VMware License Optimization
The VMWare Enterprise Licensing Agreement is a multi-year prepaid contract that entitles an organization to use all VMWare technology with a minimum term of three years or longer. The minimum spend required to enter a VMWare ELA is US$250.000 with a mandatory spend of US$150.000 that needs to be invested in new technology.
Firstly, before starting the negotiations you will need to determine your current VMWare licensing estate. This is a key step in setting up your negotiations, as without proper insight into your licensing estate, the chance is high that you are likely over-licensed and paying more than you should. VMWare states that this install base report is necessary to meet the minimum requirement for the ELA.
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Primary Cost Saving categories
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Things to consider when contracting with VMware
Many Clients find comfort in the idea that the VMWare ELA is an all-you-can-use licensing agreement, however this is a great misunderstanding. Factors such as reporting dates and opt-outs after the expiration date of the ELA can have a severe financial impact on organizations. Initially it will seem like your organization has made great savings, but when your agreement expires after three years you could be facing the downsides of the ELA. VMWare is currently one of the most aggressive auditors, so our recommendation to our Clients is to maintain extra caution if you are considering a move away from VMWare.
VMWare implements a non-transparent partner model which mainly leads to benefits for the Licensing Partners. We have often seen that Licensing Partners can earn immense rebates and kickbacks when they sell and claim for VMWare.
The ELA typically offers discounts up to 20 to 40% on the licensing estate, subscriptions and support costs. This alone is reason enough for many organizations to enter into a VMWare ELA. For the Software Asset Managers the VMWare ELA seems like an easy contract to manage, but in reality the opposite is true. The VMWare ELA is by default designed to lock Clients in by making an offer it seems they cannot refuse. The agreement provides IT-departments the flexibility to deploy technology and Software Asset Management “is not required”. However, the invoice will not be presented until the term of the agreement is up after three years and then the damage has been done.
We look forward hearing from you. Please contact one of our team members if you are in need of independent expert advisory services or contact us via the website contact form:
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