model, most organizations should anticipate higher immediate and medium-term costs, while planning for potential strategic alternatives to effectively manage their TCO.
2. Are there unique features of VMware that I’m paying for that are providing enough ROI for my business to justify the cost?
Considering this question will prevent renewing without a critical evaluation of the pros and cons. Many IT departments are inclined to renew VMware licenses automatically because that is what they’re used to doing, and migration seems too complex. But before hitting that “renew” button, IT teams need to take the time to see if the continued investment is justified based on its actual business value, not just inertia.
Start by checking to see what premium features you’re paying for but not using. Examples could include advanced security, automated disaster recovery, or sophisticated monitoring tools. This is also a good time to compare VMware with other mature alternatives that might offer comparable functionality at lower costs.
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- This evaluation shifts the focus from purely technical specifications to business outcomes, revealing whether VMware benefits justify the premium pricing for your organization’s specific needs. You could uncover opportunities to migrate certain workloads to cloud platforms.
- Furthermore, understanding exactly which VMware features are delivering measurable value will help determine if continued investment is the right choice for your organization. If it is, presenting this information to financial stakeholders will help strengthen your case. Responsible IT financial management hinges on uncovering the real benefits, not just assumed value.
3. Do I have a sound long-term cloud strategy, and does that include a transition to AWS-native services?
It’s important to consider how your VMware license renewal timeline fits into your overall cloud strategy. Evaluating your VMware investment within the broader context of your organization’s cloud journey prevents you from viewing it as just an isolated renewal decision, especially since VMware renewals often come with major, long-term financial commitments.
- Making this often years-long investment without aligning with your cloud strategy could result in redundant spending or even create technical roadblocks that will stop your future cloud plans in their tracks. If your roadmap includes significant migration to AWS-native services over the next few years, you may want to avoid locking into extended VMware contracts — or you may want to adjust the scope of the contracts accordingly.
- Timing considerations are also important. Your VMware renewal creates a natural decision point to potentially begin transitioning workloads to AWS-native services. Understanding the intersection of these timelines can help you avoid situations of payment overlap or other missed opportunities to optimize spending during transitions. Strategic alignment ensures that your immediate VMware decisions align with your future cloud objectives.
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Though it’s impossible to predict the future perfectly, preparing a long-term plan for the most strategic way to invest (or not invest) in VMware will help guide your decisions and ensure meaningful alignment with your goals.
