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Speakers: Benjamin Coon, Senior Consultant; Chris Hayes, Principal Consultant

This episode of the ITAM Executive includes content taken from our webinar, “Broadcom’s VMware Licensing Changes Decoded.”

In this episode, Benjamin Coon, Senior Consultant of Specialty Licensing at Anglepoint, and Chris Hayes, Principal Consultant of Anglepoint’s ITAM Program Transformation practice, discuss the significant licensing changes to VMware by Broadcom, dissecting the nuances of these alterations.

There are three key categories of change: the transition from perpetual to subscription-based licensing, introduction of new product bundles, and a shift in license metrics from CPU to core-based. Many organizations may face challenges in adapting to these alterations and the episode advocates for best practices such as understanding license compliance and implementing robust demand planning processes to navigate the transition effectively.

The focus then shifts towards audit response and defense strategies in the context of the acquisition. Chris stresses the necessity of establishing an aligned response framework within the organization and communicating it effectively. Furthermore, he warns against sharing information with publishers without proper approval and emphasizes the importance of controlling the written record to prevent potential pitfalls during audits or negotiations.

The podcast wraps up by highlighting Anglepoint’s VMware assessment services, which offer tailored support to organizations grappling with the evolving VMware licensing landscape. Benjamin and Chris encourage listeners to leverage Anglepoint’s expertise in optimizing software and technology assets amidst regulatory changes. Through these discussions, the podcast provides a comprehensive overview of the challenges posed by the VMware licensing changes and offers actionable insights to navigate them effectively.

By listening to this episode, you will learn about:

  • The three key licensing changes from VMware by Broadcom
  • What to watch out for when facing a renewal
  • How to mitigate risk and price increases due to the changes
  • How Anglepoint can help your organization through this transition
  • And more

Episode Transcript

Benjamin Coon:

But ultimately for how does this impact things, we do see that Broadcom has introduced these changes and they do want to see them through. And because of that, we aren’t seeing much wiggle room on pricing.


The following is an excerpt from an Anglepoint webinar. To watch the entire webinar, please visit slash webinar. You’re listening to the ITAM Executive, a podcast for ITAM leaders and practitioners. Make sure to hit subscribe in your favorite podcast player and give us a rating. In each episode, we invite seasoned leaders to share their tips on how to define your strategy, promote the value of ITAM in your organization, and align your program with the latest IT trends and industry standards.

Let’s dig in.

Braden Stringer:

We’re excited to be presenting today on Broadcom’s VMware licensing changes. We’re especially grateful to our presenters, Chris and Benjamin who have worked really hard to put this together and it’s going to be great. The content is going to be really solid. Benjamin is a senior consultant here at Inglewood Point on our specialty licensing team.

He does a lot of work with our VMware customers, and he’s very involved in this. As you’ll see, he has a deep expertise. And then Chris is Principal Consultant on our ITAM Program Transformation Team. Chris has over 15 years of software asset management experience. He’s done multiple webinars for us and has very deep expertise in the world of SAM and ITAM.

We’re grateful to have both of them join. So we’ll go ahead and get started without any further ado. I’m going to pass it off to Benjamin. Thank you.

Benjamin Coon:

Thank you for that question. Over this past year, VMware by Broadcom has announced a number of changes to their licensing, and these changes can be categorized in three different ways.

The first is a shift in their licensing model from a perpetual to a subscription model. The second is, um, new product offerings that they’ve done by restructuring their product portfolio. And then the third category is a shift in their license metrics. And so if we circle back to the perpetual to subscription model, um, effective immediately, VMware is no longer offering perpetual licenses to their customers, as well as they’re no longer offering their customers to renew support on those perpetual licenses.

And so the challenge that organizations are now facing is whether they can operate with their existing perpetual licenses. Without receiving the support or is that support business critical? And if so, likely that change to a, the subscription model and getting that support would be required. One piece of information that might be helpful as you’re making that decision is an announcement that Broadcom CEO made last week.

He did announce that Broadcom will be offering free zero-day security patches. For some perpetual licenses. And so while that’s certainly great news for Broadcom’s customer base, we do want to caution that it’s not necessarily the silver bullet that it might initially seem. It does only apply to supported versions of vSphere licenses.

And so ultimately that could limit an organization’s ability to remain on just the perpetual licenses. Broadcom did announce that they will eventually roll it out to some additional products, but. They didn’t mention which products that might be, nor did they give a timeline for that. So that is one thing to, to keep in mind.

If we do look to the best practice here, ultimately, it’s important to really understand and know where you stand with your license compliance. And these best practices that we have, if they’re utilized, we think can really help you as you make that decision. And so we recommend that you do complete periodic effective license positions that will help you understand your organization’s compliance status going into upcoming renewals, as well as we recommend that you implement a robust demand planning process that will pave the way for your optimization roadmap.

And the reason that demand planning is so impactful is if you know that your investment in VMware is only increasing, then it’s very likely that the support will be required. And so going to the subscription licenses and getting that support will be very helpful for you. Whereas on the flip side, if you know that your demand is decreasing and maybe you even have plans to sunset your VMware environment at that point, it is possible that sticking with the perpetual licenses until you decommission the environment, uh, would give you enough, um, that you’d need.

So for the second, um, category that we had, it’s a new product offerings. And so VMware has announced two new product offerings. It’s the VMware cloud foundation, and then the VMware vSphere foundation. And both of these products are bundles of various VMware technologies that have now been combined to offer a single solution.

And so, uh, the cloud foundation, that’s a little bit more of the all encompassing product offering, whereas the vSphere foundation is. It’s more of a simplified solution. And so ultimately we are seeing that in larger organizations that have a larger VMware environment, the cloud foundation does generally offer more value, but ultimately at the end of the day, depending on your organization circumstances, optimization will likely occur by having both products in your environment and utilizing both options.

So one thing to note that will be important to consider as you look at the two different product offerings is there are some products that are only offered in cloud foundation. So if we look, for example. The HCX enterprise or data services manager, those are only offered with Cloud Foundation. So if your organization might still have a smaller VMware footprint, but you do require some of those products, that will help dictate which product offering you, you go to.

So we can take a look at vSphere Foundation. As I said, it is more simplified view. The important thing that I’ll highlight here is at the end of the day, once you’ve made the decision that you do want to renew support and you need support, you’re going to go to a subscription model, one decision you’ll need to make is whether or not you wish to swap or turn in the active perpetual licenses that you currently own.

In which case you can receive some credits. Or do you want to just keep your perpetual licenses? You are allowed to operate both a perpetual license environment as well as a subscription license environment. But that does add some additional complexities and it is a breach of compliance to run two different licensing models in the same environment.

So what does that look like in the real world? You wouldn’t be able to, uh, use a subscription vCenter server to optimize or look at and manage the vSphere licenses that you own that are perpetual. And on the flip side, you wouldn’t be able to use a perpetual vCenter server to monitor the subscription vSphere licenses that you own.

So the last of the changes that we noted vSphere is the license metric shift going from a CPU model to a core model. And so at the surface, this might look like a simple change. Um, but if we dive a little bit deeper, it’s easy to see the complexities that start to, um, come forth as we look at correctly licensing our environment.

So one such complexity is the minimum core requirement that Broadcom does require. Both when you’re purchasing licenses and when you’re counting your licenses, Broadcom does require a minimum core requirement of 16. And so how does that look like? So if we look at the table on the right side of the screen, we have two tables, an old and a new, and the old represents the prior CPU model and the new is new core model.

And what the CPU model is, it was very straightforward. You would sum up the CPUs in the environment and we get to 16 CPUs. But when we look at the core requirement, we have to look at two calculations. And so the first calculation is looking at the number of core licenses required per CPU, we multiply that by the number of CPUs per ESXi host, and then we multiply that by the number of ESXi hosts.

And then the other calculation is taking 16 cores and multiplying that by the total number of CPUs in each ESXi host. And it’s important to note that Broadcom does require you to take whichever the two calculations will result in that the higher core count. To see how this works in practice, if we take a look at the lower table, the new table, and we’ll take a look at the top line, we’ll look at the top left.

box, and we’ll run through the calculation. So if we take the first calculation, we take the eight cores that are required per CPU. We would then multiply that by the two CPUs, and each of these boxes are just representing a single ESXi host. So in this example, we would come to 16 corps. If we then look at the second calculation, it would take the 16 cores, we multiply the same two CPUs, and we get to 32 cores.

So for this example, we’d be required to implement the second calculation. If we then look at the middle And we apply the same calculations again, we would first take the 20 cores per CPU, we multiply that by the four CPUs, and we come to 80 cores. And then if we apply the second calculation, we just take 16 cores, multiply that by the four CPUs, and we would get 64 cores.

So in that standpoint, We actually want to utilize the first calculation. And then if we look at the final box on the top line, some of you might have already noticed or caught on that both of these calculations will get to the same core count, will have 64 cores. Um, and so in this example, um, ultimately once you’ve done these calculations, we get to the 272 cores that are required.

And so one thing that we do want to note is once you’ve done your core requirement calculations, don’t go into panic mode. Some core optimization may be possible. I’m an expert in this area can help determine what options you have. And as a little tip, uh, when you’re looking to decide which of these calculations are best for you.

You need to run. Generally speaking, if the core requirement per CPU is, uh, below 16, you’d want to use the second calculation. And if it’s 16 or greater, uh, the first calculation will be the, the one that gets you to the, the right answer. The final thing is, so if you are an SPVM or a sourcing procurement vendor, manage.

You might be asking yourself, then what does all this mean? How does it affect you as you navigate your, uh, upcoming renewal with, uh, VMware by Broadcom? And should your approach change with any of this? And so we would say, generally, as with any major change, like an acquisition, it is always a good time to evaluate.

Which VMware technologies you want to renew with Broadcom, but ultimately for how does this impact things, we do see that Broadcom has introduced these changes and they do want to see them through. And because of that, we aren’t seeing much wiggle room on pricing. 1 area where there might be an opportunity for some discounts is by looking to combine your agreement with your Broadcom and see technologies agreement.

Uh, we have seen some indicators that mentioned that soon Broadcom will be. offering that as a possibility. And as one other kind of side note that goes with that, that we do want to call out for everyone. Broadcom did also announce last week that on Tuesday, April 30th, there will be the transition from the VMware Customer Connect portal to the Broadcom Support portal.

And so as of 5 p. m. that day, various reports will no longer be available. So we do recommend that you pull any reports or extracts from that VMware Customer Connect Portal before 5 p. m pacific on that on the 30th. So with that, to go back to that initial question of should anything change, we’d ultimately say that if you have a robust negotiation framework that you apply for your software contract negotiations, then at the end of the day, stick to it.

None of these changes should change that framework that you have in place already. And with that, I will turn it over to Chris.

Chris Hayes:

Thanks. Essentially, I’m going to cover off a little bit more from the audit response and audit defense point of view, what to watch out for. This is not the first acquisition.

This is not the last acquisition. This happens all the time, right? So when a publisher that you’re utilizing or even more complex in your organization, if it’s a strategic publisher that you’re reliant on when they get acquired, you can expect a few things, right? So a request for information.

Understanding your response posture in terms of your audit framework, potentially you have a new account team and that recommendation of making sure you’re prepared and doing your homework. First thing, audit response. It is important, not just for acquisition purposes, not just for audit defense purposes.

It’s best practice. But in these scenarios, you need to have this aligned response framework. What I mean, there is everyone should know ahead of time. What they’re doing, the steps involved, and in a very detailed swim lane fashion, right? This step precedes this step, and in parallel, we’re doing this, and this role is doing this, right?

And more importantly, it’s effectively communicated. One of the worst things I’ve seen happen is a centralized software asset management or IT asset management function was very mature. And then satellite or siloed the business function, giving information to a publisher or, or doing something that could harm the organization in terms of an audit.

So have your framework and be aligned, but also communicating this is very important. Just a shameless plug here and some free information as well. If you’re starting off in your SAM maturity journey, we do have an eBook, so you can hit that link and then see how we would potentially respond and some other tips and tricks about managing a successful response to a compliance audit.

All right, information requests, right? So this is the real typical thing. Depending on your existing account team, a very common occurrence is to transition to a new account team, and they’re going to take advantage of that and ask things that will sound nominally positive, right? So this is not an audit.

This is we want to help you optimize your agreement. If you can give us some information or in order to roll these products over and look at what your footprint would look like for subscription licensing. Can you please send us. Blah, blah, blah, information or report. So your best practice here is make sure that SPVM, your sourcing procurement vendor management function are in alignment with your software asset management team, and they know about this audit response framework and they know that you should not provide any information to a publisher when they’re asking without approval, without checking.

Hey. Could this be an audit? What information are they trying to get? Again, the worst-case scenario is information is shared and bang, that triggers a soft audit. And then second, make sure you are having that constructive conversation around that audit or review terms and condition and language in the contract.

I saw in chat there, a couple asks for where does this specifically detail that you’re prohibited from running a soft audit? Perpetual and subscription licensing, right? What are those specific terms and conditions? So maybe that’s something that we can provide offline to the respondents. So you have that in your back pocket.

So essentially information requests. Align this with your software as a management team. Don’t share information outside of this process, no matter how good it sounds. Right. Best practice here is if you’re approached, right? Oh, let’s see here in this scenario. I’m Chris, I’m your new account rep. And it looks like Benjamin and team were at VMware, but now we’re looking at a little bit different aspect.

And was I correct in understanding we’re looking at your global footprint and global data. If you’re in a review or you’re in discussions already, very much number one, control the written record. You want to be setting agendas. You want to be taking detailed meeting minutes. So this is from the software asset management team perspective.

You want to include any conclusions, agreements, actions that were taken. So you can refer back. Oh, no, actually, it was not global usage data. We were looking at. We were looking at a sub portion of the enterprise or this country, et cetera. And then the 2nd to that point, always follow through if they’re saying something from the publisher side. VMware, Broadcom, et cetera.

This is applicable across the board. Don’t accept those half answers. Make sure that if there’s a deliverable or something, they’re promising that they come through with that. Okay. This goes to the kind of running and looking at the impact from an ELP or effective license position point of view.

Do your homework and understand. Is this change good on balance? Is it bad? What do we have to look out for? How do we quantify that that will help you optimize and then maximize your results? And then last but not least, I think this was Benjamin’s point to discuss.

Benjamin Coon:

Yeah, thanks, Chris. So the final point that we wanted to mention is Anglepoint’s VMware assessment.

So we talked about having ELPs as a best practice, different framework in place. And as Chris mentioned, even, you know, the audit response and having those frameworks in place. And one thing that’s great about this VMware assessment is it can really be tailored to fit your organization’s needs. If you really only need help looking at your compliance position and maybe the core requirements.

Uh, we can look at that information, but if you recognize that maybe your organization could use a little bit more help with the establishing framework or with an audit response team, this can really be tailored to fit those needs. And so, um, if you do have any questions or you want to reach out, please do so by reaching out to info at Uh, Chris, is there anything else you’d like to add to that?

Chris Hayes:

Nope. Completely agree. Kind of from my point of view, right? If you’re suspected that you’re entering a compliance topic or you have some specific questions about your environment relative to that move or the calculations, the switch, how that’s applied to you, our teams are more than happy to talk it through with you.

So please get in touch.


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Anglepoint’s managed services provides you immediate access to the people, processes, and technology you need to optimize your entire software estate. To learn more, visit anglepoint. com slash schedule.

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