VMware White Paper

Executive Summary

VMware, a leader in Enterprise-class solutions, has demonstrated its strategic adaptability by staying at the forefront of the virtualization technology space since its inception. It was one of the first companies to virtualize the x86 architecture successfully. In recent times, VMware has successfully navigated the industry’s growing shift to public cloud from traditional data centers, leveraging its robust Distributed Hybrid Infrastructure product portfolio.

VMWare sells multiple products under various product families to meet customer requirements. Some of these product lines and associated products are:

*The above product families are the latest rearranged product offerings post Broadcom’s acquisition of VMware

vSphere foundation and its associated technologies remain the most critical and widely used for VMware customers. Licensing practices for these products have remained relatively stable and unchanged over the last many years. In addition, VMware provides a substantial level of licensing resources to its customers, leading to a stable licensing environment for most customers. However, there are still complexities that arise in VMware licensing due to various reasons such as:

• Metric definitions across various products
• Infrastructure limitations in licensing
• Capabilities of discovery tools
• Networking Architecture
• License Key management for various products

The recent acquisition of VMware by Broadcom and the updates to the selling and licensing policies have added another dimension of complexity for its customers. This white paper shall discuss the implications of this acquisition as well.

This white paper endeavors to guide Software Asset Management (SAM) professionals who provide the right VMware licensing advice and enable compliance for their organizations or customers. This white paper also discusses various license optimization opportunities available to customers based on a thorough understanding of VMware licensing policies and infrastructure/network peculiarities of target IT environments.

Objective and Target Audience

VMware software is ubiquitous across most big enterprises. While adopting the public cloud has slowed down, most enterprises use VMware products to run their production-critical enterprise applications.

This, combined with various licensing complexities discussed in previous sections, requires comprehensive knowledge of various facets of VMware licensing for software asset management and procurement practitioners.

This white paper does not attempt to replace the licensing guides made available through official VMware sources but to add much-needed context derived from experience running successful SAM programs. This white paper should be useful for software asset managers, software licensing specialists, IT procurement experts, IT managers, system administrators, and CIOs.

Problem Statement

In the executive summary, we discussed various complexities of licensing VMware Products. For this white paper, we will discuss these challenges across two broad spectrums:

• Licensing challenges due to Broadcom’s Acquisition
• Inherent licensing challenges in VMware licensing policies

The following VMware products are in scope for this white paper:

VMware products are typically tied and activated through license keys, and they have done a great job of maintaining key history for essential license management practices. However, certain challenges still remain. We will discuss these in the upcoming sections.

Most common issues

Through our experience in managing and auditing VMware environments, we’ve consolidated current issues in VMware licensing.

1. Managing contracts and procurement
2. Risks of VMware licensing
3. Navigating Broadcom’s licensing changes

Managing Contracts and Procurement

This section provides key insights to IT leaders and procurement specialists involved in VMware purchases.

• The terms and conditions listed in the VMware End User License Agreement govern VMware products and services. However, post-Broadcom’s acquisition, Broadcom’s EULA agreement is now considered the primary governing document.
• This agreement is deemed accepted on the purchase and/or utilization of VMware products. Procurement and legal teams should regularly review the agreement document for any changes.
• Unless your organization has had an Enterprise Agreement with VMware, your licenses and products may be distributed across various accounts and managed by different account management teams. Procurement/Sourcing teams should try to locate such distributed license environments.
• VMware licenses and keys are managed through the VMware customer connect portal (recently moved to Broadcom). Multiple customer connect portals may exist for a single organization. Ideally, procurement and sourcing teams should try to consolidate all VMware accounts under a single connect portal.
• Geographical restrictions apply to license key deployments, limiting them to specific regions based on the contract. Procurement teams should verify regional deployment permissions to ensure compliance.

Broadcom’s acquisition has made customer portal management more complex. As of 30th April 2024, all customers are redirected^[1] to Broadcom’s customer portal. Companies must validate that all their accounts have been successfully migrated to Broadcom’s portal.

• SAM/Sourcing teams also need to regularly review the license quantities and term end dates available in the customer connect portal. We have seen many irregularities in various scenarios.

Risks in VMware Licensing

VMware licensing is straightforward on the surface. However, SAM practitioners must overcome many unseen risks before they can provide the right licensing guidance and operations for their organizations.

1. Visibility Risks

Visibility risks in the VMware environment are generated from both a lack of visibility of entitlements and visibility of deployments.

In the previous section, we discussed how multiple accounts and customer portals affect the visibility of entitlements and licenses.

VMware deployments are even more difficult to track. Some of the reasons are:

• Agent-based discovery solutions do not discover ESXi Hosts.
• Missing Host-Guest mapping in most of the discovery solutions in the market.
• PowerCLI commands running on the vCenter environment only discover managed ESXi hosts, not standalone ones.
• Difficulty in tracking license keys allocated to an ESXi host due to upgraded license keys not being available in the registry.
• Difficulty in tracking VMware on public cloud deployments.

1. Compliance Risks

Compliance risks have become relevant for IT leaders due to the ubiquitous nature of VMware products and the change in ownership. There are various compliance risks for VMware which need to be tracked, such as:

• Expired Support for VMware products
• Use of VMware products in non-approved geographies
• Use of EOS/EOL products without updating supported keys
• Over allocation of keys

Compliance risk is also generated through the Audit clause in Broadcom’s policies. The clause is produced below for reference.

Audit Clause: Refer to Broadcom’s EULA^[2] clause 3.4 for various terms related to Audit for Broadcom’s offerings, including VMware products.

Customer agrees to provide verified reports and records reasonably requested by Broadcom to verify Customer’s compliance with the Authorized Use Limitation and License Metric defined in the Transaction Document. These reporting and verification obligations remain in effect during the Term of the Broadcom Offering and for twelve (12) months thereafter. Customer agrees that, upon thirty (30) days’ prior written notice, Broadcom or an independent third party may audit Customer’s compliance with the Foundation Agreement, Software Module, and the Transaction Document, remotely or at Customer’s facilities. Customer shall cooperate in good faith with such audit, which Broadcom agrees will be confidential, and commercially reasonable in nature and time. If Customer’s self-verification or Broadcom’s audit reveals any unpaid or unlicensed use, Broadcom shall provide written notification to Customer and within thirty (30) days of such written notification, Customer shall order at Broadcom’s then-current list price, a sufficient number of such Broadcom Offering(s) and any applicable Support to cover its past or current use in excess of the Authorized Use Limitation and License Metric. If an audit reveals an underpayment of ten percent (10%) or more of total fees owed for the review period, Customer will also reimburse Broadcom for its reasonable audit expenses.

The following points are noteworthy and important for SAM practitioners:

• The prior notice is only 30 days.
• Past use licensing or license cost backdating is also prevalent.
• The audit scope includes terms specified in foundation agreement (EULA), Transaction Document (Order).
• SAM practitioners must review the Authorized Use Limitation and License Metrics in detail.
• Payment clauses in case of successful audits

Navigating Broadcom’s Licensing Changes

After its acquisition of VMware, Broadcom has made many changes to VMware licensing.

• All VMware product offerings based on perpetual licensing have been discontinued^[3]. This means that a VMware customer cannot purchase perpetual licenses for VMware products anymore or renew the support for their existing perpetual products.
• Existing customers of perpetual products shall be able to use them till the end of the current support cycle. After that, their licenses shall be mandatorily migrated to a subscription model.
• VMWare products have been consolidated into various product families, which now are sold as subscription-based products.
• A new unified licensing model^[4] has been implemented to manage on-prem licensing subscriptions better.
• Broadcom’s support policies are tricky to get accustomed. Customers of Symantec, which was taken over by Broadcom, have shared difficult stories regarding change in support structure and support ethos. Similar changes may be expected in the VMware case as well.
• Most account and license management teams at VMware have been laid off. Customers must navigate new teams and build relationships for license review and purchase processes.

Vmware vSphere product line comparison:

Licensing VMware Products

In this section, we detail the process of licensing various VMware products. The licensing process includes the following major components:

Data Collection

1. Entitlement data
2. Software inventory data
3. Hardware inventory data

Let’s discuss each of them:

1. Entitlement Data

This refers to the license information for VMware products owned by your organization. i.e., documentation proving you bought the software or are entitled to use it or use it. Entitlement information for VMWare products can be fetched from various sources. The VMware Customer Connect (Broadcom Support Portal) is the most common. It is one the best and most consistent sources of license information. In this portal, we can also see various license keys and their history of updates.

However, using the Customer Connect Portal as a single source of entitlement information might be insufficient. Earlier in this white paper, we discussed how there might be multiple customer portals depending upon the count of admin accounts set up for your organization. Conversely, we can request VMware account managers to provide a list of all accounts to allow us to consolidate entitlements across these accounts.

For vSphere clients, we can collect the licensing details of the vSphere products by leveraging the license management functionality in the vSphere Client. Details to fetch this information are available at this link^[5].

This cannot be the single source of entitlement information, as you can only see what you know. Any vSphere clients not in IT inventory would get missed, and associated license information would be lost. Additionally, there needs to be a reconciliation between the new license keys available in the customer connect portal and those registered with vSphere clients.

The ideal strategy to collect entitlement information would be a combination of all the above sources.

1. Software Inventory Data

Refers to VMware deployment information, i.e., what is installed on each device in scope. This includes all compute assets and appliances where VMware and the related add-ons are installed.

Sources of entitlements, such as vSphere clients, would be able to provide deployment and actual license allocation information. In addition to these sources, you may also leverage any of the following sources:

• Virtualized Infrastructure Management and Monitoring Tools: depending on the virtualization technologies used, we may leverage free and widely used tools such as RVTools (or a PowerCLI script) to discover and consolidate VMware deployments across virtual environments.

• ITAM/SAM Discovery Tools: Any of the known SAM discovery tools (Snow, ServiceNow, Flexera, USU, Lansweeper, etc.) can be utilized to collect VMware installation data.
• An issue specifically with ESXi environments is the inability to support inventory agents. In these cases, the only way to inventory software/hardware would be through vCentre scripts or out-of-box vSphere integrations in the above ITAM/SAM delivery tools.
• License key allocation can be determined via certain inventory tools such as RVtools or by using VMWare PowerCLI directly.

1. Hardware Inventory Data

Refers to hardware or compute information. For VMware subscription management, we would need the following hardware data:

• On-Premises Environment
• Server Type
• Processor Count
• Core Count
• Cloud Environment
• Cloud provider
• vCPU count
• Hyperthreading
• BYOL/PAYG Nature of Instance

Subscription Allocation Analysis

VMware products are only available as subscriptions from December 2023 onwards. For this reason, this white paper shall discuss subscription allocation rather than perpetual license allocation, which was prevalent earlier.

For the purpose of this white paper, we’ll cover the most common scenarios and provide licensing and optimization suggestions:

1. VMware vSphere

Editions/Packages Available & Licensing Metrics

Licensing Scenarios

In this section, we will only discuss the Per Core metric since all VMware customers need to migrate to the subscription and core metric model upon completing their existing support period or purchasing new products.

To license an ESXi host, you must assign to it a vSphere license that meets the following prerequisites:

• The license must have sufficient capacity depending on the licensing model.
• The license must support all the features that the host uses. For example, if the host is associated with a vSphere Distributed Switch, the license you assign must support the vSphere Distributed Switch feature.

Steps for Licensing vSphere on ESXi environment:

• The Per Core metric definition states that one must license each physical core with a minimum of 16 cores per CPU.
• Examples of license allocation are given below:

• Core licenses are for the underlying ESXi infrastructure and do not depend on or limit the number of virtual machines running in the ESXi host.

1. VMware vCenter

vCenter is available on either instance-based metrics or through solution-based licensing.

Solution-based licensing refers to the VMware vSphere Foundation solution wherein a single solution license (based on Per Core metric) includes licenses for vSphere, vCenter, ESXi, vSAN, etc. The Per Core metric has been discussed in the vSphere section.

The instance-based metric for vCenter refers to the number of vCenter instances running in your organization.

• This metric is not dependent upon the number of hosts connected to the vCenter instance.
• Examples of license allocation are given below:

1. VMware Workstation Player/Pro/ Fusion Pro

• VMware Desktop Hypervisors are available in three editions, i.e., Workstation Player, Workstation Pro, and Fusion Pro.
• VMware Workstation Pro includes a license for Workstation Player. However, both Player and Pro must be on the same computing device.
• Licensing for all three editions is instance-based, i.e., the number of software installations.
• Concurrent use of this software, without covering licenses for each instance, is prohibited for users and devices.
• VMWare also has an Academic Program that provides licenses for education and research.

Problem Solving Process

Effectively managing VMware licenses requires a systematic approach that addresses both the complexities introduced by Broadcom’s acquisition and the inherent challenges within VMware’s licensing policies. The following high-level steps outline a comprehensive license management analysis:

1. Entitlement & Contract Analysis
2. Deployment / Technical Analysis
3. Reconciliation
4. Optimization & Remediation Scenarios

Entitlement & Contract Analysis

The first step in proper license management is understanding your organization’s entitlements and contractual obligations. This involves:

1. Collecting Licensing Agreements and Contracts: Gather all VMware licensing agreements, purchase orders, invoices, and support contracts. Ensure that you have access to the most recent versions, including any amendments or renewals post-Broadcom acquisition.
2. Reviewing License Terms and Conditions: Carefully examine the End User License Agreements (EULAs), product use rights, and any special terms that may apply due to the acquisition. Pay special attention to:
3. License Metrics: Understand the metrics by which licenses are measured (e.g., per core, per instance).
4. Authorized Use Limitations: Note any restrictions on usage, such as geographic limitations or environment types (production vs. non-production).
5. Audit Clauses: Familiarize yourself with Broadcom’s audit rights and your organization’s obligations under these clauses.
6. Consolidating Entitlement Data: Due to possible multiple accounts and portals, work to consolidate all entitlement information into a single repository. Use the VMware Customer Connect portal (now under Broadcom) as a starting point but validate that all accounts and licenses have been migrated successfully.
7. Identifying Licensing Changes: Stay informed about changes in licensing models, especially the shift from perpetual licenses to subscription models. Understand how these changes impact your existing contracts and future purchasing decisions.

Deployment / Technical Analysis

After understanding your entitlements, the next step is to analyze the actual deployment of VMware products within your organization:

1. Inventorying Deployed Software: Use discovery tools and scripts to collect data on all VMware products installed across your IT environment. This includes:
   1. ESXi Hosts: Since agent-based tools may not discover ESXi hosts, leverage tools like RVTools or PowerCLI scripts to collect this data.
   2. vCenter Instances: Identify all vCenter servers in use, including those managing standalone ESXi hosts.
   3. Desktop Hypervisors: Inventory installations of VMware Workstation Pro, Workstation Player, and Fusion Pro on endpoints.
2. Collecting Hardware Information: Gather detailed hardware specifications for all physical hosts, including:
   1. Processor Types and Counts: Number of CPUs and cores per CPU.
   2. Server Models: Including any variations that might affect licensing (e.g., servers with more than 32 cores per CPU).
3. Mapping Virtual Environments: Establish a clear mapping between virtual machines and their underlying physical hosts to understand how licenses are consumed in a virtualized environment.
4. Identifying Shadow IT: Be vigilant for any unauthorized or unknown VMware deployments that might exist outside of standard IT processes, as these can pose compliance risks.

Reconciliation

With both entitlement and deployment data in hand, the next step is to reconcile the two to determine your compliance status:

1. Matching Deployments to Entitlements: Compare the number of licenses owned against the actual usage. This involves:
   1. Calculating License Requirements: Based on the licensing metrics (e.g., per core), determine how many licenses are required for your current deployments.
   2. Identifying Over or Under-licensing: Detect any discrepancies where deployments exceed entitlements (compliance risk) or where there are surplus licenses (cost optimization opportunity).
2. Validating License Allocations: Ensure that license keys are correctly applied and that the features in use are covered by the assigned licenses. Check for:
   1. Expired Licenses or Support Contracts: Using products without valid support can lead to compliance issues.
   2. Incorrect License Types: Verify that the correct license editions are in use based on the features enabled (e.g., using Enterprise Plus features with a Standard license).
3. Assessing Compliance Risks: Evaluate the severity of any non-compliance issues identified, considering factors like:
   1. Potential Audit Penalties: Understand the financial implications as per Broadcom’s audit clauses.
   2. Operational Impact: Consider how remediation actions might affect business operations.

Optimization & Remediation Scenarios

The final step involves developing strategies to address any compliance gaps and optimize license usage:

1. Developing Remediation Plans: For any areas of non-compliance, create action plans which may include:
   1. Purchasing Additional Licenses: Acquire the necessary licenses to cover any unlicensed usage.
   2. License Reallocation: Reassign unused licenses from over-licensed areas to under-licensed ones where permissible.
   3. Decommissioning Assets: Retire or consolidate underused hosts or virtual machines to reduce license requirements.
2. Optimizing License Usage: Explore opportunities to reduce costs and improve efficiency:
   1. Rightsizing Environments: Adjust the number of cores or virtual machines to better align with actual needs.
   2. Leveraging Subscription Models: Evaluate whether moving to subscription-based licensing offers better flexibility or cost savings, especially in light of Broadcom’s changes.
   3. Consolidating Accounts: Streamline license management by consolidating multiple VMware accounts into a single portal.
3. Implementing License Management Tools: Utilize specialized software asset management (SAM) tools to automate tracking, compliance checks, and optimization recommendations.
   1. Engaging with Vendors: Work with VMware/Broadcom account representatives to:
   2. Negotiate Contracts: Seek more favorable terms or volume discounts.
   3. Understand New Offerings: Stay informed about new products or licensing models that could benefit your organization.
4. Training and Awareness: Educate IT staff on licensing policies and compliance requirements to prevent future issues.

Conclusion

Navigating the complexities of VMware licensing, especially in the wake of Broadcom’s acquisition, requires a diligent and structured approach. By thoroughly analyzing entitlements, assessing deployments, reconciling differences, and proactively addressing optimization and remediation, organizations can:

Yes Ensure Compliance: Mitigate the risks associated with audits and penalties by maintaining accurate and up-to-date licensing records.

Yes Optimize Costs: Identify areas where the organization can save money by eliminating unnecessary licenses or taking advantage of new licensing models.

Yes Adapt to Changes: Stay agile in response to industry shifts, such as the move from perpetual to subscription-based licensing.

Yes Enhance Operational Efficiency: Streamline license management processes, reducing administrative overhead and freeing up resources for other critical tasks.

For software asset managers, licensing specialists, and IT leaders, embracing these problem-solving steps is crucial in maintaining control over VMware licensing and ensuring that the organization’s virtualization infrastructure remains both compliant and cost-effective.

By providing these final sections, the white paper now offers a complete guide for professionals dealing with VMware licensing challenges, equipping them with the knowledge and strategies necessary to navigate the evolving landscape.

Glossary