Diversifying Virtualization to Reduce Risk: A CIO Playbook

Diversifying Virtualization to Reduce Risk

Introduction

VMware’s dominance in enterprise virtualization is being challenged – not by a new technology but by its licensing upheavals. In the wake of Broadcom’s acquisition of VMware, customers have seen steep price increases, restrictive new licensing models, and shifts in support that introduce significant risk​. CIOs of global enterprises and mid-sized organizations now face a crucial decision: continue an all-in commitment to VMware at a higher cost or diversify their virtualization strategy to regain leverage and control.

This playbook provides a strategic roadmap for CIOs to navigate these changes. It outlines why diversification is prudent, surveys viable alternative platforms, and offers guidance on selecting workloads, managing risks, building a transition plan, and even using this strategy as a bargaining chip in negotiations with Broadcom.

An analysis approach is used, focusing on actionable recommendations, clear analysis, and pragmatic steps for technology leaders.

Why Diversify Beyond VMware?

Broadcom’s Licensing Shake-Up – A Catalyst for Change: Broadcom’s acquisition of VMware has triggered major changes in pricing and licensing that are hard to ignore. Many organizations have been hit with budget-shattering cost hikes – reports include 2x, 3x, and even higher increases in VMware fees, with some smaller customers facing up to 10-12× increases when forced into new subscription bundles.

These hikes stem from Broadcom’s new policies: bundling products into all-or-nothing suites, eliminating perpetual licenses in favour of subscriptions, and raising minimum license counts.

Restrictive Terms and Support Concerns: Alongside price changes, contractual terms and support structures have shifted. Broadcom has discontinued renewals for legacy support contracts unless customers transition to subscription-based support. The channel partner ecosystem is shrinking, potentially disrupting longstanding support relationships.

Broadcom’s focus on large enterprises suggests mid-market and smaller customers may get less attention or face “one-size-fits-all” service. CIOs worry that sole reliance on VMware under these terms creates vendor lock-in without the old assurances – it’s now a single point of failure from both cost and support perspectives.

As one analyst observed, Broadcom isn’t being subtle about this: it’s an “effort to divorce the customer” with an unwillingness to negotiate​. This hardline stance raises the risk of having all your eggs in VMware’s basket.

Maintaining Innovation vs. Cost: VMware’s platform remains top-tier in features and performance; Broadcom asserts that these changes will fund continued innovation. But CIOs must ask: at what cost? If licensing fees drain the budget, it may crowd out funding for innovation elsewhere. Diversification ensures you don’t depend solely on one vendor’s roadmap or pricing.

It introduces healthy competition and flexibility. In summary, diversifying beyond VMware is a proactive way to reduce risk. It mitigates exposure to unpredictable costs and protects your organization’s ability to support critical workloads on your terms.

CIO Recommendations – Why and When to Diversify:

• Assess VMware Impact: Immediately analyze how Broadcom’s new licensing will affect your IT spend over the next 3-5 years. If projected costs spike dramatically or key terms (like support coverage) change, treat this as a call to action.
• Recognize Lock-In Risks: Acknowledge the operational risk of 100% dependency on VMware. Communicate these risks to executive stakeholders – for example, how budget overruns or support issues could impact business continuity.
• Champion a Dual-Source Strategy: Even if VMware remains critical, begin securing buy-in for a dual-vendor virtualization strategy. Emphasize that a selective move to alternatives can curb costs and improve negotiating leverage without compromising core operations.
• Watch Industry Signals: Keep an eye on how other enterprises are responding. If peers are diversifying or if market analysts (e.g., Gartner, Forrester) advise caution, use that data to strengthen your case for change.

Exploring Viable Alternatives to VMware

Diversification doesn’t mean abandoning virtualization – it means broadening the mix of platforms in your environment.

Several mature alternatives can run your workloads, often at lower cost. Key options to consider include:

• Microsoft Hyper-V (Windows Server Virtualization): Hyper-V is a Type-1 hypervisor built into Windows Server. It offers robust core virtualization features, including VM isolation, live migration, failover clustering, and replication, and is tightly integrated with the Windows ecosystem. Cost advantages are a primary draw: if your organization already licenses Windows Server (Data Center edition, in particular, allows unlimited VMs), Hyper-V comes at no additional hypervisor cost. This makes it extremely cost-effective for Microsoft-centric shops. Hyper-V’s management, via Hyper-V Manager or the more advanced System Center Virtual Machine Manager, is familiar to Windows administrators. It’s a strong fit for hosting Windows and Linux workloads where ultra-advanced VMware-specific features (like vSAN or DRS) might not be necessary. Example: A global company running many Microsoft workloads can enable Hyper-V on its existing Windows servers to host test or departmental virtual machines (VMs), thereby avoiding VMware expansion costs. Recommendation: CIOs should evaluate Hyper-V, especially if they have a significant Microsoft footprint. Check if your Windows Server licensing covers virtualization rights, and pilot Hyper-V for less critical workloads to validate performance and manageability. The low entry cost and decent feature set make it a prudent first alternative.
• Open-Source KVM (e.g. Red Hat, Proxmox Variants): The Linux KVM hypervisor is the engine powering many cloud platforms and enterprise solutions (including Red Hat and Nutanix). KVM is open-source (no license fee) by itself, and there are user-friendly distributions like Proxmox VE and enterprise offerings like Red Hat Virtualization (now part of Red Hat OpenShift Virtualization) that package KVM with management tools. Cost-wise, KVM solutions are typically far cheaper than VMware – you might only pay for optional support subscriptions. For instance, an open-source KVM solution with community support can be run free of licensing, and even with commercial support, analyses show options like Oracle’s KVM or Citrix Xen (now open-sourced as XCP-ng) can cost only a few thousand dollars per year for a whole cluster​ (versus five or six figures for VMware). Functionally, KVM supports modern OSes, VM live migration, software-defined storage (Ceph, ZFS), and more, especially when using polished platforms like Proxmox. Operational considerations: Your team will need Linux skills to get the most from KVM-based platforms. The ecosystem is not as plug-and-play as VMware; for example, you may string together separate tools for backups or multi-cluster management unless you use a commercial bundle. Example: A mid-sized software firm leveraged Proxmox KVM clusters for their development, testing, and backup recovery environments, avoiding VMware license costs in those areas while retaining VMware for production – a successful mix that cut costs and validated KVM’s stability. Recommendation: If your organization has Linux expertise or a desire for platform independence, test a KVM-based solution. Start with a small Proxmox deployment or evaluate Red Hat’s offering if you need vendor support. Ensure your hardware is compatible (most x86 servers are) and measure the performance of typical workloads on KVM. Many CIOs are pleasantly surprised that KVM’s capabilities meet their needs for a fraction of VMware’s cost. Keep in mind you may need to budget for management add-ons (e.g., a better UI or backup tool) to match VMware’s convenience.
• Public Cloud VM Platforms (AWS, Azure, GCP): Another way to diversify is to use cloud infrastructure for some of your virtual workloads instead of running them on-premises with VMware. All major cloud providers offer robust IaaS virtual machines – effectively outsourcing the hypervisor to AWS, Microsoft Azure, or Google Cloud. The appeal here is twofold: no upfront virtualization licensing (you pay as part of the VM hourly costs) and access to on-demand scalability and global infrastructure. Cloud VMs can be a good alternative for certain use cases, such as development environments that can be spun up and down. During these regional or branch deployments, building a new data centre is impractical or a disaster recovery target for on-prem systems. Moving a workload to the cloud means VMware licensing and hardware maintenance costs for that workload are eliminated and replaced by a monthly cloud bill. Cost Comparison: Cloud costs vary by usage. Long–running, steady workloads might end up costing more in the cloud over several years than running them in-house. However, the cloud can shine for variable or bursty workloads and for avoiding large capital expenditures. Also, clouds have their own savings options (reserved instances, savings plans) that CIOs can leverage. Example: A retailer moved its e-commerce test environments to AWS, allowing those virtual machines (VMs) to be powered off when not in use, which saved money and freed up VMware capacity on-premises for production. Another organization uses Azure as a failover site for critical VMs via Azure Site Recovery, avoiding the need to license a second VMware site. Recommendation: Include the public cloud in your diversification strategy, either as a strategic platform for new workloads or a tactical solution for peaks and disaster recovery (DR). Evaluate the total cost of ownership (TCO) of running a given application in the cloud versus on VMware, including network and storage costs. If your company has a cloud-first mandate, align with it by identifying which VMware-based apps can be rehosted on cloud VMs or replaced with SaaS or PaaS equivalents. Ensure your team develops cloud management skills, if they are not already in-house. Even if you don’t move production to the cloud, having the option and some footprint reduces reliance on any one on-prem hypervisor and gives you flexibility (for example, to delay hardware refreshes or handle unexpected capacity needs without buying more VMware licenses).

(Note: Other alternatives exist as well – e.g., Nutanix AHV, an integrated hypervisor with hyper-converged infrastructure, or Citrix Hypervisor (Xen) – but the three categories above cover the primary non-VMware pathways most CIOs consider.

The approach in this playbook is vendor-neutral; focus on what meets your technical requirements at an acceptable cost.)*

CIO Recommendations – Evaluating Alternatives:

• Map Requirements to Options: List your must-have virtualization features (e.g. live migration, high availability clustering, backup integration). Use this to do a gap analysis for each alternative. For instance, ensure Hyper-V or KVM supports the Linux distro your business application needs, or that cloud VMs meet your latency requirements. This mapping prevents unpleasant surprises later (such as discovering an alternative lacks a feature you rely on in VMware).
• Pilot At Least One Alternative: Don’t just read about alternatives – experience them in a pilot. Allocate hardware (or use cloud credits) to set up a small environment with an alternative hypervisor. Aim to run a representative sample of workloads. This hands-on trial will reveal compatibility issues and learning curve challenges early. It also builds team skills. Treat the pilot as an experiment: document what works, what breaks, and how the performance compares to VMware.
• Engage Vendors and Community: Leverage resources from the alternative platforms. For Hyper-V, engage your Microsoft account team – they often provide tools or assistance for VMware migration assessments. For open-source solutions, tap into the community forums or hire a consultant experienced in that platform to guide your setup. Many cloud providers offer free proofs-of-concept or funding for migrations as well. Take advantage of these to reduce evaluation costs.
• Consider Support and Ecosystem: If your organization requires enterprise-grade support, include that in your evaluation. For example, test Red Hat’s support responsiveness for KVM, or ensure Microsoft Premier support covers your Hyper-V scenarios. Also check tool compatibility: will your monitoring software or backup vendor support the new platform? Identify any gaps and how to fill them (perhaps a new tool or a different operational process). The goal is to ensure an alternative can be production-ready with the right support model in place.

Assessing Workloads for Suitability on Alternative Platforms

Not every application or environment should be yanked off VMware immediately. Smart diversification targets specific workloads that are best suited to alternatives first, allowing CIOs to minimize risk while maximizing savings.

Below are key workload categories and how to approach them:

• Dev/Test Environments: These are prime candidates for alternative platforms. Development and QA systems are usually not customer-facing and can tolerate minor performance variations or occasional reboots, making them ideal for trying out a new hypervisor or cloud setup. Moving dev/test VMs to a low-cost platform, such as Hyper-V on existing servers, a Proxmox cluster, or even ephemeral cloud VMs, can yield quick wins in cost savings without compromising production uptime. Additionally, developers often appreciate the flexibility of cloud-based test labs or the use of container platforms, which can be part of this shift (e.g., containerize some dev workloads to reduce reliance on VMware entirely). Recommendation: Identify all non-production VMware clusters, especially those hosting internal development or testing, and evaluate migrating them to an alternative within the next refresh cycle. For instance, if you refresh hardware every 3-4 years, deploy the new dev/test hosts with a different hypervisor, and run them in parallel for a trial period. This way, you can either free up VMware licenses or avoid renewing them for environments that can run elsewhere. Also, consider implementing self-service dev/test provisioning in the cloud to further decouple it from your VMware infrastructure.
• Branch Office and Edge Workloads: Remote offices, retail locations, factory floors, and other edge sites often run a handful of virtual machines (VMs) to support local services, such as file sharing, printing, point-of-sale systems, and data center replicas. Historically, VMware offered ROBO (Remote Office/Branch Office) kits or Essentials editions for these scenarios at a lower price point. With those options now curtailed or more expensive​, it is highly cost-effective to use alternative solutions at the edge. For example, a small retail store might have a single physical server – instead of putting ESXi on it with an expensive license for just 2-3 VMs, one could use Microsoft Hyper-V (free with Windows Server) if that server is also needed for local AD or file services, or run an open-source hypervisor. Even a lightweight Linux KVM or virtualization appliance can do the job for minimal cost. The goal is to contain VMware’s footprint in the central data centres and use cheaper options in remote locales. Recommendation: Survey all decentralized sites using VMware. For each, ask: “Can this be run on a different hypervisor or in the cloud?” Focus on the technical requirements (e.g., some sites might need GPU support or specific integrations that dictate the choice). Then, pilot one or two branch migrations. For instance, migrate a branch office’s VMs to a Hyper-V server and monitor performance over a month. Document the process so it can be replicated at other sites. Standardize on one alternative per use case. For example, you might decide on Hyper-V for all branch offices to simplify support. This reduces VMware license counts significantly across dozens of locations, building confidence in a multi-hypervisor operating model.
• Disaster Recovery / Secondary Sites: DR environments are another fruitful area for diversification. Many organizations maintain a secondary data centre or co-location for disaster recovery, often mirroring key VMware workloads on standby. These DR resources typically sit idle or underused most of the time – yet if they run on VMware, you’re still paying for full software licensing and support. Instead, consider using a different platform for disaster recovery (DR) to cut costs. There are a few approaches: (1) Use cloud for DR – e.g., replicate VMware VMs to AWS/Azure and only spin them up during a disaster, leveraging pay-as-you-go. (2) Use a secondary hypervisor for disaster recovery (DR) – e.g., use Hyper-V or KVM at the DR site. Modern backup and replication tools can often restore VMware VMs onto alternative hypervisors, or you can keep warm copies of VMs converted to the alternate format, ready to launch. The trade-off is managing two environments, but in a disaster, you may accept slightly different operations if it saves substantial costs during normal times. (3) Use vendor-agnostic replication – some enterprises replicate data at the storage level (e.g., SAN replication, ZFS snapshots) and can bring up VMs on any hypervisor that accesses that storage. This approach requires careful planning but enhances flexibility. Recommendation: Revisit your DR strategy to diversification. Perform a risk analysis: For each critical system, is it acceptable to run on a different platform during an emergency? Often, the answer is yes if the alternative is tested. Run a disaster recovery (DR) test where you fail over a service to a cloud VM or a Hyper-V host to ensure it works as expected. If successful, you can potentially downsize your VMware licensing to cover only the primary site while the DR site uses a cheaper standby platform. Be sure to include orchestration and recovery procedures in the DR plan (e.g., staff must know how to start virtual machines on the alternate platform during a crisis). By doing this, you not only save costs in a steady state, but you’ve inherently proven that your workloads are portable – a big win for resilience.

In all cases, the guiding principle is to match the right workload to the right platform. Mission-critical, performance-sensitive applications may remain on VMware (at least initially), whereas less sensitive or more cost-sensitive workloads are moved. Over time, as confidence and capabilities in other platforms grow, you may shift more workloads to other platforms. Diversification is a continuum – you might start at 10% non-VMware and later reach 30-40% if it makes sense.

CIO Recommendations – Workload Selection Process:

• Classify Workloads by Criticality and Requirements: Create a simple chart or matrix of your application portfolio with columns for downtime tolerance, performance needs, OS type, and any platform-specific dependencies. Use this to identify “low-risk” movers (e.g., an internal tool used by one department, which could run fine on a different hypervisor) versus “high-risk” (e.g., core banking system heavily integrated with vSphere APIs). This classification ensures you take calculated risks only.
• Target Quick Wins First: Prioritize moving workloads that offer immediate payoff with minimal complexity. Dev/test is a classic quick win – the business impact of any issues is low, and you can reclaim expensive VMware resources. Another quick win might be a batch of Linux utility servers (DNS, DHCP, etc.) that could run on KVM easily. By scoring early successes, you’ll build momentum and credibility for the diversification initiative.
• Plan for Partial Redundancy During Transition: When migrating a workload to a new platform, whenever possible, don’t do a one-way cutover initially. Instead, run it in parallel or maintain a fallback. For instance, keep the VMware VM around (turned off or in snapshot) until the new instance on Hyper-V has run stable for a few weeks. This safety net makes application owners more comfortable and allows easy rollback if needed. Once confidence is gained, you can fully decommission the VMware instance.
• Engage Application Owners: Communicate with the stakeholders of each workload. Explain the reasons for moving (cost, strategic diversity) and ensure that the move won’t violate any vendor support agreements. Some software vendors certify only certain platforms – double-check that moving a workload doesn’t put you out of compliance with a support contract. In most cases it won’t, but due diligence here avoids future headaches. Garner support by highlighting benefits (e.g., “We can afford to allocate more resources to your app in the new environment since it’s cheaper, improving performance!”).
• Document Results and Refine Criteria: After each migration or pilot on an alternative platform, document what you learned. If a certain type of workload ran into issues on KVM (perhaps a driver issue or a performance hit), note that and adjust your criteria for what’s suitable to move. This iterative approach will gradually draw a clear line of what stays on VMware vs. what can leave, based on evidence from your own environment.

Cost Comparison: VMware vs. Alternative Platforms

One of the primary drivers of this strategy is cost. CIOs need a clear understanding of how VMware’s costs compare to those of alternatives.

Below is an overview of cost factors for VMware and the main alternatives:

• VMware vSphere (Broadcom Era): VMware was never the cheapest option, but now costs have escalated further. VMware licensing is now sold by subscription per CPU core, with high minimum counts, and typically requires purchasing bundled suites, such as VMware Cloud Foundation. Price examples: Enterprise customers report VMware subscription quotes that are 2-5 times higher than their previous perpetual license maintenance costs. In one analysis of a 4-host cluster (208 cores total, approximately 100 VMs), VMware’s new “vSphere Foundation” bundle cost was estimated at around $ 28,000 per year, versus about $ 8,000-$9,000 for a comparable Proxmox (KVM) setup. Even the scaled-down VMware Standard edition came in at around $ 10,000 (with fewer features). Additionally, support is now baked into the subscription; there is no option to run without support and save money – you pay VMware annually, or your environment is not legally licensed. Bottom line: VMware offers rich functionality and a decades-old ecosystem, but at a premium cost. CIOs should plan on VMware being the high-cost benchmark in any total cost of ownership (TCO) comparison. Expect pricing to be in the “premium software” range and budget for increases at renewal unless mitigated via negotiation or via volume
  commitment.
• Microsoft Hyper-V Cost Model: Hyper-V’s big appeal is that if you own Windows Server licenses, you likely already own the rights to run Hyper-V. Windows Server Datacenter Edition licensing, which many enterprises use, allows unlimited virtual instances on a host. This means that once you license the hardware, the hypervisor comes at no extra charge. Even the Standard Edition provides some virtual machine (VM) rights, such as two VMs per license, etc. You might choose to invest in System Center Virtual Machine Manager (SCVMM) for more sophisticated management of multiple Hyper-V hosts, which has its licensing (~$3600 per 16 cores, plus Software Assurance for support​). Still, even combined, Hyper-V is typically cheaper. For example, continuing the previous cluster scenario, one might estimate roughly $ 11,000/year after the initial license purchase for a 4-host Hyper-V + SCVMM setup (and lower if you already own the Windows licenses) – which is still far below VMware’s equivalent. Additionally, many organizations have enterprise agreements with Microsoft, meaning Hyper-V is essentially included for free as part of that agreement. Hidden costs: Ensure you accurately account for Windows Server licensing costs when adding new hosts solely for Hyper-V. But since most VMware hosts also require OS licenses for VMs, it’s often a wash. Bottom line: Hyper-V can drastically reduce virtualization licensing costs, essentially eliminating the separate hypervisor fee. Operational costs (admin labor, training) may increase during the transition, but from a pure software standpoint, it’s usually a fraction of VMware’s cost for similar capacity. This makes a strong financial case for using Hyper-V,
  at least in portions of the environment.
• KVM and Open-Source Solutions Cost Model: KVM itself is free; what you pay for is the value-add around it. Proxmox VE, for instance, is open-source and free to use in production, with an optional support subscription (enterprise repo access and support tickets) that is modest (hundreds of dollars per CPU socket per year)​. Even fully loaded with the highest support tier, Proxmox for a large host might cost around $ 1,000 per socket annually – far less than VMware, which can run into thousands per socket, even for lower tiers. Red Hat’s KVM-based virtualization (now part of OpenShift) is more expensive than pure open-source – one might spend around $ 25,000 per year for a 4-host setup with premium support – but that also includes container platform features and enterprise SLAs. Other variants: Oracle’s Oracle Linux KVM is free to use; support costs around $ 1,400 per two processors per year (meaning our 4-host cluster example would be only $ 5,600/year with full support). Citrix Hypervisor (formerly XenServer) is an open-source Xen with commercial options. Citrix’s premium edition for a cluster of that size was around $ 6,000 per year. XCP-ng (community Xen) can be run for free or with low-cost support. The pattern is clear: open-source hypervisors drastically undercut VMware’s licensing costs. You’ll mainly invest in staff time and possibly some third-party management tools. It’s also worth noting that Nutanix AHV (KVM-based) is included when you buy Nutanix HCI appliances – its cost is effectively rolled into the hardware/software appliance purchase. Still, it eliminates separate VMware licenses (Nutanix positions it as a cost-saving measure if you go that route). Bottom line: For organizations willing to manage a Linux-based environment, KVM options can deliver enterprise virtualization at a cost anywhere from one-half to one-tenth that of VMware. The trade-off is that you may not get an all-in-one polished experience out of the box – you might spend on integration and training. But purely on license and support fees, the savings are significant.
• Public Cloud Costs: Comparing cloud to on-premises is complex, but here are some general points: With cloud VMs, you pay for runtime and associated resources, including CPU, RAM, storage, and bandwidth. There is no separate hypervisor license – that cost is embedded in the VM price that the cloud provider charges. For a fair comparison, include hardware depreciation, VMware licensing, power and cooling, and IT labor in your on-premises costs and compare them to the cloud VM cost plus network connectivity. The cloud can be cost-effective for intermittent workloads (you only pay when the VMs run) and can offer savings through scale, as large clouds achieve economies of hardware utilization. However, 24/7 workloads in the cloud can be more expensive over multiple years than an optimized on-premises setup. Many CIOs use the cloud in targeted ways to complement on-premises solutions: for example, bursting seasonal demand to the cloud avoids buying extra servers that sit idle later. From a diversification perspective, shifting some workloads to the cloud transfers those costs from capital expenditures (buying VMware licenses and servers) to Operating Expenditures (monthly cloud fees). This can be beneficial for cash flow and aligns with many companies’ cloud strategies. Also, note that support costs in the cloud are generally included – you don’t pay extra for hypervisor updates or break-fix services; you may only pay for premium support tiers. Bottom line: Use cloud economics to your advantage – it’s not always cheaper, but it offers flexibility. Calculate a 3-year cost projection for a given workload staying on VMware vs. rehosting to the cloud. Include everything (such as staff time and downtime risk, if relevant). In some cases, cloud wins, in others it doesn’t – so be selective. The advantage of the cloud is that you can often pilot a workload easily and get real cost data after a few months, allowing you to decide whether to continue or not.

To summarize, a diversified approach allows you to optimize costs per workload: keep critical workloads on VMware if needed, but perhaps at a lower quantity while moving others to cheaper platforms.

This portfolio approach to virtualization spending ensures you’re paying a premium only where it’s justified. Many organizations find that a hybrid of VMware and one or two alternatives yields the best balance of performance, risk, and cost efficiency.

CIO Recommendations – Conducting a Cost Analysis:

• Establish a Baseline: Work with your finance team to calculate your current VMware spend in detail. Include license fees, support contracts, hardware costs attributed to VMware environments (if any special hardware/software is solely because of VMware), and labor for administration. This baseline will be the “status quo” cost. Project it over 3-5 years, assuming known price increases (Broadcom has signaled annual uplifts and penalties for late renewal – include those). This shows the trajectory if you do nothing.
• Model Alternatives at Equal Scope: Take a representative chunk of your environment (say 100 VMs, or a particular site) and model the costs to run it on an alternative. Use vendor quotes or published prices for licenses/support, and don’t forget to factor in any new hardware or cloud costs. For example, model “What if these 100 VMs ran on 4 Hyper-V hosts we already own, plus System Center – what’s the 3-year cost?” vs. “What if they stayed on VMware under the new pricing?”. Repeat for KVM or cloud as needed. This side-by-side comparison will quantify potential savings. Often, you’ll see results like: Hyper-V could save 30-50%, KVM could save even more – concrete numbers that can be presented to executives.
• Include Migration and Ops Costs: Be fair and include the one-time migration costs and ongoing operational costs in the alternative case. E.g., add the cost of training staff on KVM (perhaps a week of professional training courses), or the time to convert VM images, or new tooling you might need to purchase. These are investments required to realize the savings. Calculate payback period: “We spend $X to implement Hyper-V, but save $Y per year, so ROI is achieved in Z months.” CFOs appreciate seeing the full financial picture.
• Factor in Growth: If your footprint is growing (more VMs each year), consider how costs scale. VMware costs will scale linearly with cores/VMs (with possibly volume discounts if you negotiate), whereas an investment in an alternative might have a flatter curve (e.g., once you have trained staff and a stable KVM cluster, adding more VMs is very low incremental cost). Show how diversification can bend the cost curve over time. For instance, maybe staying 100% VMware leads to a 40% cost increase in 3 years due to growth and pricing changes, while a diversified approach keeps the increase to 10% because new workloads go to cheaper platforms.
• Present a Business Case: Compile the above into a business-case document for leadership. Highlight not just cost savings, but also strategic benefits (risk reduction, negotiating leverage). It might be compelling to frame it as: “Diversifying will save us $X million over 5 years, which can be reinvested into digital transformation projects or hiring additional developers, etc.” – in other words, illustrate the opportunity cost of overspending on virtualization. That turns this from a pure IT cost-cutting exercise into something that enables growth or innovation with the freed resources.

Risks and Challenges of Diversification

Diversifying your virtualization stack comes with its challenges. CIOs must be clear-eyed about the risks and trade-offs so they can be managed.

Below are key risk areas and how to address them:

• Migration Complexity and Compatibility: Moving workloads off VMware isn’t as simple as flipping a switch. Virtual machines may need conversion (different hypervisors use different virtual machine formats), which introduces complexity and downtime during cutovers. There’s also the risk that certain workloads may not behave the same on a new platform due to subtle differences, such as networking setups and drivers. For instance, VMware’s virtual hardware and tools are highly optimized – when you move a VM to Hyper-V, you’ll switch to Hyper-V’s integration services and virtual drivers, which might reveal an issue if an application was fine-tuned for VMware. Mitigation: Approach migrations methodically. Use migration tools where available. Microsoft offers a Virtual Machine Converter, and there are community tools for KVM, among others. Always test migrated systems in parallel before decommissioning the VMware version. Start with simple workloads (file servers, basic web servers) to build experience, then tackle more complex ones. Another tactic is to rebuild VMs from scratch on the new platform (treat it like a fresh install and data restore) – this can sometimes be cleaner than converting an image, though it takes more time. The complexity is real, but with careful project management – treating this like any major data centre migration – it’s a solvable challenge. Also, consider outside help for large-scale moves. Vendors or third-party service firms have experience with these migrations and can accelerate the process with automation scripts and expertise.
• Skill Gaps and Training Needs: Your IT staff might be VMware experts but lack knowledge of Hyper-V clusters or Linux KVM tuning. Introducing a new platform means a learning curve. In the interim, this could lead to misconfigurations or slower issue resolution simply because it’s new terrain for the team. Mitigation: Invest in training before or during pilot projects. Identify staff who have aptitude or interest in the new platform and send them for certification courses (e.g., Microsoft Certified: Azure Stack HCI for Hyper-V or Red Hat Certified Specialist in Virtualization for KVM). Hands-on labs and trial-by-fire in non-production environments will build confidence. Also, adjust team structure if needed: you may designate “Hyper-V champions” or “cloud engineers” within the team who specialize rather than expecting everyone to know everything immediately. In addition, update your operational documentation – including new runbooks for creating VMs, handling backups, etc. – on the alternative platform, so there’s a reference to guide staff. Recognize that during the transition, support costs might temporarily rise (you might need to use vendor support more often as your team learns). This is a normal part of adopting multiple platforms. Over time, as skills catch up, the efficiency will improve. Cross-training between VMware admins and new platform admins can also be beneficial, so you’re not siloing knowledge. Essentially, treat new platform expertise as a core competency to develop, supported by management with time and training resources.
• Operational Tooling and Integration Gaps: In a homogeneous VMware world, you likely have a mature set of tools and processes – including monitoring systems tied into vCenter, backup solutions that use vSphere APIs, and automation scripts that utilize PowerCLI, among others. Introducing a new platform means some of those integrations won’t work on the new systems, or you need new tools. For example, your backup software might require an additional module (or license) to back up Hyper-V VMs, or you may find that your configuration management tool needs an agent update to handle KVM guests properly. Mitigation: Inventory all the tools and processes that interact with your VMware environment, from provisioning to monitoring, disaster recovery, and patch management. For each, determine how it will work with the alternative platform: is there native support, a plugin, or a workaround? Many modern IT management solutions are multi-hypervisor capable, but you might need to enable those features. Where you find gaps, you have a few options: replace the tool with one that supports both (for example, choose a backup product that can handle VMware, Hyper-V, and cloud VMs for consistency), or run separate tooling for each environment (less ideal but sometimes acceptable for smaller scales). Also, consider unifying management where possible. Some vendors offer single-pane-of-glass management for hybrid clouds, such as tools that manage both VMware and AWS, or both vSphere and Hyper-V. Evaluate if those can simplify operations. It’s important to adjust SLAs and procedures during the transition. For instance, if your monitoring alerts are only set up for VMware VMs, ensure you extend monitoring to new platform VMs and adjust thresholds accordingly. The goal is to avoid blind spots where a new system could fail and go unnoticed due to a lack of tool integration. Budget some time and money for acquiring or extending tools as part of the roadmap.
• Multi-platform management overhead: Running multiple virtualization platforms inherently adds complexity. You’ll have separate management consoles, such as vCenter for VMware, Hyper-V’s Admin Center, SCVMM, Proxmox’s web UI, etc. Administrators will need to keep track of two (or more) sets of patches, updates, and quirks. Capacity planning gets trickier because resources are fragmented across platforms. Mitigation: Embrace good management practices and automation. For example, use Infrastructure-as-Code and scripting to standardize deployments on each platform. Even if the commands differ, you can maintain scripts for each one to ensure consistency in configurations. You might schedule platform maintenance on different cycles (e.g., patching VMware in one window and Hyper-V in another) so they don’t overlap and overload the team. Over time, if one platform becomes dominant in use and the other is minimal, you can consider phasing out the less-used one. However, in the interim, treat multi-platform operations as the “new normal” that needs its standard operating procedures (SOPs). It helps to create a central dashboard or reporting system that aggregates key information, such as a weekly report showing the number of VMs and uptime on each platform, resource utilization, etc., so nothing gets overlooked. Another risk is sprawl – with multiple platforms, it’s easy to lose track of virtual machines (VMs), which may be on VMware, in the cloud, etc. Implement good governance, such as a CMDB or at least a tagging and naming convention, across all platforms to track assets. While multi-platform complexity is a boost, many enterprises already manage multi-cloud or hybrid environments. Virtualization diversification is similar and can be managed with the right discipline.
• Potential Performance or Feature Trade-offs: VMware offers very advanced features, such as mature VM live migration even under load, automated load balancing, and memory overcommit, among others. Alternatives may not perfectly match every capability. There could be performance differences – perhaps a workload runs a few percent slower on Hyper-V, or a networking feature in NSX is not available in KVM, requiring a different solution. Mitigation: Identify critical features you rely on (“must-haves”) and verify alternatives provide them or have acceptable substitutes. If VMware’s DRS (Dynamic Resource Scheduling) is important, note that Hyper-V offers similar clustering with load balancing, but Proxmox might require manual oversight or simple priority-based scheduling. If those differences are acceptable for the target workloads (which, likely, they are if you chose them carefully), then it’s fine. For anything mission-critical where VMware’s unique capabilities are truly needed, you might choose to leave that on VMware until alternatives evolve further or your requirements change. Also, keep an eye on the development roadmaps of alternatives. For example, the open-source community is rapidly improving KVM management features, and Microsoft continuously adds to Hyper-V’s feature set. The gap may narrow over time. Running real benchmarks in your pilot can provide empirical data on performance differences, helping you make informed decisions about what can be moved without user impact.
• Vendor Support and Accountability: When you diversify, you might lose the “single throat to choke” benefit. If everything is on VMware and something goes wrong, VMware’s support can help pinpoint the issue. In a multi-environment scenario, finger-pointing can occur (e.g., if an app experiences intermittent issues, the VMware team and KVM team may need to coordinate, or a vendor might claim it’s the other platform’s fault). Mitigation: This is where your internal processes and accountability become important. Define clear ownership for each platform and each application. For instance, have runbooks that outline troubleshooting steps for each environment, and ensure that during an incident, both platform teams collaborate rather than deflect. From a vendor perspective, maintain support contracts for the new platforms (don’t skimp on that in the early stages), so you have experts to call. Independent support providers also exist for open-source solutions if needed. Essentially, accept that you become the integrator of multiple technologies, which most IT organizations already do across many domains, and put in place the necessary support structures (monitoring, on-call expertise, vendor escalation paths for each major platform). Over time, as confidence grows, this will feel less like a risk and more like routine operations.

CIO Recommendations – Mitigating Risks:

• Start Small and Build Confidence: Mitigate many risks by starting with a contained pilot or secondary environment. It’s better to discover a backup incompatibility or performance quirk on a small scale than after a full rollout. Use these early trials to develop mitigation strategies (maybe you find you need a new backup tool – you can introduce it gradually). Each small success allows you to widen the deployment with reduced risk.
• Create a Multi-Platform Center of Excellence: Form a team or working group that focuses on multi-hypervisor operations. This team sets the standards for how each platform is configured, documents best practices, and disseminates knowledge to the broader IT staff. They can also be the ones to test updates on each platform before rolling them into production (similar to how many have a VMware admin team; extend it to cover the new tech). By formalizing this, you avoid ad-hoc management that can lead to mistakes.
• Adjust SLAs During Transition: Communicate to business stakeholders that during this diversification period, some internal SLAs might need slight adjustment. For instance, the time to provision a VM might temporarily increase while the team adapts to new tools, or certain low-priority services might have different maintenance windows as you juggle multiple platforms. Setting realistic expectations prevents the perception that IT is dropping the ball when in fact you’re executing a strategic initiative. Assure stakeholders that these are temporary and you’re monitoring service quality closely.
• Leverage External Expertise for Risky Components: If there’s a particularly thorny part of your environment (say, a complex Oracle database cluster on VMware with specific tuning), and you want to explore moving it to another platform, consider engaging an expert or consultant who has done it. The cost of a short-term specialist can be well worth avoiding a failed migration or performance disaster. Similarly, consult independent licensing or support experts (like independent licensing advisors) to ensure you’re not inadvertently breaking any licensing terms when moving software between environments. For example, some enterprise software might have different licensing rules on VMware vs Hyper-V – get clarity on those to avoid compliance issues (this is where experts such as Redress Compliance can provide guidance on VMware and other software licensing nuances).
• Embrace Incremental Progress: Treat diversification as a journey, not an overnight flip. Even after you start, maintain a roadmap of gradually increasing the scope of alternative platforms. This way, if any risk becomes too high, you can pause and address it before proceeding. The phased approach we discuss next in the roadmap section inherently mitigates a lot of risk by design – make sure to follow it rather than attempting a big bang change.

Building a Diversification Roadmap

Diversifying your virtualization platform is a significant initiative that requires a well-thought-out plan. CIOs should create a phased roadmap to guide the effort. Below is a structured approach to building and executing this roadmap:

1. Initiation and Pilot Phase – “Prove the Concept”:

• Define Scope of Pilot: Select one (or a small number of) alternative platform(s) to pilot and identify specific success criteria. For example, decide to set up a Hyper-V cluster to host a specific application or a Proxmox server for a development or testing environment. Define what success looks like (e.g., “App X running in production on Hyper-V for 2 months with no major issues and performance within 10% of VMware” could be a success metric).
• Secure Resources: Allocate hardware or cloud resources for the pilot. Often, you can repurpose older hardware for an initial Hyper-V or KVM test or use a low-cost cloud subscription for a trial. Ensure you have the necessary licensing or open-source downloads and that your networking and storage are configured for this separate environment.
• Team Assignment: Assign a pilot team – a mix of your best virtualization engineers and those eager to learn new tech. Make them directly responsible for pilot execution. Empower them to make changes and quickly iterate (the pilot environment should be somewhat isolated so they can tweak settings without affecting production).
• Execute Pilot and Document: Run the pilot according to plan, migrating a handful of workloads to the new platform. Monitor everything – including performance metrics, stability, and user feedback – and document the results. If issues arise, capture how they were resolved. By the end of this phase, you should have tangible evidence of whether the chosen alternative can meet your needs for the selected workloads. Frequently, the pilot phase will last 2-4 months.
• Go/No-Go Decision: At the conclusion, evaluate the pilot against the success criteria. If it meets or exceeds expectations, you’re ready to proceed. If not, analyze whether the problems were inherent to the platform (in which case, you may want to test a different platform) or due to configuration (which can be fixed). You may do a couple of pilot cycles with different technologies to determine the best fit. CIO involvement: Review the pilot results with your team and use the data to build confidence among stakeholders that “this is doable.”

2. Planning and Preparation Phase – “Set the Stage”:

• Architecture and Integration Planning: Now that you’ve chosen an alternative (or a couple) to roll out, plan the target architecture. How many hosts, what specs, what network setup, and how will it connect to existing systems? Decide whether to run a completely separate environment for the new hypervisor or integrate it into your existing data centers. Many choose to run the new hypervisor in parallel with VMware for a long period. Also, plan integration points, such as ensuring your Active Directory is accessible from the new platform for authentication and planning how monitoring will cover it, etc.
• Procurement Strategy: If new hardware is needed or you need to procure software licenses (such as Windows Datacenter licenses for Hyper-V hosts or a support subscription from Red Hat or a vendor), engage procurement early. Negotiate contracts smartly – for instance, you might start with a smaller number of licenses with an option to grow as you migrate more VMs. For the cloud, ensure you have the accounts and spending limits set up properly. This is also the time to factor in any cost of new tools or professional services. Essentially, get all the pieces in place so that when you start migrating at scale, you won’t be waiting on a purchase or a contract approval.
• Develop Migration and Rollback Procedures: Create standard operating procedures for moving a VM from VMware to the new platform. The pilot phase gave some insight, and now we formalize it. Decide on the tooling (you may use export/import via OVF or specialized migration tools). Write down step-by-step guides that engineers can follow. Also, define rollback steps in case a migration fails (e.g., how to quickly revert DNS to point back to the VMware VM if the new one doesn’t work). Having these playbooks written and tested will make later phases much smoother and less error-prone.
• Communication Plan: Start communicating the upcoming changes to broader IT teams and stakeholders. You want everyone to be aware that a diversification initiative is underway. Explain the why (strategic rationale) so there is support. Also, if any downtime or process changes are anticipated, inform people well in advance. For example, “When we migrate the finance app to the new platform, there will be a maintenance window…” etc. Early communication prevents fear, uncertainty, and doubt. People often resist change less when they understand the reasoning and see that there’s a solid plan.
• Skill Building and Hiring: Based on pilot experience, assess whether you have the necessary internal skills to proceed. Maybe you realize you need a couple more experts – consider hiring or contracting for specific knowledge, such as a cloud architect if you’re heavily investing in the cloud or a Linux admin with KVM experience. Schedule training sessions for the broader operations team so that by the time of larger migrations, more staff will be able to handle the new environment. Peer learning works well: have your pilot team share lessons in lunch-and-learn sessions or internal wikis. Essentially, prime the organization to be ready for the new platform operationally.
• Set Realistic Timeline and Milestones: Develop the project timeline for migration waves (next phase). Be realistic about how many VMs or sites can be migrated per week or month, given your resources. Factor in some contingency for issues. Establish milestones – e.g., “By Q3, migrate 25% of dev/test VMs; by Q4, decommission VMware in branch offices; by Q1 next year, renegotiate VMware contract based on reduced usage.” These targets help track progress and keep momentum. They also provide natural points to reassess (maybe after 25%, you pause to evaluate results and decide next steps). Present this roadmap to executives to set expectations on when benefits (cost savings) will be realized and when they can expect updates.

3. Execution Phase – “Diversify in Waves”:

• Phase-wise Migration: Execute the migrations in the waves as planned. It could be by environment type (first all dev/test, then DR, and then production), by location (site by site), or by application group – whichever makes sense based on your earlier planning. Use the refined procedures to move workloads. Keep track meticulously of what has been moved and what’s left – maintain an up-to-date inventory and status.
• Pilot Expansion for Complex Systems: When you encounter a more complex or critical application, consider conducting a mini-pilot specifically for that system on the new platform (possibly in a test environment). For example, if you plan to move an ERP system to cloud VMs, perhaps do a dry run with a sandbox copy of that system first. This is an extra safety net in the execution phase.
• Quality Assurance and Monitoring: After each wave of migration, closely monitor the systems on the new platform to ensure everything is functioning properly. Are they meeting performance SLAs? Any increase in incidents? Gather feedback from users if it’s a user-facing feature. This immediate post-migration QA helps catch any issues that slipped through testing. Have a hyper-care period where the project team is on standby to fix issues in the newly migrated environment. If serious problems occur, don’t hesitate to roll back that wave and regroup. Better to pause than to jeopardize business operations.
• Optimize as You Go: Diversification is not just a lift-and-shift approach; you may find opportunities to optimize applications for the new environment. For example, after moving some workloads to Azure, you realize you can use Azure’s auto-scaling or PaaS services to further improve efficiency – go for it, as long as it aligns with your strategy. On-premises, when moving to Hyper-V, you may decide to update the OS of some VMs or consolidate them into a single one; these optimizations can help reduce complexity. Each wave can include some improvements that weren’t possible or thought of in the VMware environment. However, be careful to separate the variables; make one major change at a time to isolate cause and effect.
• Track Savings and Benefits: It’s essential during execution to measure your progress. For instance, if after wave 1, you were able to cancel a VMware support contract for some licenses or avoid a renewal payment, document that cost avoidance. If a branch office now runs on Hyper-V, note the VMware licenses freed up or the cost saved. Over the project, tally the cumulative savings (or cost avoidance) and any additional costs incurred. This running tally is useful for showing progress to the CFO and validating the predicted ROI. It will also inform your negotiation strategy with VMware when they see that you have actually reduced usage.
• Stakeholder Updates: Provide regular updates to senior leadership and affected business units on the project’s progress. Celebrate successes (“50 VMs migrated with zero downtime incidents!”) and be transparent about any issues and how they were resolved. Keeping everyone in the loop helps maintain support for the initiative and reduces any resistance due to uncertainty.

4. Completion and Integration Phase – “Steady State Operations”:

• Project Close-Out: Once you’ve migrated the intended scope of workloads, formally close the project. This includes handing off the new environments to the operations teams as part of business as usual. Ensure documentation is fully updated, and any temporary project roles or external resources either exit or transition to normal support roles.
• Final Optimization: With multiple platforms now in production, look for opportunities for further optimization. Maybe you can right-size some VMware clusters now that they have fewer VMs (turn off some hosts to save power or reassign them to the KVM cluster). Or perhaps you can adjust your license counts – for example, if you moved a lot to Hyper-V, you might reduce your VMware vSphere licenses to a smaller number of sockets. Ensure things are cleaned up: old VMware templates for systems now on KVM can be archived, etc., to avoid confusion.
• Hybrid Management Strategy: As we advance, decide how you will manage the lifecycle of the two platforms. Perhaps you’ll set policies like “all new dev/test goes on platform X unless there’s a reason to use VMware” – institutionalize the diversification. Adjust capacity planning and budgeting processes to account for having a split environment. For instance, you might plan to grow the Hyper-V environment next year by N hosts and correspondingly not renew some VMware licenses. Also, ensure security and compliance processes cover both (don’t neglect patching one environment because of focus on the other).
• Executive Review and Next Steps: Finally, review the outcomes with the executive sponsors. Quantify the financial and operational benefits achieved (and compare to the original business case). If the results are positive, you’ve increased IT’s credibility by proactively tackling a tough challenge. Discuss if further diversification is warranted or if the current balance is optimal. It might be that after this project, you’re running, say, 70% VMware / 30% other – is there value in pushing more? Or maybe hold at this equilibrium and focus on other priorities? This strategic decision can be revisited periodically. The key is that you now have the optionality. You can also plan how you will approach the next VMware renewal, given the new landscape (more on that in the negotiation section).
• Change Management and Training Continuation: Even after the project is completed, maintain a culture of continuous improvement. Continue training new team members on both platforms, rotate staff to gain experience in each, and update documentation as platforms evolve (both VMware and its alternatives will release new versions). Institutionalize the practice of evaluating the best platform for a given need rather than defaulting to VMware out of habit. In effect, you’ve created a more agile infrastructure that can adapt to future needs or vendor moves.

CIO Recommendations – Roadmap Management:

• Use a Formal Project Framework: Treat this diversification as you would a major ERP implementation or data center migration. Use project management best practices – a clear project charter, sponsor buy-in, defined roles (project manager, technical leads), risk register, etc. This ensures accountability and timely execution. It also signals to the organization that this is an important strategic project, not a background task.
• Iterate and Learn: Be willing to adjust the roadmap as you progress. You might discover in phase 2 that you can accelerate some migrations, or conversely that you need an extra pilot for a tricky area. Build flexibility into your plan. It’s better to adapt than to rigidly stick to a plan that assumptions have changed for. For example, if Broadcom announces a new licensing policy mid-project that affects your calculus, incorporate that information and adjust (maybe it slows down if VMware offers concessions, or speeds up if they announce even more hikes).
• Keep Business Continuity in Focus: While executing the roadmap, ensure that business continuity and disaster recovery are maintained. Don’t shutdown your old VMware DR setup until the new DR strategy (if it involves alternatives) is proven. It’s easy to get caught up in migrations and accidentally weaken your redundancy. Plan transitions such that at every point, you have at least one reliable copy of each critical workload running somewhere (be it VMware or the new environment). This might mean carrying some extra cost for a short period (dual environments), but it’s worth it to avoid outages.
• Engage Change Management and Communications Teams: If your organization has a change management practice, involve them. They can help assess user impact, send out communications, and ensure proper scheduling of changes in line with other IT changes. You don’t want your diversification steps to collide with, say, a network upgrade, resulting in compounded issues. Coordinate via change advisory boards as needed. A smooth sequencing with other initiatives will reduce risk.
• Celebrate Milestones and Acknowledge Teams: Migrating part of your IT fabric off a long-standing platform is heavy lifting. When milestones are reached (e.g., successful pilot, first 100 VMs migrated, etc.), recognize the team’s effort. It’s important to keep morale up, especially since working on two systems can feel like double work for admins. A motivated team will go the extra mile to ensure success, directly benefiting the outcome. Let the organization know about the wins (“IT saved us $500k annually by smart re-platforming!”). This not only rewards the effort but also cements support for continued efforts if needed.

Using Diversification as a Negotiating Lever with Broadcom

One often-understated benefit of pursuing a multi-platform strategy is the leverage it can provide in negotiations with VMware (now under Broadcom’s regime). CIOs can use the credible prospect (or reality) of moving workloads off VMware to drive better terms.

Here’s how to approach it:

• Demonstrate a Credible Alternative Plan: By following this playbook, you will have concrete evidence – pilots done, cost analyses, and maybe some systems already running on alternatives. Bring this to the negotiation table. When Broadcom’s sales team comes with an astronomical renewal quote, you can respond with specifics: “We have successfully migrated 30% of our workloads to Hyper-V and AWS and have budget approval to continue. At the current VMware price, it is financially justified for us to accelerate that migration.” This isn’t a bluff; it’s a factual position. Vendors take such threats seriously when you have proof of execution. It sets a tone that your organization is not captive and will make rational choices.
• Leverage Competition: If possible, get pricing from alternative vendors to use as a benchmark. For instance, if Microsoft or Red Hat is willing to provide a quote for supporting your environment, you can share relevant portions with VMware reps to say, “Here’s what I can run my virtualization for with Vendor X.” You don’t need to divulge everything, but showing that you’ve done due diligence can pressure VMware to re-evaluate their pricing. Additionally, large vendors like Microsoft and cloud providers sometimes offer migration incentives, such as Azure credits or free migration services, to entice VMware customers. If you have such offers, you can indirectly mention them (e.g., “We’ve been approached by other providers who are willing to ease our transition costs – so staying with VMware at this price needs strong justification.”). This reminds Broadcom/VMware that the competitive landscape is active, and you have options.
• Consider Partial Retention Deals: One negotiation strategy is to let VMware win where they differentiate but push back where they don’t. For example, you might say: “We’re willing to retain VMware for our main data centre and purchase product bundle XYZ, but we will not renew licenses for our 50 branch hosts and DR site. We need a pricing model that reflects this reduced scope.” This signals that they will lose a portion of business for sure, but there’s an opportunity to keep the rest at a fair price. Broadcom’s team might respond with a more flexible package or discounts on the core usage if they see you’re serious about dropping the rest. This approach essentially splits the negotiation: you concede you won’t be 100% VMware but open the door to a reasonable deal for the portion you keep. It’s a middle ground that can break stalemates – they avoid a total loss of the account, and you avoid all-or-nothing decisions.
• Use Contract Timing Wisely: If your VMware renewals are coming up, time your diversification milestones around those dates. The ideal scenario is to have completed a pilot or initial migration before signing a renewal. That way, you can potentially reduce your renewal scope (renew fewer licenses or commit to a shorter term). Broadcom typically wants multi-year subscriptions; you could push for a shorter term as you transition. Alternatively, if the renewal is imminent and you’re not ready to cut a big portion yet, consider negotiating a short-term extension (6-12 months) instead of a full 3-year renewal to buy time. Broadcom might resist, but if you show that you’ll otherwise start dropping licenses now, they may prefer to keep you on board, even short-term, with the hope of winning you back. During that extension, ramp up your migrations. Essentially, align your negotiation strategy with your technical execution – each should reinforce the other. By the next cycle, you’ll be in an even stronger position.
• Engage Independent Licensing Advisors: Negotiating with Broadcom, known for its tough stances, might require specialized skills. Independent experts, such as licensing advisory firms like Redress Compliance, have experience dealing with Oracle, SAP, and now VMware/Broadcom, and can help identify negotiation levers in the contract fine print. They might, for instance, find that you have entitlements or protections in your original VMware contract that Broadcom must honour (e.g., price caps or use-case definitions). They can also advise on how to structure any new agreement to protect your interests, such as ensuring you can cancel subscriptions over time or receive credits for any consolidation. While these services cost money, they often pay for themselves in the savings achieved or legal pitfalls avoided. Using an advisor signals to Broadcom that you are well-prepared and won’t be easily pressured by sales tactics.
• Don’t underestimate the importance of communication: when in discussions, be candid yet professional about your stance. Explain that as CIO, you have a fiduciary duty to consider all options for the company’s benefit. Communicate that the relationship with VMware is valued (if true), but the current cost and licensing model are forcing these moves. Sometimes, a direct conversation with a VMware account executive or even higher-ups, where you lay out your plan to diversify, can prompt them to seek creative solutions to keep your business. This might include special discounts or the introduction of a tailored licensing model. For instance, VMware has occasionally made exceptions or created temporary SKUs for strategic customers, but only if they knew the customer might walk away entirely. Your goal is not to “threaten” in a hostile way, but to make it clear that your organization will act in its best interest and that remaining all-in on VMware is on the table only if it is mutually beneficial.
• Be Prepared to Walk: Ultimately, your negotiating power is only as good as your willingness to follow through with the alternative. If Broadcom doesn’t budge and offers no acceptable terms, you must be prepared to continue with your diversification, even accelerating it. For some CIOs, the negotiation might result in no deal (i.e., you decide to let certain VMware licenses lapse and fully move those workloads off). That’s okay because your strategy ensures you’re not caught unprepared. Interestingly, if Broadcom sees that you’re following through (decommissioning some licenses), they may come back later with a better offer to regain that footprint. At that point, you can evaluate if it’s worth reintroducing VMware or simply continue forward without it. In any case, by not relying on their goodwill, you’ve put your organization in the driver’s seat. As one analyst quipped, Broadcom’s playbook is holding a knife to customers – your diversification plan is essentially your shield and alternative path.

CIO Recommendations – Maximizing Negotiation Outcomes:

• Quantify Your Ask: When negotiating, be specific. For instance, instead of saying “VMware is too expensive, we need a better deal,” say “We need to reduce our VMware annual spend by 30%. That could be achieved via a deeper discount or by us dropping certain components. Otherwise, we will shift approximately XYZ workloads off VMware to hit that budget target.” Having a concrete number anchors the discussion and gives the vendor a target to try to meet.
• Stay Professional and Data-Driven: Base discussions on data (cost analyses, performance reports from pilots, etc.) rather than emotions or threats. Show that you’ve done homework: “Our analysis shows that moving 20% of workloads to cloud will save us $500k/year, so we need VMware’s proposal to at least come close to that for us to justify keeping those 20% on VMware.” This kind of reasoning is hard for a vendor to dismiss and can lead to more fact-based concessions.
• Explore Flexible Licensing Options: Press VMware for flexibility. Ask about options like burst licenses, smaller bundles, or one-time credits. Sometimes sales organizations have leeway to offer one-time discounts or promotions (especially at end of quarter/year) that aren’t publicly advertised. Also inquire if certain less-used VMware components can be dropped from your bundle to save cost. Essentially, look for a custom fit. If none is forthcoming, that itself validates your diversification.
• Keep Executive Stakeholders in the Loop: Make sure your CEO/CFO are aware of the negotiation stance and back you up. Sometimes vendors will try an “escalation play” – going around the CIO to other executives to push their agenda. If your C-suite is well-informed by you about why you’re taking this stance (cost, risk), they’re likely to support you and not undermine the negotiation inadvertently. In fact, having your CFO join a pricing call to state “We can’t accept this TCO, and we have alternatives” adds weight.
• Document Any Agreements: If you do reach a new deal with Broadcom/VMware, ensure all promises (especially any special conditions or future pricing protections) are written into the contract. Verbal assurances mean little later on. If, for example, they agree to allow a certain number of VMware licenses to sit unused for a year without charge (just as a concession), write it down. You want no ambiguity going forward, because personnel change and memories fade. Your goal in negotiation is not just a one-time better price, but also predictability and control, so include clauses that give you flexibility (like the ability to drop X% of licenses on annual anniversaries, etc., without penalty). If they won’t agree to that, you know the path: continue reducing reliance.

Practical Recommendations and Next Steps for CIOs

Diversifying virtualization is a strategic move that can deliver considerable benefits if executed thoughtfully.

In summary, here are actionable steps and best practices CIOs should put into motion immediately:

• Conduct a VMware Licensing Audit: Gather your contracts, license counts, renewal dates, and current spending. Understand exactly what you’re entitled to, what you’re using, and when the renewals hit. This forms the baseline for all planning. You might find, for example, that some licenses are underutilized – low-hanging fruit to cut or reallocate. If Broadcom has sent any notices of changes (such as the 72-core minimum rule or the end of certain SKUs), compile those as well. Use this data to quantify the risk (e.g., “if we simply renew everything for the next three years, it will cost $X, and possibly more if penalties apply”). Present this reality to your IT steering committee to create a sense of urgency.
• Identify Two Pilot Candidates (One Workload, One Platform): Pick at least one non-critical workload or environment and one alternative platform, and start a pilot this quarter. For instance, choose your QA testing environment and try it out on either Hyper-V or a cloud platform on a trial basis. Or select a remote office and set up a KVM server there to take over its VMs. Starting with a small, manageable pilot will quickly surface the challenges and give you tangible experience. Set a short timeline (60-90 days) for the pilot and plan to evaluate results soon after. The goal is to gain momentum and not get stuck in analysis paralysis. Even if you’re not 100% sure which alternative is best, pick one and try – you can adjust the course later with minimal loss.
• Engage Stakeholders Early and Often: As you embark on this strategy, keep communication channels open. Talk to application owners about why you might move their app to a new platform, emphasizing that this is to ensure long-term sustainability and cost-effectiveness, which benefits them as well. Inform your security team that new platforms are being introduced so they can assess any implications (for example, ensuring hypervisor hardening guidelines for the new platform). Update your CIO peers and business leadership periodically – even a brief email update like “We successfully ran 10 VMs on Hyper-V this week with no issues” can build confidence among stakeholders who might be anxious about moving away from the status quo. If there’s internal resistance (“we’ve always used VMware, why change?”), Use your data and the industry trend to make the case. Show them analyst commentary about skyrocketing costs and how others are responding – this playbook’s sources can help underline that you’re following a prudent path many are considering.
• Revisit your DR and Backup Plans: Quickly review how your backups and disaster recovery (DR) are set up. A virtualization diversification might impact these (for instance, can your backup software handle multiple hypervisors, or do you need a new solution?). Likewise, ensure that any interim state, such as having some systems on VMware and others on another platform, is captured in your DR plans. Update runbooks so that if a disaster occurs tomorrow, the team knows the recovery steps for systems, regardless of the platform they are on. This readiness will also reassure management that by diversifying, you’re not compromising resilience – in fact, you may be enhancing it by not having a single point of failure.
• Monitor Broadcom and VMware Announcements: Keep a close watch on any communications from VMware or Broadcom regarding licensing, pricing, or product changes. Given the dynamic situation, new developments could open opportunities. For example, suppose Broadcom introduces a new, smaller bundle or a special program for mid-sized businesses (perhaps in response to customer backlash). In that case, you’d want to know immediately and evaluate it. Join user groups or forums (many CIOs and IT managers discuss their Broadcom experiences in these communities) – these can provide early warnings or creative ideas. Being well-informed ensures your strategy can adapt. Make someone on your team responsible for competitive intel – not just VMware’s moves ,but also what Microsoft, Red Hat, Amazon, etc., are offering that could be leveraged.
• Strengthen Vendor Relationships (Beyond VMware): Reach out to your account reps or partners for alternative solutions. For instance, talk to Microsoft about Hyper-V or Azure deals, discuss KVM support options with Red Hat or a reseller, and consult with AWS about migration assistance. Building these relationships now will give you allies as you execute the diversification. They can provide technical resources or incentives that make the transition easier. Plus, if VMware sees that other vendors are actively involved with you, it underscores your resolve. Essentially, start behaving like a multi-vendor environment already – split your attention and nurture multiple partnerships. This will pay off in both better support and possibly better pricing through competition.
• Prepare for Cultural Change: This is a soft recommendation, but it’s important. If your org has been a “VMware shop” for a decade, shifting to a multi-platform mindset is a cultural change for the IT team. Begin fostering a culture of flexibility and learning. Highlight success stories of teams mastering new skills. Encourage people to get certified in the new platform and recognize their achievements. Possibly set up internal demos or a lab where anyone in IT can play with the new virtualization platform to get familiar. By building enthusiasm or at least openness to change, you reduce internal friction. In the end, technology diversification often fails not for technical reasons but because people resist change. As CIO, you should champion the mindset that being technologically versatile is a strength – it future-proofs careers and the company.
• Use Wins as Leverage Internally: As you achieve early wins, such as cost savings or successful migrations, use them to reinforce the initiative. For example, if moving dev/test off VMware saved $100k in license renewals, decide where to reallocate that budget and publicize it: “We saved $100k and are now investing that into a new dev tool or an extra headcount for cloud development.” This shows the organization the tangible benefits of the strategy. It also helps ensure you capture the savings (sometimes, in IT cost optimization, savings just disappear unless you actively repurpose them or report them to finance). Making savings visible and beneficial encourages everyone to support further diversification.
• Maintain your VMware Vendor Relationship (if you are still partially using VMware): As you diversify, you may still have a significant VMware footprint. Don’t alienate that vendor relationship entirely – you might need their support for the remaining environment. Be transparent with VMware representatives about issues and work with them to optimize what you keep. In fact, performance-tune and right-size your remaining VMware environment to get the most value from it (since you’re paying a premium, squeeze all the utility you can from those licenses). Ensure you’re running current supported versions (Broadcom is likely to insist on it anyway under subscriptions). A lean, efficient VMware environment, alongside new platforms, can be a positive outcome where VMware is used where it excels, and alternatives make more sense.

Finally, remember the strategic goal: to reduce risk and avoid being held hostage by any single vendor’s decisions. By executing this playbook, you’re positioning your IT organization to be more resilient, cost-effective, and agile in the face of changing vendor landscapes.

That is exactly the kind of strategic initiative CIOs are expected to lead. In the end, whether Broadcom’s VMware changes turn out to be a short-term pain or a long-term norm, your organization will be better off for having expanded its capabilities.

You’ll either negotiate a better VMware arrangement or successfully run a diverse virtualization ecosystem (or a bit of both). Each scenario is a win compared to the status quo of rising costs and uncertainty.

The key is to start now, iterate, and drive the change proactively. The CIOs who act decisively will turn this challenging moment into an opportunity to optimize and modernize their infrastructure strategy.