The end of perpetual software licensing contracts for VMware Cloud Foundation solutions has clients concerned about their network infrastructure costs with the potential for IT budget overruns and 100% price hikes. Our previous article covers the recent changes in VMware’s licensing models and the expected impacts on clients. Whereas this article guides VMware clients in evaluating what’s best for their organization with a list of suggested actions and activities to consider as they weigh their options.
A Recap: The Impact of Subscription Changes
VMware’s changes have been reported as wildly disliked. That’s because its haven of predictable invoices and costs may disappear, potentially exposing clients to well-documented problems associated with other subscription-based cloud services – i.e. runaway costs that put the burden of financial governance squarely on clients’ shoulders.
Cloud subscriptions typically incur higher cumulative costs compared to one-time purchases and necessitate a tighter approach to financial management and planning. They demand ongoing tracking and monitoring to ensure optimal utilization and alignment with changing corporate needs, thus preventing cloud waste.
The new subscription-based services should serve as a call to action for IT and financial leaders to consider the following steps.
What’s Best for You? Consider these Next Steps
1. Pull Your VMware Contracts and Audit Your Cloud Infrastructure and Licenses
Companies should thoroughly assess their existing VMware contractual agreements. Thoughtful strategic planning is needed, particularly for those facing upcoming contract renewals or contemplating the adoption of new VMware solutions.
Define your public, private, and hybrid cloud environment and perpetual licenses. Know what cloud instances you have, where your workloads reside, and how many users and licenses you own. Accurate inventories and clean data are the first steps in understanding your current state so you can make informed decisions.
2. Know How You Purchase VMware Services and Who Your Contact Is
Knowing who can serve you at this critical time should be a top priority.
NOTE! If you work with a Partner your typical purchasing route may be in the throes of change.
Companies may purchase services directly from VMware or through a technology advisor, as known as Channel Partners, Value-Added Resellers, or simply the catch-all term “Partners.” In late 2023, VMware suddenly handed all its Partners a termination notice. Effective February 4, 2024, all existing VMware partner agreements are cancelled. These changes are part of the company’s new go-to-market strategy and affect the way clients purchase and make changes to their services. According to Broadcom, Partners must reapply to be accepted into their new “invitation-only” Partner Program.
3. Evaluate the Impact of Subscription Changes on Your Business
Work with your account manager and purchasing partner to define what your future state would look like should you decide to stay with VMware and move to the subscription model. Here are some things to think about:
- Expect VMware to reach out to initiate discussions about switching your contract
- Evaluate VMware’s trade-in options and BYO incentives, as it could pay to update perpetual licenses now – before your contract expires (see previous article for details)
- Consider the work and process of migrating to the subscription versus migrating to a new provider, as shifting cloud workloads to an alternative service can be a complicated, multi-step process
- Don’t overlook the security risks – software will be unsupported which can open vulnerabilities making timely decisions and transitions of utmost importance
4. Shop Around and Consider Cloud Repatriation
As competitors jump on the opportunity to take market share, promotional offers are already available, and it’s safe to say we can expect others to come forward.
One less-considered option is to revert to on-premises resources and in-house management. Cloud repatriation is a growing trend for good reason – price disparities between public and private clouds are diminishing. Plus, private clouds can keep a lid on costs, helping companies to pay only for the infrastructure they intentionally consume. Those with significant infrastructure needs are likely to find that a private cloud delivers a lower total cost of ownership.
In short, public clouds are no longer the default choice based solely on price. But only cost-informed executives can make the smartest choice between public and private clouds.
Know the Tipping Point between Your Public and Private Cloud Costs
To know when it’s more cost effective to use a public versus private cloud strategy, you must define where that tipping point is for your business. That means identifying your public cloud costs (a simple task) and the fully loaded cost of your private cloud deployments (a more difficult task).
The financial outlay of a private cloud should tally both virtual and physical expenses including: virtual machines or virtual server expenses, physical server expenses, data center expenses, power and utilities costs, labor management costs, and software licenses. Learn more about private cloud expense management for VMware and how Tangoe can help you.
5. Now is a Great Time to Implement a FinOps Strategy
As companies adopt more subscription-based VMware services, it can be challenging to track and control their cloud expenses. Effective management involves implementing FinOps strategies and practices. Short for “Financial Operations,” FinOps offers a strategic framework for managing and optimizing cloud costs.
Let VMware be your impetus for implementing FinOps best practices across your entire cloud estate.
The goal of FinOps is to provide transparency and accountability for cloud infrastructure and software spending. It implements tactics and technologies to analyze cloud usage data, identify cost optimization opportunities, and reduce cloud costs without compromising performance or functionality. FinOps encompasses various activities, including budgeting and forecasting, cost allocation and chargebacks, and resource optimization.
Analyst firm Forrester highlights the importance of managed service providers in FinOps programs, cautioning that without such support, organizations may need three full-time employees and custom software platforms, entailing significant technology investments amounting to millions of dollars.
Learn about Tangoe’s FinOps solutions.
6. Partner Up: Cloud Advisors are Valuable Guides Right Now
This is a critical juncture – a pivotal moment to weigh your options. Broadcom is revolutionizing how VMware operates, which means clients need to be armed with a new set of intelligence to navigate these waters.
Stay informed and seek expert advice.
It may be difficult for CIOs and financial leaders to keep pace with the barrage of VMware changes coming in rapid-fire succession lately. As executives make critical decisions, they need detailed monitoring and information about their cloud expenditures. Up-to-date inventories and tracking financial changes will be critical. Cloud advisors and auditors trained in expense management and cost optimization will be best suited in helping leaders make the smartest choices.
How Tangoe can Support VMware Clients and Cloud Cost Decisions
- Cloud auditing and cost evaluations: Gain full visibility into your multi-cloud estate with cloud optimization assessments that identify costs, areas of waste, and overspending to optimize cloud capacity and innovation investments
- Private cloud cost evaluations: Expense management solutions specifically for VMware‘s private cloud offerings
- Multi-cloud services: IT expense management not just for VMware but also AWS, Microsoft Azure, and Google Cloud Platform
- FinOps solutions: End-to-end expense management, invoice management, and cost allocations for pubic, private, and hybrid clouds — a total FinOps solution
- IT staff augmentation: When migrating cloud workloads to an alternative service can be a complicated, multi-step process, Tangoe offers a team of project managers and helping hands
- Help that goes further than cloud infrastructure: Expense management for SaaS and UCaaS, mobile devices, and telecom services too
Talk to a Tangoe cloud cost advisor today.
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