Subscribing to change

Companies need a smart way of navigating the new licensing model from VMware by Broadcom that fits in the gap between tight budgets and intelligent technology, says Neil Dragt, Innovation Executive at Echo South Africa.

Johannesburg, 30 Apr 2024
The move from perpetual licence to subscription-based payments may come with a higher price tag than companies expected.
The move from perpetual licence to subscription-based payments may come with a higher price tag than companies expected.

In November 2023, Broadcom finalised its acquisition of VMware in a deal worth $61 billion and announced it would change the company’s licensing structure from perpetual licences to a subscription-based model. 

The move, said Broadcom, was aligned with the simplified and streamlined VMware portfolio and designed to reduce go-to-market complexity. It also saw a radical change in partner programmes and accredited channel partners, as companies across the ecosystem had to reapply to VMware by Broadcom to continue selling the suite of services.

As one of the most recognised names in HCI and virtualisation, VMware has a proven track record in providing companies with an agile, flexible and strategic infrastructure. However, the move from perpetual licence to subscription-based payments may come with a higher price tag than companies expected. While companies currently using VMware within the perpetual licence and support framework are supported until these expire, they need to take simple steps to prepare for this change and to potentially reassess how they leverage VMware in the future.

The transition from a perpetual licence – an alluring licensing format that gave companies the freedom to use the products indefinitely – to subscription-based – an agile and potentially more cost-effective approach – brings with it both benefits and risks. The benefit is that companies can align their software consumption with their operational needs. Companies can eliminate unnecessary expenses on unused products while streamlining their licensing expenditure.

That said, there are complexities. The subscription model isn’t as predictable as the perpetual licensing model and companies have to transition from a large upfront capital expenditure to an ongoing operational expense. Finding the right route through the new licensing framework also means having an in-depth understanding of the new licence bundles and how subscriptions are calculated. Companies have to re-evaluate their budgeting processes and financial forecasting while maintaining visibility over their long-term cost implications.

Renewals are also tricky. Subscriptions require consistent assessments to ensure they are getting the most value from their expenditure with each renewal cycle. They need to assess feature updates, support services and pricing on an ongoing basis. It is a consistent cycle of evaluation that requires a proactive approach to ensure companies take ownership of their software investments while optimising their subscriptions and their on-premises infrastructure.

As companies approach this digital crossroads, it’s a good time to re-evaluate investing into the cloud. Many capex-heavy companies that have had to sweat assets like hardware and perpetual licences haven’t seen the value in moving to the cloud. For them, a cloud migration introduced complexities and uncertainties that weren’t worth the risk. Now, however, with the push towards subscriptions placing increased pressure on the bottom line, cloud is starting to make sense.

It is an opportunity for companies to take control of their digital transformation journey and expenditure while leveraging the benefits of a constantly evolving and innovating architecture. Cloud isn’t sitting stagnant, it’s always changing and adapting to market expectations, security demands and business requirements. Migrating into the cloud makes sense for companies keen to leapfrog the subscription-based challenges and instead benefit from the operational and infrastructural benefits it provides, on demand.

Built-in security, redundant power, climate control, unparalleled flexibility, scalability, accessibility and agility – the benefits of a cloud-based architecture are proven and allow for companies to innovate and adapt at speed. Embracing this change can potentially help companies unlock new efficiencies while streamlining operations and refining their expenditure.

Organisations can sidestep the complexities and uncertainties presented by the subscription-based model introduced by VMware without sacrificing their reliance on the technology. Adopting an infrastructure as a service (IaaS) model with Echo South Africa allows companies to maintain their VMware infrastructure on a cloud-based platform without the hefty costs. Organisations can move away from purchasing their infrastructure and hardware and instead move into a virtual data centre that reduces capex while improving visibility and access.

Offering an unbiased approach to technology within a proven architecture and cloud-based model, Echo South Africa can help companies navigate their future digital investments within budget, and with ease.