You may already have heard about the acquisition of VMware by Broadcom. High-level summary? They’ve decided to end the sale of perpetual licenses for VMware products, moving to a subscription model/bundling, and reducing the number of Resellers and Cloud Service Providers. Existing contracts will continue to receive support as outlined in their contractual commitments, but there will be no option to renew once they come to term.
“80% of virtualized workloads are running on VMware technology”
This is a big deal, so many organizations rely on VMware to virtualize their applications, servers, storage, and networks. They’ve helped boost efficiency and flexibility while reducing IT expenses. All that remains true but expect the cost to increase for both on-prem users and those sourced through Cloud Providers. However, VMware is not the only game in town. This will open the conversation and present an opportunity for Partners to work with their customers to review all the available options and their potential benefits. For some of your customers, particularly small and mid-sized businesses (SMBs), VMware may still make the most sense even at an increased price. It is the de facto standard in the industry for a reason. Customers may also look to move towards a managed Cloud offering, which may be built using VMware virtualization. It’ll open the door for many of you to have conversations around ROI utilizing what they have today, or moving towards one of our Managed Cloud Providers that can manage the virtualization layer, plus offer additional services like Helpdesk, virtualized desktops, additional security, patch management, and more. Our team at Sandler Partners can help look at migration costs, ongoing monthly costs, and additional services your customers may wish to take advantage of.
“There are a lot of nuances that need to be taken into account, but it’ll make sense to begin these conversations with your clients now and help determine the best path forward for your customers. VMware is not going away; in fact, many of our suppliers will still be offering it as part of a private or public Managed Cloud offering.”
What is VMware doing with how they offer their products?
The VMware portfolio of solutions is being consolidated and simplified. Features are being bundled and the number of SKUs are being reduced. Most customers will be forced into new subscription bundles, with features they aren’t or won’t use at a higher price point. Discounted pricing will only be available with a 3-year commitment. This will result in dramatic increases, as noted below.
What is VMware doing with how they offer their products?
The VMware portfolio of solutions is being consolidated and simplified. Features are being bundled and the number of SKUs are being reduced. Most customers will be forced into new subscription bundles, with features they aren’t or won’t use at a higher price point. Discounted pricing will only be available with a 3-year commitment. This will result in dramatic increases, as noted below.
Will this impact my Provider relationship?
On May 1st, the VMware Cloud Service Provider Program is being reduced from thousands of CSPs to dozens. Some Cloud Service Providers themselves may have to use more traditional methods to purchase VMware. Therefore, several may have the same flexibility as an authorized reseller/VAR would have! A limited number of Cloud Providers will be allowed to participate as Cloud Services Providers. Whatever program they end up purchasing VMware through, the bottom line is that cost will be significantly higher than what they’re paying today. And end customers that manage VMWare today will also experience dramatic increases. Therefore, this may be the time your customers need to find an alternative Provider for their preferred solution or look for alternative ways to host their virtualized apps. Maybe it’s the perfect time for them to consider a Managed Cloud offering from one of our Providers.
When will this change really impact your customer?
New subscription models for VMware will mean an increase in audits conducted on their part to ensure compliance. Knowing what the customers have and managing inventory will become critical, with an expected increase in administrative/reporting requirements that may be too large a burden for some IT teams. These changes will be most painfully felt when current VMware customer’s contracts expire and they see their options presented at the time of renewal.
Can someone else manage this?
Finding an alternative sourcing option for VMware or a completely different virtualization solution may just be the start. We’re in a service trade, whether it’s an MSP to meet existing needs (using existing solutions), working directly with a Cloud Provider (that offers Cloud-based VMware Cloud Provider with Public and Private options), or perhaps a Hyperscaler/Public Cloud option such as Amazon AWS, Microsoft Azure, or Google Cloud Platform (GCP). MSP, Managed Cloud Providers, and suppliers who offer Hyperscaler/Public Cloud options offer the expertise, variety of solutions, and consultative services that may make staying with existing solutions possible while offering a blueprint for evolving approaches that may include moving to a completely different solution(s). These and the freedom to address customers’ evolving requirements on their own timetable are all compelling reasons to move away from directly sourcing solutions and/or adopting additional solutions on top of VMware. There are so many ways to get to the best solutions for your customer, and the best way to deliver them. For an idea of your options for virtualization, look at the list of options below!
How good are your customer’s alternative solutions?
The best option may be their existing option, migrating to another solution can be more than a straight 1-for-1 swap, requiring additional dedicated staff and changes/replacement of adjacent solutions. The important thing, as is often the case, is to look at what your customer is trying to do both now and to meet their future goals. Are they experiencing any pain points? Is there a larger need that you can help solve? There are some great products out there, which stand up very well against VMware, with more being developed every day. Will AI be more of a factor? Will other solutions develop products or emphasize features that reduce or remove the need for this kind of virtualization? Will there be less headaches? Again, it’s too early to tell what’s coming in the future. The important thing is to look at the now, your customer’s needs, and identify all the options that make the most sense! Many of our suppliers offer a multitude of options as outlined above. From VMware-based public and private Cloud options to the many public Cloud options such as Azure, AWS, and GCP, let us help you with those conversations.
“Fixed, predictable cost with potentially dramatic decreases in cost can be achieved in many cases over the expected cost moving forward more and you should assess your approach”.
How do I help customers evaluate the cost of their existing vs. alternative virtualization solutions?
There are a lot of direct and indirect costs that will be associated with migrating away from an existing solution. Is it the right time, to make the move in part or in full? Is the IT expertise available within the organization, able to be augmented by staffing, or provided via an MSP? How will it impact the organization overall beyond just the IT team?
“How are VMware changes being viewed with your company?”
How does this challenge offer customers a new opportunity?
Technology reaching end of life can almost be predicted from the day it’s purchased, with secondary suppliers often extending that timeline and improving the return on investment. With a large change like this, CTOs and IT managers have the opportunity to take a hard look at their environment and see it not as a challenge but as an opportunity to gain on their current posture, whether they stay the course, migrate to different solutions, adopt a multi-vendor solution, source through an MSP, or Cloud Provider.
“Your commissions should also be a consideration; some virtualization solutions pay little to no commissions given the low margins. In many cases, we can help guide you towards the best path forward by working with you and your clients to find solutions best fitted to you and your customers.
Bottom line, as an agent and their trusted technology expert, you need to be having these tough conversations with your clients. If you don’t, somebody else will. Evaluating what’s happening with their VMware is critical and they need assistance figuring out their immediate and future path forward. You are their advocate, this exercise will only further entrench how much you value supporting their operations. In many cases, it may mean a move towards a Managed Cloud alternative they’ve been putting off. Now, may be the time to make the move, and a great opportunity to leap forward!
Your First Step: Talk & Listen to Your Customer!
Discuss their Current Setup | “How do you currently use VMware, and what, if any concerns, do you have with the new subscription model?” Plus, “When are you up for renewal?”, “Where are you in your hardware lifecycle?”, and “Do you have infrastructure in a colo facility – if so when does the contract expire?”
Budgetary Impact | “What impact will the increase in renewal costs have on your budget this year?”
Value of Subscription Bundles | “Have you identified and seen value in the new features included in the VMware subscription bundles, or are there features you won’t use?”
Service Provider Preferences | “With fewer Cloud Service Providers available, how do you anticipate this change will affect your Provider choices?”
Alternatives Awareness and Migration Concerns | “Are you considering or evaluating any specific alternatives to VMware like Managed Cloud? What concerns do you have about the costs and challenges of migrating to them?”
Team Preparedness for Transition, Additional Support | “Is your team ready to switch to a new platform if needed? What training or skills are you lacking or short on?”
Audit and Compliance Confidence | “Are you ready for more frequent audits with the subscription model? Do you see any gaps in your current processes?”
Alignment with IT Strategy | “How do VMware’s changes affect or fit into your long-term IT plans? Do you see any challenges or opportunities?”
Current Pain Points/Shortcomings |“Is there anything that you wish you could be doing now, or frustrations that we can help you remove?”
Experience with Support |“What, if any, changes have you seen in your VMware support and what changes would you like to see with the new model or an alternative solution approach?”
Lingering Concerns, Need for Assurances | “The acquisition of VMware is not Broadcom’s first. What, if anything, have you heard about their past acquisitions and are there any concerns you’re keeping your eye on?”
The conversation on VMware and virtualization strategies will continue to evolve. Understanding how it impacts your customers while being ready to engage with them is something every technology expert and salesperson should be prepared for. There is so much to be considered – from the size of the organization to their willingness to manage the solutions they utilize to other elements that may influence what they’re trying to achieve. As a Partner, you can offer Providers with a complete range of virtualization and physical Cloud solutions. TierPoint, 11:11 Systems, Pax8, Rackspace, RapidScale, DYOPATH, Evolve IP, PhoenixNAP, Thrive, Equinix, Flexential, DataBank, Sky Data Vault, Logicworks, and Data Canopy are all great examples of suppliers in this space, with different strengths and complementary solutions that may put them in front. Some of these suppliers can even help with the assessment, helping you position yourself as their trusted advocate during the evaluation phase.
Choosing the best solution, from the best supplier, for your customer’s situation is where we work with you, as a member of your support team. Sandler Partners, and the Sales Engineering team, will continue to provide more information, develop resources, and be available to help you throughout your interaction with customers. You can contact your Sandler Partners’ Sales Engineering team at [email protected] for immediate help, or find your complete support team – Channel Manager, Channel leader, dedicated regional Sales Engineer, Partner Experience, and Partner Services representative on the homepage dashboard of your Sandler Portal. Not a member of the independent Sandler Partners community? There’s never been a better time to Become a Sandler Partner, we’re ready to welcome you, and introduce you to all the benefits you have to gain!
Thanks for reading!
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