VMware licensing procurement: VMware vs. third-party providers

IT shops face two imperfect options when purchasing VMware: buying direct or via third parties.

For some IT organisations, the decision to deploy VMware virtualisation is a no-brainer, but the choice of where to procure it -- that is, directly, from a server OEM or through a reseller -- is less so.

Most medium and large IT organisations purchase VMware licenses direct from the company, said Chris Wolf, senior analyst at Burton Group.

"You can get pretty aggressive with VMware, especially if it's a competitive situation with Hyper-V," he said. "We encourage our clients to do that (1) to see what product is best for their environment," and (2) because -- if the stars align correctly -- it's sometimes possible to get discounts on the order of 30% to 40% off the list price, he said.

But smaller shops have been tempted to purchase VMware licensing through a server original equipment manufacturer (OEM) or reseller. "If you're just talking about a couple of licenses, it might be hard to get a [VMware] salesperson to pay attention to you," Wolf said. In that case, "there's some benefit to taking the OEM/reseller path and take advantage of their discounts."

Third-party VMware providers: The upside
For some IT shops, buying VMware from a third party has helped consolidate IT purchases and garner substantial savings. An infrastructure manager at a Midwestern financial services firm said that without any haggling, CDW's list price for VMware vSphere Enterprise Plus is 7.5% less than VMware's.

But his firm doesn't just buy VMware licenses from CDW, but all manner of IT products. "All the hardware, Microsoft software, VMware licensing, SAN [storage area network], servers, PCs -- it adds up," he said, and discounts tend to get larger accordingly.

I buy [VMware] through Dell for simplicity.


Tom Becchetti,
server and storage engineer

Tom Becchetti, a server and storage engineer for a large manufacturing company, said his firm recently decided to start buying VMware licenses through Dell -- even though they don't run Dell servers. That decision slashes roughly $1,000 from the cost of VMware licensing. "By consolidating our buying power, our discount rate improves," he said. The firm also buys Symantec Veritas Storage Foundation through Dell.

Becchetti's previous employer was even more aggressive about sourcing from Dell. "We bought a ton of stuff through [Dell], including EMC storage and even Oracle/PeopleSoft. "With every incremental [buy], you get a higher discount." In total the company has saved about $250,000 per year by buying as much as it could through Dell, he said.

Then there are logistical reasons for buying from an OEM. "I buy through Dell for simplicity. Order from one place the server and all I need," said one IT professional in the southeastern U.S.

Third-party VMware providers: The downside
The downside of one-stop shopping is that things such as licensing renewals don't go as smoothly as IT managers might like.

"Let's not talk about renewals, because when they mess stuff up, they mess it up bad," said the financial services infrastructure manager.

In one incident, the distributor combined the customer's VMware licenses with those of its outsourcing provider. "It was just wrong, and it took me three weeks to renew my stuff," he said.

The infrastructure manager believes that these sorts of problems could be avoided by going direct. "I have to think it would be easier with VMware directly. Purchasing a new license and applying it to our portal happens very quickly, but remediating with a third-party goes really slow."

The problem of improperly recognised licenses and renewals came to a head last year when VMware released vSphere 4. VMware customers rushed to the VMware site to download a copy of the vSphere code to which they were entitled with a valid support and subscription (SnS) contract, but many found that the licenses they had purchased through their server vendor were not being properly recognised.

That prompted at least one VMware customer to start buying directly from VMware rather than through his reseller, Hewlett-Packard.

"I found out from VMware that we do have the option to renew our contracts directly through VMware instead, so that is what we will do when they come up for renewal again next month," wrote Eric Siebert, a system administrator at Boston Market and a TechTarget contributor. "By dealing directly with VMware for our SnS, hopefully we will not experience this type of issue again in the future when the successor to vSphere is released."

'I told you so'
The bad experiences of those who have purchased VMware through third parties vindicates IT managers that buy direct.

I don't want to talk to HP about VMware.


Kent Altena
technical engineerFBL Insurance

Chuck Shmayel, the VP of infrastructure and security for corporate relocation company Sirva, recently bought Intel Xeon-based blade servers from Hewlett-Packard Co. for two data centres in the Midwest. The company bought everything itself -- hardware, operating system and VMware software -- separately and did its own installs. It is what the company has always done, and Shmayel said he thought it was the best way.

"I don't think it's attractive [to bundle]," he said. "I think I can negotiate a better deal with VMware depending on what I need compared to getting everything from HP. There are advantages to dealing with VMware directly. I can get some perks from them, some support for installation and configuration. If you bundle it together, you basically have to go through HP to get these answers."

Another reason to purchase directly is support, said Kent Altena, the technical engineer at FBL Insurance in West Des Moines, Iowa. "To get a VMware patch, you have to go to the HP website and not to VMware's -- and that website isn't necessarily as up to date with its patch releases," he said. Furthermore, when calling in a problem, "I don't want to talk to HP about VMware; I want to talk to someone that deals with VMware problems day in, day out."

In short, bundling VMware licenses with server purchases "adds complexity that I wouldn't want to have," Altena said.

No procurement nirvana 
But buying directly from VMware isn't perfect either, emphasised Becchetti.

When it comes to procuring VMware licenses, "you have trouble regardless of who you go through," he said, citing an instance where even VMware licenses purchased through a VMware sales rep weren't properly recorded and recognised. "They must have a really complicated system over there."

Burton Group's Wolf acknowledged that VMware had hit some speed bumps with respect to its operations, but that on the whole, its operational processes have improved. Notably, the company switched from a complicated license file system last year to license keys.

"A little bit of growing pain is to be expected," Wolf said, "but overall I feel like they've been pretty proactive on licensing." Nevertheless, shops planning an upgrade should follow best practices and obtain necessary licenses early -- regardless of who their vendor is -- and avoid performing upgrades directly following a product release.

"To do a quick upgrade is a dangerous thing," Wolf said. "Let other people fail in the wild, not you."

Let us know what you think about the story; email Alex Barrett, News Director at [email protected], or follow @aebarrett on twitter. News Writer Mark Fontecchio contributed to this story.

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