CIO Playbook: Broadcom’s VMware 2024 Licensing Changes

Overview of Licensing Changes

In late 2023, Broadcom’s acquisition of VMware ushered in sweeping licensing reforms that CIOs must understand and plan for. The most significant change is the end of new sales for perpetual VMware licenses on core products, such as vSphere and vSAN.

This means organizations can no longer purchase vSphere or vSAN on a one-time, perpetual basis; all new VMware licenses are now available only as subscriptions (with a time-limited term).

Broadcom offers subscription terms of 1, 3, or 5 years, replacing the previous model of buying a perpetual license and renewing support annually. The shift is part of Broadcom’s strategy to increase recurring revenue and simplify VMware’s complex product portfolio.

Under the new model, VMware licensing is now measured per CPU core rather than per CPU socket. Traditionally, VMware sold licenses per physical CPU, with some core-count limitations per CPU in later years.

However, in the future, pricing is explicitly based on cores. Each server’s total core count must be licensed, and minimum core counts apply – for example, one CPU is counted as at least 16 cores even if it has fewer.

These licensing changes take effect immediately and are global. Effective early 2024, VMware (under Broadcom) stopped selling perpetual licenses and, in many cases, also stopped renewing support (SnS) on legacy perpetual contracts.

Customers with existing perpetual vSphere or vSAN licenses can continue to use them. Still, once their current support agreements expire, they will need to transition to a subscription to continue receiving support and product updates.

Broadcom made some concessions after customer pushback – for example, offering free critical security patches for certain perpetual license versions even after support has lapsed – but the overall direction is clear: ongoing use of VMware technology will require a subscription moving forward.

This shift aligns VMware with the industry trend of subscription-based and cloud licensing, allowing Broadcom to bundle support and updates as part of the subscription price. It also gives Broadcom more control over customer renewals and compliance, with the expectation of more frequent license audits to enforce the new model.

In summary, CIOs should recognize that VMware’s licensing has moved from a CapEx-heavy model (perpetual plus maintenance) to an OpEx model (recurring subscription). The core-based, term-limited licensing impacts budgeting, procurement, and compliance processes.

Large enterprises that relied on long-lived VMware licenses and mild support cost increases must now prepare for regular subscription renewals and potentially higher costs over time.

The end of perpetual licensing also means less flexibility to hold on to older versions indefinitely – future access to new VMware features or hardware support will necessitate an active subscription.

What CIOs Should Do:

• Educate stakeholders on the end of perpetual VMware licenses and the mandatory shift to subscriptions. Ensure your IT, finance, and procurement teams understand that new VMware purchases will be term-based and need ongoing renewals.
• Review existing VMware contracts and timelines to determine support expiration dates. If you have perpetual licenses, note when their support ends – that is effectively the deadline to decide whether to migrate those workloads to a subscription (or an alternative support option) to stay compliant and supported.
• Adjust budgeting practices to account for VMware as an operating expense. Instead of one-off license buys, plan for multi-year subscription payments. Communicate this change to finance early so that the budget can be allocated for future renewals.
• Stay informed on policy updates from Broadcom. The licensing rules (such as minimum core counts or renewal grace periods) may evolve. Establish a channel with your VMware account manager or reseller to stay updated on any new requirements or programs.

VMware Subscription Packages

With the transition to subscription licensing, Broadcom has overhauled and simplified VMware’s product offerings into a new portfolio of bundles. Instead of the dozens of editions and kits that existed before, the lineup has been streamlined to a few core subscription packages and optional add-ons.

Each package is sold on a per-core subscription basis, with 1-, 3-, or 5-year term options. Longer terms often provide better rates or incentives. Here are the main VMware subscription packages now available to enterprises:

• VMware Cloud Foundation (VCF) – A comprehensive “full-stack” infrastructure bundle. VCF combines VMware’s core compute, storage, and network virtualization into a single subscription. Specifically, it bundles vSphere (compute hypervisor), vSAN (software-defined storage), NSX (network virtualization), and the VMware Aria Suite for management, all under a single per-core license. This is positioned as an end-to-end private cloud platform, delivering a complete data center software stack. VCF subscriptions include premium support and have the highest resource entitlements, for example, a high allowance of vSAN storage capacity per core, such as 1 TB of vSAN storage per licensed core. It’s ideal for organizations looking to deploy a full VMware cloud on-premises with a unified license, but it’s also the most expensive option. It may include components that some customers won’t fully use.
• VMware vSphere Foundation (VVF) – A slightly slimmed-down bundle focused on core data center virtualization and operations. vSphere Foundation includes the vSphere hypervisor and vCenter management, along with a standard tier of the Aria operations suite (for performance and log management), and Kubernetes integration (VMware Tanzu/Kubernetes service). It also includes an allotment of vSAN storage capacity per core (e.g., vSAN Enterprise edition with a baseline capacity, recently increased to ~250 GiB per core). This package is targeted at organizations that need more than just a hypervisor – it adds built-in operations management, but perhaps not the full software-defined networking (NSX) or the advanced cloud management features of VCF. Like VCF, it is sold per core, with 1-, 3-, or 5-year terms, and includes production support. Notably, both VCF and vSphere Foundation are designed to be “disconnected” subscriptions, meaning they do not require continuous cloud connectivity to function, addressing customer concerns about on-premises isolation. However, Broadcom indicates that future features might introduce connectivity.
• VMware vSphere Standard (VVS) – A subscription equivalent of the classic vSphere Standard edition, this is a compute-only offering for basic virtualization needs. It includes the vSphere hypervisor and vCenter Standard, with production support, but excludes add-ons like vSAN or advanced management – suitable for simple server consolidation use cases. Licensing is per core; a 16-core minimum applies per CPU as well, for a chosen term. The vSphere Standard subscription is often considered for smaller environments or edge deployments that don’t require the features of the larger bundles. Broadcom kept this option in the catalog to serve customers with “light” requirements. It’s even noted that very small deployments can still opt for vSphere Standard or an Essentials Kit equivalent as a subscription.
• VMware vSphere Enterprise Plus (Subscription) – A new subscription-only edition replacing what used to be the “Essentials Plus” kit in name. vSphere Enterprise Plus, in this context, is essentially a higher-end compute-only offering that includes the full feature set of the vSphere hypervisor (e.g., advanced features like distributed resource scheduling and high availability) and vCenter, but still without NSX or the Aria suite. It’s meant for enterprises that want top-tier hypervisor capabilities but don’t purchase the broader Cloud Foundation bundle. Like other offers, it’s priced per core with 1-, 3-, or 5-year terms and bundled support. Do not confuse this with the legacy perpetual Enterprise Plus. Here, it is a subscription package aligned with Broadcom’s new structure; the naming was adjusted to replace the previous’ Essentials Plus Kit” due to low demand for the latter. Essentially, a vSphere Enterprise Plus subscription allows customers to get just the vSphere platform with all its advanced features, and then optionally add other services as needed.

Alongside these core packages, Broadcom offers “Advanced Service Add-Ons” that can be layered on to extend functionality. These add-ons are subscription services for specific needs, for example: vSAN+ (storage), which allows additional vSAN capacity licensing beyond what’s included in a bundle (licensed per TB of storage rather than per core); VMware NSX security add-ons (like vDefend Firewall with advanced threat protection); disaster recovery services such as VMware Site Recovery or the new VMware Live Recovery; Avi Load Balancer for advanced load balancing; Tanzu Platform for more expansive Kubernetes capabilities; and emerging offerings like Private AI Foundation for on-prem AI workloads.

The idea is that a customer can subscribe to a core bundle (VCF or vSphere) and then attach these add-ons to cover specific use cases (e.g., more storage or security) as needed. Some formerly standalone products, such as SRM and NSX, are now only available as part of these add-on subscriptions or within the main bundles – they are no longer sold separately.

This is a big change: if you previously licensed products individually (like buying vSAN or NSX standalone), you now must either purchase the bundle that includes them or add them on top of vSphere.

Crucially, all these new VMware subscriptions are licensed per CPU core. The license entitlements are generally calculated by counting the physical cores across your ESXi hosts that run the product. Broadcom enforces a minimum of 16 cores per physical processor (so an 8-core CPU still requires 16 cores worth of subscription).

Cores are typically sold in blocks corresponding to that minimum (and recent partner communication suggests a minimum purchase of 72 cores on any new order, which effectively groups cores into larger blocks for sales). Enterprises will need to count cores carefully: if you have servers with high-core-count CPUs (e.g., 32 or 64 cores each), your license consumption will increase proportionally compared to the old per-socket model.

There is no concept of “per-socket” licensing anymore – even a dual-socket server will require subscribing to all cores on both processors. Broadcom supports co-terming of subscriptions, aligning different subscriptions to renew on the same date, and offers typical 1-, 3-, or 5-year term choices, providing some flexibility in commitment length.

One benefit of the subscription model is that support is included in the subscription fee (all subscriptions come with Production or Premier support service by default), so you don’t have to purchase support separately – but it also means you pay for support whether you use it or not, as part of the package.

To clarify how the new structure compares to the old, the following table highlights key differences between the legacy perpetual licensing model and Broadcom’s new subscription model for VMware:

Aspect	Legacy Perpetual Licensing	New Subscription Licensing
License Duration	Perpetual license (one-time purchase, no expiry).	Term-based subscription (1, 3, or 5-year periods).
Metric	Per physical CPU (socket), with a core limit (e.g. 32 cores/socket cap in later years).	Per CPU core. Every core must be licensed (with minimum 16 cores per CPU enforced).
Upfront vs. Ongoing Cost	High upfront cost for license; annual Support & Subscription (SnS) fee (~20% of license) for updates/support. Can use software indefinitely if you forgo support.	Ongoing annual or multi-year cost. Subscription fee includes software use and support. Must keep renewing to continue using and to get updates (no perpetual rights if you stop paying).
Included Features	Buy licenses for each product/feature separately or in bundles (e.g. vSphere, then add vSAN license, etc.). Perpetual edition determines features (Standard vs Enterprise, etc.).	Simplified bundles include multiple components (e.g. vSphere + vSAN + NSX in one price). Fewer standalone options; most functionality is packaged or available as add-on subscriptions.
Scalability & Expansion	Add more CPU licenses when adding new hosts; licensing tied to physical CPUs (could be under-utilized if CPU has few cores). Upgrading hardware (more cores per CPU) might require buying additional licenses if core limits exceeded, but otherwise unused capacity was not metered annually.	Subscribe to additional cores as you grow. Licensing is precisely proportional to core count—if you deploy servers with more cores, subscription cost rises accordingly. Minimum purchase requirements mean small expansions may require a block of cores. Capacity (e.g. storage) expansions often require additional add-on subscriptions.
Support & Upgrades	Support (SnS) is optional but needed for version upgrades and support. If maintained, you get new version rights; if lapsed, you can still run the last version you have perpetually (but no support or updates). Security patches might cease without SnS.	Support and upgrade rights are bundled in. All updates (including major versions) are available as long as subscription is active. If you choose not to renew, legally you must stop using the software (though Broadcom has pledged critical security patches to unsupported perpetual users, that is outside the subscription scope).
Cost Profile	Mixed CapEx/Opex: upfront capital expenditure for licenses, and smaller recurring Opex for support. Over a long period (5+ years), often cheaper if you extend the life of the software beyond break-even point.	Opex: recurring operational expense. Lower upfront cost, but cumulative cost over a similar period can be higher than the old model. Multi-year commitments can lock pricing temporarily, but renewals may bring increases. Budget predictability in short term, but potentially higher TCO in the long term.
License Portability	Perpetual licenses tied to organization but generally flexible to reassign to new hardware (within contractual rules) as long as you don’t exceed quantity. No cloud usage unless using specialized BYOL programs.	Subscription may offer some portability (e.g., a “bring-your-own-subscription” model for cloud deployments is being introduced for VMware Cloud Foundation). Typically, subscriptions can be reallocated on new hardware, but you cannot exceed total cores without additional purchase. Some bundles require all-or-nothing adoption (can’t split components across sites independently).

For large global enterprises, the key takeaway is that VMware’s product catalog has been condensed into a few bundled solutions available by subscription, all governed by core-based metering. This requires careful mapping of your current environment to the new packages.

For instance, if you historically bought vSphere Enterprise Plus and vSAN licenses separately, you’ll need to see if the vSphere Foundation or Cloud Foundation subscription covers your needs (with vSAN included in the bundle), or if you should subscribe to vSphere plus a vSAN add-on.

Also note that some lower-end offerings, such as the free vSphere Hypervisor, Essentials Kits, and ROBO editions, have been discontinued or fundamentally altered under the new scheme. Even labs and ROBO sites may now require paid subscriptions, which is a significant change for cost-conscious scenarios.

What CIOs Should Do:

• Map current licenses to new subscriptions: Conduct a thorough inventory of your VMware products (such as vSphere, vSAN, and NSX) and identify which new bundle or subscription each one corresponds to. This will help determine what subscriptions you would need to replace your existing entitlements. For example, if you use vSphere and vSAN, will you adopt VMware Cloud Foundation or the vSphere and vSAN add-on?
• Calculate core counts and minimums: Gather data on the physical cores in all your ESXi hosts. Since licensing is based on cores, this data is crucial for budgeting. Apply the 16-core-per-CPU rule to each host to see how many core licenses you’d consume.
• Educate your technical teams on bundle components: Ensure that your infrastructure teams are aware of what is included in the new bundles. If you move to vSphere Foundation, for example, they will suddenly have access to tools like Aria Operations or Tanzu Kubernetes that they might not have used before. Leverage what you’re paying for (or decide if you need those components before subscribing).
• Review add-on needs: Determine if you require any additional subscriptions, such as extra vSAN capacity, disaster recovery services, or advanced security add-ons. Include those in your planning. This is especially important if you opt for a lighter bundle like vSphere Standard and then need storage – you’ll need a vSAN subscription add-on.
• Compare bundle options for fit: Evaluate the new bundles against your use cases. Some enterprises might find Cloud Foundation overkill (and overpriced) if they don’t need NSX or the full management suite, whereas vSphere Foundation might hit a sweet spot. Others with broad VMware footprints might benefit from the all-in-one nature of VCF. Align the package choice with what components you truly need to avoid overpaying for unused functionality.

Transition Strategies for Enterprises

Transitioning from perpetual licenses to Broadcom’s subscription model is a significant change that should be managed in phases. Enterprises shouldn’t simply rip and replace all licenses at once; instead, a strategic migration plan can minimize disruption and cost.

Here are key strategies for navigating the transition:

Phased Adoption and Pilots:

Consider trialing the subscription model in a controlled portion of your environment, such as a “greenfield” cluster or a new project, before implementing it across your entire environment. For example, if you are setting up a new virtualization cluster or extending into a new site, license that environment under the new subscription model first.

This allows your team to gain operational experience with subscription licensing (and any new features in the bundle). At the same time, the rest of the environment remains on perpetual licenses for the time being. Piloting also helps uncover any technical gotchas – for instance, verifying that your license management tools, contract processes, and VMware software versions all align with the new scheme – before you scale it enterprise-wide.

Maintain Legacy Support to Extend Life:

For existing VMware deployments running on perpetual licenses, it’s usually wise to continue renewing support (SnS) on those perpetual licenses as long as you are allowed. As of 2024, Broadcom initially indicated that standard support renewals for perpetual licenses would cease, potentially pressuring customers into converting to subscriptions.

In practice, they have offered some extensions and concessions. Third-party support providers are another option, discussed shortly. By keeping your current environments under support, you ensure you still receive security patches and technical assistance while you plan your next move. This can delay any “forced” migration and buy time, time you can use to evaluate alternatives and budget for the change.

However, note that even with support, new versions of VMware software will likely become exclusive to subscription customers eventually. Broadcom’s roadmap suggests that future major releases or new features will be tied to subscription entitlements.

Thus, staying on legacy perpetual licenses indefinitely could mean falling behind on new versions or being unable to support new hardware. Use the support window to your advantage, but don’t view it as a permanent solution.

Mixed-Mode Environments:

Enterprises may end up running a hybrid licensing environment during the transition period, with some clusters licensed perpetually (legacy) and others on subscription. Technically, VMware’s software can coexist in this scenario, but you need to manage it somewhat separately. Broadcom’s guidance is that perpetual and subscription licenses can be mixed only if they are in “disconnected” environments, meaning you wouldn’t mix license types within the same vCenter or cluster.

One practical approach is to designate certain vCenter Server instances (or data centers) to remain on the old model for now, and use separate vCenter instances for any new subscription-licensed deployments. This avoids any confusion or compliance issues about what licensing applies where. Operationally, be prepared for differences: subscription licenses might require new license keys or different handling in VMware’s licensing portal.

Ensure your admins know not to inadvertently use subscription license keys in a legacy environment or vice versa. “Mixed-mode” will add some complexity to monitoring and support (since you’ll have two sets of contracts), but it can be a useful tactic for gradually phasing migration.

Plan Around Hardware Refresh Cycles:

Align your transition with hardware upgrades or infrastructure refreshes. A common strategy is to deploy new servers or appliances under the new model and let older servers run out their life on the old licenses.

This way, you’re not paying again for capacity you already bought, and you’re only converting to subscription as you invest in new hardware capacity. Over a typical 3- to 5-year server lifecycle, this approach naturally transitions your environment in stages. The downside is managing two licensing models in parallel, as noted above, but the upside is financial smoothing and avoiding a sudden change.

Just be cautious: if an old server dies or needs replacement, its perpetual license may not transfer to a new server if the old software version doesn’t support the new hardware or if the contract terms prohibit transfer after support has lapsed. At some point, you’ll reach a cutoff where keeping an old version is no longer viable (due to support or compatibility issues), and that’s when that segment must migrate.

Risk Considerations for Deferring Migration:

Delaying the move to subscriptions has risks that CIOs should weigh. First, as mentioned, lack of support for new hardware and features is a major consideration.

VMware’s newer releases (vSphere 8 Update releases and later) may introduce capabilities your business needs, such as support for the latest processors, security enhancements, or integration with modern cloud-native tooling. If those releases are only available to subscribers, sticking to an older version could impede IT’s ability to deliver new services.

Second, security compliance risk: initially, customers feared that without a subscription, they’d be cut off from security patches. Broadcom’s CEO has since promised free critical security updates for customers who choose not to continue with a subscription after their support expires – a gesture to ease concerns. However, it is unclear how comprehensive or long-lasting this offering will be.

Relying on “free patches” outside of a support contract may cover zero-day exploits, but it likely won’t cover the steady stream of bug fixes and minor improvements that come with full support. Enterprises with strict security requirements might not be comfortable without full support coverage.

Third, consider that Broadcom is tightening compliance enforcement. If an enterprise tries to quietly exceed its licensed capacity or delay conversion far past support expiration, Broadcom’s audit teams may intervene.

The new licensing regime is complex enough that misunderstandings could lead to compliance gaps, such as inadvertently using more cores than licensed or spinning up a new host without a subscription.

An audit finding in such a scenario could lead to back payments or penalties at the new, higher subscription rates. Thus, deferring migration needs to be paired with diligent compliance monitoring to avoid surprises.

Greenfield vs. Brownfield Approach:

A pragmatic strategy is to treat new projects (greenfield) as subscription-first and existing deployments (brownfield) as last to migrate. For instance, if your organization is deploying a new application environment or building a new branch data center, use that as an opportunity to adopt VMware’s subscription bundle that is appropriate for that use case.

Gain experience and validate the cost/benefit. Meanwhile, for your stable existing virtual infrastructure, you may want to maintain the status quo for a bit longer (especially if it’s working fine and fully supported under a previous contract).

Over time, plan upgrades for existing environments by scheduling maintenance windows to install the latest VMware versions and switch to subscription licensing when you’re ready.

Keep in mind that switching from perpetual to subscription may simply be a paper exercise (installing new license keys) if you’re already on a recent version of vSphere; you won’t necessarily need to reinstall software, but you do need to ensure the software version you run is eligible under subscription (Broadcom might require you to be on a certain update for subscription features, e.g., enabling some cloud connectivity or specific build that aligns with subscription SKUs).

Leverage Third-Party Support as a Bridge (if needed): In cases where budgets are constrained or a decision on the future direction (stay with VMware or migrate elsewhere) cannot be made by the time support expires, some enterprises consider third-party maintenance providers as a temporary measure. Firms like Support Revolution and Rimini Street have offered third-party support for VMware, although it’s a newer area, as VMware’s licensing changes create an opening.

This means that if Broadcom does not renew your SnS on a perpetual license, you could contract with a third party to get help with break-fix and access to some updates for a year or two. This is not a long-term solution – VMware’s IP is proprietary, so third-party support can only do so much.

However, it could give CIOs breathing room to either negotiate a better deal or execute a migration to something else. If you take this route, ensure top management and stakeholders are aware (since it means running “unsupported” in VMware’s eyes) and have a clear timeline for what comes next. The goal is to avoid being cornered into a bad deal because you ran out of time.

In planning the transition, communication and careful change management are key. Your IT staff, procurement, and business units should be aware that a licensing change is underway, so they’re not surprised by new processes, such as allocating core licenses for a new host, where they might have previously requested a license key from a pool.

Also, track the outcomes of any pilot migrations – for example, actual costs versus estimates, or any technical issues encountered – and refine your strategy accordingly. Every enterprise’s situation will be a bit different, depending on how heavily invested in VMware they are, how old their current environment is, and what alternatives exist internally. Therefore, your transition roadmap should be tailored to your specific context.

What CIOs Should Do:

• Develop a phased migration plan: Create a roadmap that identifies which parts of your VMware estate will move to subscription and when. Prioritize new or easily isolated environments for early adoption to test the waters. Set target dates for transitioning legacy clusters once you’ve validated the new model.
• Continue support for legacy systems: If you have perpetual licenses, budget for and renew support contracts (if possible) to keep those systems safe and supported during the transition. Should Broadcom restrict renewals, consider negotiating an extension or using third-party support temporarily. Avoid letting support lapse without a plan – you’d risk security and compliance issues.
• Implement a mixed-license governance: If running both perpetual and subscription environments, put controls in place to manage them separately. For example, maintain separate vCenter Servers or tag which resources are subscription-licensed. Train your IT ops teams on how to handle license keys and upgrades in each environment to prevent mistakes.
• Align with hardware refresh: Coordinate licensing changes with your hardware lifecycle. For any upcoming server refresh or expansion, plan to use subscription licensing on the new gear. Conversely, for older hardware nearing the end of its life, consider keeping it on the old license until retirement. This alignment can maximize the value of prior investments and spread out costs.
• Assess the risks of waiting vs. moving: periodically evaluate the trade-offs of deferring migration. Check VMware’s product announcements: are there new features or performance improvements you’re missing by staying on an older version? Weigh those benefits against the cost of accelerating your move. Also, keep an eye on Broadcom’s policies, such as security patch support for lapsed customers, to adjust your risk calculations. Always have a contingency plan if the “wait” strategy is no longer tenable (e.g., if a critical application demands a version only available via subscription).

Financial Impact and TCO Modeling

The move to subscription licensing has significant financial implications for enterprises. CIOs will need to revisit their Total Cost of Ownership (TCO) models for VMware infrastructure and likely face higher costs in the short to medium term compared to the previous perpetual model. Several factors are driving this financial impact:

Upfront vs. Ongoing Costs:

Under the perpetual model, companies paid a large upfront fee for a license and then a smaller annual support cost. Over a multi-year period (say 5 years), the total cost would be the license fee plus 5 years of support. Beyond that, the asset was essentially “free” to use (if you didn’t need support or could use an old version indefinitely).

With subscriptions, that dynamic changes to continuous payments with no ownership. For example, imagine an enterprise previously bought 100 CPU licenses of vSphere at $3,000 each ($300,000 upfront) plus 20% per year ($60,000/year) for support over 5 years, totaling approximately $600,000.

In the subscription world, if the equivalent subscription costs, say, $120 per core per year and each CPU had 16 cores, those 100 CPUs (1600 cores) would cost 1600*$120 = $192k per year, which is $960k over 5 years – about 60% higher cost over the same period, and that’s a rough scenario not accounting for discounts or bundle extras.

The exact numbers will vary, but in many cases, the 3-5 year cost of subscription will be higher than the old model’s 3-5 year cost for the same environment. Enterprises must model this out using their actual numbers: include any discounts offered and consider different terms (a 5-year upfront subscription might be more discounted than a year-by-year subscription).

Support Costs Embedded:

One could argue that some of the increase is because support is now bundled, so it’s not an apples-to-apples comparison with license and support.

However, analysis from early adopters indicates that even factoring that in, Broadcom’s list prices for subscriptions are materially higher. In part, this is because the bundles include more components than many customers originally had. If you only need vSphere, but the new bundle forces you to take vSAN and NSX (as in Cloud Foundation), you’re paying for more “value” whether or not you use it. This has led to cases of “sticker shock” – for example, some mid-market customers reported 3x to 5x increases in their VMware renewal quotes when converted to subscription.

One extreme case from the education sector saw a more than 1000% increase: an institution that was paying around £ 40,000 per year for support on perpetual licenses was quoted over £ 500,000 per year for the equivalent environment under a Cloud Foundation subscription.

The massive jump was because they were moved into a top-tier bundle (with lots of additional features) and lost prior academic discounts. While that may be an outlier, it highlights the need to model scenarios for your specific environment. Smaller enterprises and those in sectors with special pricing, such as education and government, should be particularly cautious, as some special discounts may not carry over in the new model.

OPEX and Budgeting:

VMware costs, which may have been a mix of CapEx (for new licenses) and OpEx (support renewals), will now primarily be OpEx. This means CIOs must work closely with finance to ensure budgets can absorb recurring subscription charges.

The good news is that OpEx can be predictable for the term of the subscription – you often pre-commit to 3 or 5 years – but the bad news is that each renewal is an opportunity for a price increase. Broadcom is known for seeking to increase contract values over time.

Enterprises might negotiate multi-year price locks (more on negotiation later), but you should assume that the cost will likely increase after the initial term. This uncertainty needs to be reflected in long-range IT financial plans.

It may also affect how projects are funded: instead of a one-time cost for virtualization software, the expense will be included in the operating budget annually. Some organizations may need to shift funds from capital budgets to operational budgets or rethink chargeback models for internal business units to account for subscription usage.

3-Year vs 5-Year Perspective:

Many organizations plan on a 3- to 5-year cycle for their infrastructure. When evaluating VMware subscriptions vs. perpetual licenses, it’s useful to compare costs over a standardized period, such as 5 years. Often, subscriptions look reasonable in year 1 compared to a large perpetual buy, but by year 5, the subscription’s cumulative spend surpasses that of the perpetual plus support model.

If you extend to years 6 or 7, the gap widens further because the perpetual model, by then, only has support costs (if you even kept it). In other words, the break-even point might be around 4 years in many cases – beyond that, subscription costs more. Of course, with a perpetual license, you might have eventually had to rebuy a new version or licenses for new hardware, but the flexibility to extend the life of a license is now gone.

CIOs should prepare to justify this increased TCO to their stakeholders or look for offsetting value, such as improved features or eliminating some third-party tools, as the VMware bundle now includes these features. It may be helpful to create a clear financial comparison table for internal discussions, showing “if we stayed on the old model, it would be roughly $X over 5 years vs. the new model at $Y over 5 years,” to set expectations.

Multi-Site and Hybrid Environment Costs:

For large enterprises with multiple data centers, remote sites, and cloud components, VMware licensing costs can vary widely by environment, and the subscription model might affect them differently. For example, a small remote office running a vSphere Essentials kit (a low-cost, 3-host perpetual bundle) may now require a vSphere Standard subscription for each host, with a 72-core minimum purchase, resulting in a significant cost increase for that tiny environment. This could potentially make VMware non-viable from a cost perspective.

On the other hand, your primary data center, where you have dense hosts and were already paying for top-tier licenses, might see a more moderate increase proportionally (or even a slight decrease if Broadcom gave a concession) because the environment aligns well with a bundle like VCF.

In hybrid cloud setups (e.g., VMware Cloud on AWS or other VMware-as-a-service offerings), note that Broadcom’s changes also involve procurement route changes – for instance, VMware Cloud on AWS must now be purchased through VMware/Broadcom, not directly from the AWS marketplace, potentially affecting pricing and discounts you get.

When modeling costs, include any changes in your cloud strategy. If part of your workload might migrate from VMware to a public cloud or to a different solution (such as Kubernetes on bare metal or alternative hypervisors), factor those scenarios into your long-term cost estimates.

It’s wise to model a few scenarios: a full VMware subscription scenario, a partial migration scenario (where some workloads migrate to cheaper platforms), and perhaps an alternative vendor scenario (such as using Hyper-V or cloud-native services) to truly gauge the opportunity cost.

TCO Elements to Include:

A comprehensive TCO model for this transition should include: subscription fees for VMware (over the period, with any assumed escalation at renewal), any one-time migration or implementation costs (for setting up new licensing, maybe upgrading software, or training staff on new components), savings from retired perpetual support fees (once you cut those off), and potential savings or costs from bundling (for example, if vRealize/Aria ops was a separate cost before and now it’s included, you can subtract what you used to pay for that separate tool; conversely if you’re now paying for NSX in a bundle but not using it, that portion is essentially wasted spend).

Don’t forget to include operational cost differences: perhaps the new model simplifies management (with minor savings in administrative effort), or conversely, the need to manage licenses more tightly might incur some additional asset management overhead. These might be small relative to license fees, but they are part of the total picture.

ROI and Value Considerations:

In conversations with leadership, pure cost increase is hard to swallow, so try to frame any additional spend in terms of value gained. For instance, if you incur a +30% cost, you can now get a disaster recovery-as-a-service component that you previously lacked, which could be justified by the risk mitigation it offers.

Or, if the bundle includes enhanced analytics (Aria) that let you optimize performance, you may be able to run the infrastructure more efficiently and save on hardware costs. Identifying such angles will be important to defend the investment. Suppose you find there is little additional value to justify the higher cost. In that case, alternative solutions or tougher negotiations should be on the table (as discussed in the next section).

One more financial aspect: multi-year subscription commitments vs. annual payments. Broadcom will likely push for longer-term commitments (3 or 5 years) by offering better pricing for those who commit upfront. If your company has budget flexibility, a 3-year subscription paid upfront might come with a 10-15% discount compared to paying annually (or a 1-year term renewed three times).

A 5-year term might yield even larger discounts or at least lock the rate. However, multi-year commits also lock you into the platform for that duration – less flexibility if you wanted to change course. It becomes a classic risk-reward decision: commit longer to save versus staying agile yearly, but possibly paying more.

CIOs should evaluate their confidence in VMware as a continuing strategic platform when deciding on term lengths. In any case, be sure to budget not only for the current year but also for the full term of any subscription you sign – for example, if you sign a 3-year deal that bills annually, ensure that years 2 and 3 are accounted for in your IT budget projections.

What CIOs Should Do:

• Perform detailed cost modeling: Create a 3- to 5-year cost model that compares the status quo with the new subscription model. Include license fees, support, and any additional infrastructure or training costs. Use actual quotes from VMware/Broadcom, if possible, for the subscription pricing. This analysis will quantify the budget impact and help make the case for either more budget or exploring alternatives.
• Evaluate multi-year commit options: Decide what subscription term makes the most sense financially. If cash flow allows, longer terms might save money, but weigh the risk of commitment. Run scenarios for 1 year, 3 years, and 5 years to see the cost differences. Present this to finance and leadership to decide on the level of commitment the organization is comfortable with.
• Incorporate bundle “value” into ROI: Identify which new components in the subscription bundles could replace existing costs. For example, if the bundle includes Aria Operations and you’re paying maintenance on a separate monitoring tool, you might drop that and save money. These offsets can partially defray the subscription cost – make sure to capture them in your model.
• Plan for OPEX increases: Engage with your Finance department early to restructure budgets. If needed, reclassify some funds from capital expenditures to operational expenses. Communicate that VMware expenses will be recurring and likely higher. By setting expectations up front, you’ll get fewer surprises when those invoices come each year.
• Consider environment-specific strategies: Not all parts of your IT environment need to follow the same path. For each major site or workload, evaluate if staying with the VMware subscription makes sense or if it’s an opportunity to move to a different solution. Factor those potential shifts into the financial plan. For instance, if remote offices can’t justify VMware’s costs, consider planning for them to migrate to a simpler virtualization platform and account for that in a separate project budget.
• Monitor and revisit assumptions annually: Treat your cost model as a living document. Revisit it at renewal time or when there are significant changes, such as price increases or adding a new cluster. This will help in negotiations and in keeping management apprised of the ongoing ROI of sticking with VMware versus other options.

Negotiation Guidance with Broadcom

Facing these changes, CIOs and procurement leaders will want to approach Broadcom (and VMware resellers) with a clear negotiation strategy to mitigate costs and ensure favorable terms. Broadcom has a reputation for tough, value-driven negotiations, but large enterprises with significant VMware footprints still have leverage.

Here’s how to navigate negotiations for VMware subscriptions in the Broadcom era:

Engage Early and Proactively:

Don’t wait until your support is about to expire or a project is imminent to open negotiations. As soon as you have a timeline in mind for transitioning (or if you receive a subscription quote that seems high), start conversations with your VMware account executive or reseller. Broadcom’s changes have been fast-moving, so early engagement helps you stay up-to-date with the latest information on available programs and promotions.

For example, in the initial rollout, Broadcom offered “transition credits” or discounts for customers who traded in their perpetual licenses for subscriptions. These credits included an upfront discount (reportedly 50% or more in some cases) off the list price if the conversion was made within a certain timeframe.

These deals may not be publicly advertised; they are often handled on a case-by-case basis. By inquiring early, you can find out if you qualify for any incentive programs, such as those for being a loyal VMware customer or having a large Enterprise License Agreement (ELA) historically.

Leverage Your Existing Investments:

Make sure Broadcom understands the scope of your current VMware investment – the number of licenses you own, years of support paid, and the importance of VMware in your IT operations.

During negotiation, explicitly position this as a renewal or expansion discussion, not a net-new sale. The mindset should be: “We’ve already invested heavily in VMware; what can you (Broadcom) do to make us whole as we transition to your new model?”

Successful negotiators have secured so-called grandfathering discounts, where Broadcom might discount the subscription price based on the number of current licenses you own. For instance, if you have 100 CPUs of Enterprise Plus with perpetual licenses, you could negotiate a reduced rate for the subscription equivalent to those cores, recognizing your prior investment.

They might not give a formal credit line item, but instead they might apply an overall percentage discount or offer an additional term length for free (e.g., pay for 3 years and get 1 extra year). Prepare a license baseline report (possibly with the help of an independent licensing advisor) that details all your entitlements – this factual data is key in negotiations to justify why you deserve a better rate than sticker price.

Seek Bundling and Multi-Product Deals:

Broadcom’s portfolio simplification means they want customers on the big bundles. If your enterprise can genuinely make use of a wide range of VMware products, consider negotiating an Enterprise Agreement that encompasses all the necessary components under one agreement.

Broadcom may be willing to provide better pricing if you commit to a larger bundle or additional Broadcom software. For example, suppose you’re interested in security products, such as Broadcom’s Symantec line, or mainframe software, like VMware. In that case, bundling those into a larger deal might increase your leverage to get concessions across the board.

Even within VMware’s scope, committing to adopt not just vSphere but also NSX (for networking) or Aria for operations could position you for a larger discount, since Broadcom sees that as a greater’ share of wallet.” However, be cautious about purchasing software you don’t plan to use – a bundle discount only makes sense if the included products have value to you.

Otherwise, you’re buying shelfware. It’s a balance to strike: you can sometimes get a steep discount on the whole bundle, which makes it worth it even if you use, say, 80% of the components.

Negotiate Price Protections and Renewal Caps: One of the biggest fears with subscription models is the “lock-in, then raise the price’ scenario. While you have leverage, try to negotiate terms that cap the rate of increase for renewals.

For instance, seek an agreement that at the first renewal (say after 3 years), the price increase will be limited to a certain percentage or tied to an index.

Broadcom may resist long-term price locks, but large customers have had some success getting at least one renewal cycle guaranteed at a fixed price. Alternatively, negotiate that the discounted rate you receive now will apply to additional purchases in the next couple of years.

Because you might not convert all at once, you want any price advantage you gain to also apply when you migrate the remaining environments to subscription. If you secure a 30% discount today for half your estate, ensure you have it in writing that the same discount (or better) will apply when you convert the rest next year, for example.

This avoids a situation where they offer a deal upfront but then charge the full rate later when you’re further in.

Phased Adoption Agreements:

If you plan a phased migration, discuss this openly and structure the deal accordingly. Broadcom might offer a committed volume discount if you sign an agreement to transition X number of cores this year and additional cores next year.

They could, for instance, contractually commit to a certain price for a larger volume, but allow you to execute it in phases. This is similar to how some cloud providers do reservations: you commit to a total, but deploy gradually. In VMware terms, you might say, “We will move 2000 cores to subscription in 2024 and an additional 2000 cores in 2025.” You can then negotiate pricing based on the total of 4000 cores, with the flexibility to co-term the second batch later.

Be sure any such agreement is documented to avoid confusion when you go to place the Phase 2 order. Phased approaches can also be tied to milestone events, such as data center migrations or hardware refreshes. Make sure the sales team understands your timeline – they may be able to align the subscription start dates with when you need them, avoiding early payments for capacity not yet in use.

Involve Resellers and Get Competitive Quotes:

Although Broadcom is centralizing a lot of sales, VMware’s channel partners are still involved and competing for your business. Engage a few trusted large resellers or licensing solution providers to get quotes for the subscription licenses.

Sometimes resellers have leeway to reduce margins, or they might have vendor incentives to apply, resulting in a better price than a direct quote from Broadcom. Also, partners can be advocates; a good partner will lobby Broadcom on your behalf for a discount, especially if they fear losing you as a customer entirely. If you are considering alternative solutions, like moving to a different virtualization platform, mention that in negotiation discussions (without making empty threats).

Broadcom needs to know that you have options and you’re willing to consider them if the VMware deal isn’t viable. This competitive pressure can make them more flexible on price. Keep the tone collaborative but clear: your preference is to continue with VMware, but only if the economics make sense.

Use Independent Licensing Experts: Firms such as Redress Compliance, VMware licensing consultants, or SAM advisors can provide invaluable support in the negotiation process. They often know the “market rate” – what other companies are getting in similar deals, which arms you with knowledge of how far you can push.

They can help prepare a thorough license baseline to ensure you’re not missing any entitlements that could be converted or any unused licenses that could be credited. They can also simulate different licensing scenarios and verify Broadcom’s proposals (for example, confirming that the bundle they’re selling truly covers all your needs, or identifying if you’re over-licensing).

Bringing an expert to the table can also send a message to Broadcom that you are a savvy customer who will not be easily upsold or misled.

While there is typically a consulting fee for their services, the savings from a large VMware deal often justify it. If you do engage such an expert, have them review all proposal documents and assist you in drafting counter-proposals. Often, they can suggest creative contract clauses or identify red flags (like onerous audit terms or one-sided renewal terms) for you to negotiate.

Negotiating Non-Financial Terms:

Price is paramount, but don’t neglect other terms in the subscription agreement. Clarify the terms around global use rights (can you use the licenses in any region or cloud?), audit process (try to get a reasonable notice period and dispute resolution in case of audit findings), transfer rights (if you undergo a merger or divestiture, what happens to the subscriptions?), and cancellation/true-down terms (though subscriptions are usually non-cancelable for the term, check if there’s any flexibility to drop some capacity at renewal if your needs shrink).

These aspects can have long-term financial implications. For example, if you have a global operation, you would want the rights to deploy your subscription anywhere in the world without needing separate regional licenses.

Ensure the contract doesn’t restrict usage by geography (Broadcom’s standard terms might, unless negotiated otherwise). Another example: If you foresee moving some workloads to the public cloud, clarify if you can reduce your on-prem core subscription count at renewal or convert them to cloud subscriptions without penalty.

Prepare for a Hard Line and Escalate if Needed:

Broadcom might initially offer a high quote with little flexibility, expecting pushback. Be prepared with your data and counterarguments. If negotiations stall at the account manager level, don’t hesitate to escalate to Broadcom or VMware’s senior management. CIO-to-executive discussions can sometimes unlock concessions, especially if you’re a sizable customer or a well-known reference.

Broadcom does not want bad press about alienating key customers. There have been reports of customers escalating their concerns through legal channels or even publicly voicing them, which prompted Broadcom leadership to offer ameliorations, such as the security patch announcement.

While you want to keep negotiations amicable, remember that as a customer you still have power – the power to leave. If the deal on the table would blow up your IT budget, it’s better to push back hard (even delaying decisions if possible) than to simply accept and regret later.

Use time as leverage, too; Broadcom has aggressive revenue targets, so the end of the quarter or year might be when they are most motivated to close your subscription deal with incentives.

What CIOs Should Do:

• Gather your facts and team: Before entering negotiations, assemble a cross-functional team that includes IT, procurement, finance, and, if applicable, an external licensing advisor. Compile a detailed report of your current VMware deployments and spending. This preparation will allow you to counter any quote with well-informed questions and requests.
• Ask about transition incentives: Directly inquire about what incentives Broadcom or VMware can offer for transitioning. Use phrases like “What can you do to help us make this transition?” Sellers may then offer programs like credit for unused terms on current support or bonus months on a subscription, etc. Ensure any such offers are captured in writing in the proposal.
• Negotiate beyond the list price: Don’t accept list pricing – virtually every large enterprise will receive a discount. Start by aiming for the kind of discounts you had on perpetual licensing (if historically you had, say, 30% off VMware list via an ELA, use that as a baseline target for subscription discount). Also, negotiate the terms (not just the cost). If you need flexibility, such as phased deployment or specific contract language, bring it up. Everything is negotiable before you sign.
• Leverage competition diplomatically: If you’re evaluating alternative solutions (such as Hyper-V, KVM, or cloud migrations), mention that you’re doing due diligence and conducting a cost comparison. You don’t need to issue ultimatums, but letting Broadcom know that you have options will make them more inclined to be reasonable. They would rather retain you as a customer at a discount than drive you away and earn nothing.
• Engage executive support: Use your organization’s executive relationships if available – for example, if your CEO or CIO can reach out to Broadcom leadership or if there is an executive sponsor on VMware’s side for your account. High-level engagement can sometimes break through pricing barriers or at least signal that this deal is of strategic importance on both sides.
• Utilize experts for negotiation: Consider hiring a licensing consultant or partnering with a software asset management (SAM) provider to advise or lead the negotiation on technical details. They can craft counterproposals and help translate Broadcom’s quotes into understandable terms. Their experience with other clients can help them know where Broadcom is likely to concede. This can save you a significant amount of money and help you avoid pitfalls in the contract.

Governance and SAM Considerations

As VMware shifts to a subscription-based, core-licensing model, maintaining proper governance and Software Asset Management (SAM) practices becomes even more critical.

CIOs must ensure that their organizations can accurately track usage, entitlements, and remain compliant, all while optimizing the investment.

Here are key considerations for governance and SAM in this new regime:

Track Core Usage Meticulously:

In the perpetual era, many organizations were used to counting CPU sockets when managing VMware licenses. Now, you need to track at the granularity of CPU cores across your entire environment. This means updating your asset management databases and configuration management systems to record not just the number of ESXi hosts, but the core counts of each host and which licenses are assigned.

It’s advisable to maintain a central inventory of all VMware hosts, including their core counts, which can be exported regularly from vCenter or a discovery tool. Whenever you add new servers or upgrade CPUs in existing servers, this inventory must be updated, and you should verify that you have sufficient core subscriptions to cover the change. Implement processes that make this automatic: for example, any provisioning of a new ESXi host should trigger a license check against your entitlement pool.

Minimums and Entitlement Rules:

Understand the exact rules of your VMware subscriptions and encode them into your SAM tools. For example, if each CPU counts as at least 16 cores, and you have a host with two 10-core processors (20 cores physical), for licensing count it as 32 cores (16 per CPU).

Your internal tracking should reflect such rules so you don’t undercount.

License Key Management:

In the new model, VMware may issue different license keys or activation methods for subscription products. Keep a secure and well-documented repository of all license keys, activation codes, or subscription IDs you receive. For instance, if you purchase a vSphere Foundation subscription, you’ll get a license key (or a cloud-linked subscription account) that enables that in vCenter. Those keys often have an expiration date corresponding to your term.

It’s critical to monitor expiry dates. Ideally, your SAM tool or VMware’s vCenter itself will alert you as subscriptions approach expiry (vCenter does show license expiration warnings).

Governance processes should ensure renewals are initiated well before any expiration to avoid a scenario where licenses technically expire and ESXi hosts go out of compliance (or even functionality could be impacted if not renewed in time, depending on enforcement mechanisms).

Audit Readiness:

Broadcom has signaled a stronger stance on compliance and audits. To be audit-ready, maintain documentation that reconciles your entitlements vs. usage. This includes having copies of your subscription agreements, proof of the number of cores you have purchased (such as a license certificate or a quote and purchase order), and records from your environment showing the number of cores deployed.

SAM tools like Flexera, Snow, or ServiceNow can be configured to collect VMware vCenter data, such as the number of processors and cores on each host, as well as the edition running. Regular internal audits – say quarterly – can catch discrepancies (for example, if someone stood up an unauthorized ESXi host or if a host’s CPU was upgraded).

By catching that internally, you can true it up with additional subscriptions proactively rather than having an auditor find it. Additionally, document any specific terms you negotiated (like extra allowances or special cases) so that if an audit happens, you can show those agreements. For example, if Broadcom allowed you to exceed a certain count temporarily or provided a grace period, have that in writing to show auditors.

SAM Tool Configuration:

Ensure your SAM tools are updated to reflect VMware’s new licensing SKUs and metrics. The tools had to track VMware licenses historically by CPU socket; now, they should treat them as core entitlements. Most leading SAM platforms, such as Flexera One/FlexNet Manager, ServiceNow SAM, and Snow License Manager, will release updated product use rights templates for VMware by Broadcom. As the CIO, you should task your SAM team to import these updates and verify they match your contract.

Pay attention to bundling: if you bought Cloud Foundation, that one subscription includes vSphere, vSAN, NSX, etc. – your SAM tool should not count those separately or consider you non-compliant for NSX usage since it’s part of the bundle entitlement.

Properly modeling these bundles in the tool may involve custom license configurations, as you have a single license covering multiple products. Work with the tool vendor or a SAM consultant if needed to set this up correctly. This will save a lot of headaches when trying to report compliance.

Usage Data and Analytics:

VMware’s newer subscription offerings may also provide usage analytics (for example, vSphere+ had a cloud portal that tracks usage). Leverage any official usage tracking to cross-verify your data. Also, use VMware’s native tools like vCenter or vRealize Operations (now Aria Operations) to gauge usage trends.

For instance, if your CPU core utilization is trending up because you’re adding workloads, you can predict that you’ll need to purchase more core licenses sooner rather than later. This ties into capacity management: align your capacity planning with license planning. If you project needing 20% more cores next year due to growth, you can negotiate those in now or budget accordingly.

Compliance in Mixed Environments:

If you have a mix of perpetual and subscription (during a transition phase), be extra careful in compliance tracking. The risk is double-counting or misattributing usage. You might, for example, have 10 hosts under old licenses and 10 under new; your SAM tool should reflect that you have X perpetual CPU licenses covering certain hosts (and those hosts should not exceed that in CPU count), and Y core subscriptions covering the others. If those environments are disconnected, treat them as separate license pools in your tracking.

It might even be the simplest to separate their tracking by tagging each host in the SAM database with the type of license it is expected to have. Governance-wise, you might set a policy: any new host added to environment A must come with a perpetual license taken from our existing pool (if any available) or if none, we know environment A can’t grow further without migrating to sub; any new host in environment B must come with a subscription assignment. Codify these policies so admins know what to do.

Core Capacity Control:

Because licensing is now directly tied to hardware cores, some companies may introduce standards for hardware to optimize licensing. For example, you might decide to favor servers with fewer, higher-clocked cores if your workloads allow, to reduce licensing costs. Or, if you use very high-core-count servers, ensure they are fully utilized (perhaps running multiple VMs or container workloads) to justify the licenses.

These decisions also impact architecture and governance: involve your enterprise architects in deciding on server specs with licensing in mind. It’s a shift to think about “Do we need that 64-core monster CPU if a 32-core would do? That extra 32 cores will double the license cost for that host.”

In the past, a dual-socket license would cover both regardless of core count up to a limit, but now every core matters. SAM governance can include reviewing procurement requests for new hosts to ensure they align with an efficient licensing strategy. Some organizations set up an internal review board for any new software/hardware that has a license impact – VMware should be on that list now.

Automation and Tagging:

Use automation whenever possible to help with license management. For instance, if you use VMware’s APIs or PowerCLI, you can script a daily check of the cluster’s core count versus the licenses applied.

Or integrate VMware data with your CMDB (Configuration Management Database) so that every host record has a field for “licensed cores” and “license type”. Tagging in virtualization platforms (using custom attributes in vCenter) can indicate which subscription a host belongs to. These practices ensure that even if staff changes or time passes, there are in-system indicators of compliance needs, not just tribal knowledge.

Audit Simulation:

Periodically conduct an internal “mock audit.” Have your internal audit team or SAM team use a methodology similar to vendors: gather evidence (such as VMware’s license reports, vCenter inventory, and purchase records) and verify if it reconciles.

This exercise can catch issues like expired licenses that weren’t removed, hosts that were built without licenses, a miscount of cores, or even user-installed VMware products (such as someone deploying an NSX appliance without proper entitlement). You should find these than Broadcom’s official auditors.

If you do find discrepancies, address them promptly – either by purchasing additional subscriptions (preferably negotiating them as part of your next true-up rather than at list price in an audit panic) or by rebalancing resources (maybe decommissioning some test VMs on hosts to remove a host entirely if it was not worth licensing, etc.).

SAM Tool Integration with Procurement and Finance:

Given the recurring nature of subscription, integrate your SAM tool outputs with financial management. For example, use it to forecast the cost of the next renewal based on the current deployment. ServiceNow or Flexera can often produce reports, such as “licensed cores in use vs. purchased.” If you see usage about to exceed purchase, you can trigger a purchase request.

Conversely, if you have a subscription that covers more cores than you currently use (perhaps you overbought, expecting growth), track that so you know you have headroom and avoid overpurchasing again until needed. This tight management will help maximize utilization of what you’re paying for – an important governance principle to avoid wasted IT spend.

Training and Awareness:

Ensure that your SAM and IT asset management team is trained on VMware’s new licensing. If they were used to just counting sockets, they need to update their skills. Broadcom and VMware have documentation on the new model – leverage any training sessions or partner info sessions.

Also, train the infrastructure team to cooperate with SAM – e.g., the VMware admins should promptly inform SAM managers when they add a new cluster or change host configurations. Building a culture of license awareness in the IT ops team can go a long way in staying compliant effortlessly.

What CIOs Should Do:

• Update asset management processes: Immediately adjust your SAM and CMDB records to include core counts for all VMware hosts. Establish a process with IT operations so that any change in the virtualization environment (such as a new host or CPU upgrade) is logged and evaluated for license impact.
• Use SAM tools to their full extent: Configure your software asset management tools (such as Flexera, ServiceNow, and Snow) with VMware’s new licensing metrics. Validate that these tools correctly calculate license consumption against entitlements. Set up dashboards or alerts for VMware license utilization to maintain continuous visibility.
• Implement strict compliance checks: Don’t let unplanned usage slip in. Require that any deployment of VMware software (ESXi hosts, vSAN clusters, or NSX appliances) undergo a license check. This might mean gating such changes behind an approval that involves the licensing team. It’s much easier to approve something knowing you have spare capacity or to say “wait, we need to buy more cores before you proceed” than to reconcile after the fact.
• Prepare for audits: Maintain an audit-ready stance. Keep documentation of all VMware subscriptions, including contracts and order confirmations, in a central repository. Periodically simulate a license audit internally to ensure your records match reality. If you find any discrepancies, remediate them before an official audit occurs.
• Leverage tooling and automation: Where possible, automate the collection of VMware usage data. Use scripts or vendor-provided tools to pull cluster inventory and feed that into your asset management reports. Automation reduces human error and keeps data fresh, so you’re not surprised by environment drift.
• Continuous education and governance: Make VMware licensing a regular topic in IT governance meetings. As Broadcom updates terms or your environment evolves, ensure that everyone, from system administrators to IT finance, is aware of the current compliance position. Foster a mindset that treating licenses as a managed asset is part of operating the VMware platform, just like monitoring performance or uptime.

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