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Everything you need to know about the VMware ELA

Enterprise Software | Posted on October 10, 2019 by Susana Byun

(Editor’s note: updated on October 16, 2019)

From cutting costs to simplifying IT, there are a lot of reasons to consider the VMware ELA (VMWare Enterprise License Agreement). 

However, with a minimum spend requirement of $250,000 (with $150,000 net new licensing spend after discounting, without support or subscription) and highly customized terms, understanding if the VMware ELA is right for you is challenging.

With hundreds of VMware ELA negotiations under our belt, we decided to shed some light on the situation. Below you will find a high-level summary of a recent webinar hosted by our VMware experts.

What is included in the VMware ELA?

The VMware ELA is a multi-year contract that unifies all your existing and future VMware investments. Usually three-years in length, the VMware ELA includes:

  • Existing Install Base: Every VMware license and service you are already buying will be included in your ELA. Negotiations start by pulling a detailed report of your current environment, called an “Install Base Report.”
  • Minimum Net New Purchases: You must buy a minimum of $250,000 which can include existing install base and net new licensing. Of that $250,000, net new licensing spend after discounting and excluding SnS must meet the minimum value of $150,000.
  • Schedule and Important Dates: Your ELA also spells out key reporting dates and deployment obligations. Generally speaking, VMware has strict “use it or lose it” and compliance policies. So pay close attention!
  • Stated Out Year: Your ELA details your “Stated Out Year,”  the first year after your contract expires. You will be able to lock in reduced savings for the year following your ELA, but you must pay for your out-year before the end of your contract.

What are the benefits of the VMware ELA?

ELA customers get access to a wide range of benefits and cost-savings, which they won’t get anywhere else:

  • Cost savings: The ELA offers discounts between 20 to 40 percent on the costs of all licenses, subscriptions, and support. This reason alone is enough to build a business case to invest in the multi-year commitment.
  • Simplicity: IT procurement and software asset management is a complex and painful process. The VMware ELA reduces those burdens by putting all your VMware needs into a single, unified contract. With IT teams needing to do more with less, this is a welcome benefit of the ELA.
  • Flexibility: The ELA provides access to exclusive, token-based purchasing programs. These tokens add more flexibility to your long-term investments. Instead of pre-buying specific licenses or subscriptions, you can use credits at a later date. (See fig. 1)

Fig. 1: Breakdown of the Enterprise Purchasing Program, Hybrid Purchasing Program, and Subscription Purchasing Program

  • Professional Services and Expertise: The ELA gives you access to discounted, or complementary, professional services from accredited partners, such as Softchoice. This is a great way to support your team with third-party expertise, mentorship, and training.

How do you buy or renew a VMware ELA?

Unlike other major enterprise agreements, the full term of your VMware ELA is paid upfront.

While financing options are available from partners such as Softchoice, this is a major budgetary commitment. It’s important you work out in advance whether an ELA is right for you and how it aligns with your business goals. Once you buy it, you must also stay on top of your investment, with regular assessments and services. Softchoice also supports these needs, and more, with our complementary Lifecycle Advantage Program for ELA customers. (See Fig. 2 and 3)

Figure 2: How Softchoice can help

Figure 3: Typical lifecycle of an ELA through the Lifecycle Advantage Program

Renewals, amendments and re-negotiating a new ELA

Customers in the middle of their ELA who want to restructure the agreement can do so with an amendment. Typically, an amendment requires at least $100,000 in new spending and does not extend the duration of the ELA.

If you are seeking to extend your ELA, then you will need to do that with an ELA Refresh. This process typically requires $150,000 in new spending. But, it allows you to extend the ELA for another few years as well as restructure the discounts and terms. A common approach for customers nearing the end of their ELA is to extend the agreement by purchasing large quantities of credits. This ensures support discounts continue, while adding extra flexibility for upcoming licensing needs.

Need help with your VMware ELA?

Even the most sophisticated IT department will make mistakes when it comes to major licensing agreements. In fact, 39 percent of enterprise software lacks proper licensing, according to the 2016 BSBA Global Software Survey. And the average enterprise overspends on software by up to 25 percent, reports IDC.

Make sure you are making the right VMware ELA moves through our resources:

For more information, visit our new VMware ELA Hub page.

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