Broadcom Enterprise Licensing Models Explained: Perpetual vs. Subscription

Author’s Note: This advisory is written from the perspective of a senior independent licensing and negotiation expert with deep experience in Broadcom software agreements.

It provides an objective, Gartner-style analysis of Broadcom’s enterprise software licensing models, focusing on the differences between perpetual and subscription licensing, tailored for sourcing professionals, CIOs, and IT leaders.

The guidance below broadly applies across Broadcom’s software portfolio, including major acquisitions such as Symantec, CA Technologies, and VMware.

Introduction

Broadcom has rapidly expanded its enterprise software portfolio through acquisitions of industry giants like CA Technologies (mainframe and enterprise software), Symantec (enterprise security), and, most recently, VMware (virtualization and cloud).

With these acquisitions, Broadcom has also inherited diverse licensing models. Understanding how perpetual licenses (traditional “owned” software licenses with maintenance) compare to subscription licenses (term-based usage rights) is critical for organizations navigating Broadcom agreements today.

After each acquisition, Broadcom has signalled a clear strategic shift: moving customers away from legacy perpetual licensing and toward subscription-only models.

For example, following the VMware takeover in 2023, Broadcom announced it would end the sale of new perpetual licenses for VMware products and transition entirely to subscriptions.

Similarly, Symantec’s once-flexible licensing (which offered both perpetual and term options) was restructured under Broadcom to emphasize multi-year subscription bundles.

These changes are driven by Broadcom’s business goals (stable recurring revenue and “simplified” offerings) but have profound implications for customers regarding cost, budgeting, flexibility, and vendor relationships.

This article will clearly explain and compare perpetual vs. subscription licensing models in Broadcom’s context. We’ll analyze the cost differences over time, budgeting implications (CapEx vs. OpEx), flexibility and scalability considerations, and how renewal terms differ between the models.

Key points will be illustrated by real-world scenarios from Broadcom’s recent moves (e.g., VMware and Symantec licensing changes).

Importantly, each section concludes with a Recommendations subsection, providing actionable guidance for sourcing and IT leaders. Whether your organization is being pushed to convert legacy licenses or planning future software investments, this guide will help you make informed decisions and develop negotiation strategies.

Perpetual vs. Subscription Licensing Models: An Overview

Understanding the fundamental differences between perpetual and subscription licensing is the first step.

Below, we define each model and highlight how Broadcom applies them across its product portfolio:

Perpetual Licensing (Owned License + Maintenance):

A perpetual license grants the customer the right to use a specific software version indefinitely. A large one-time upfront fee is typically paid to “purchase” the license, after which the software can be deployed on-premises. In enterprise practice, perpetual licenses are usually paired with an annual maintenance (support) contract, often priced at 15–25% of the license fee per year.

Maintenance is technically optional – it provides access to updates, patches, and vendor support. If you stop paying maintenance, you can legally continue running the last version you obtained, but you won’t receive further updates or assistance. Broadcom’s acquired portfolios historically sold many products under perpetual models.

For instance, CA Technologies offered perpetual licenses for mainframe tools, and Symantec sold perpetual licenses for products like Endpoint Protection, often alongside a maintenance/support plan.

Under Broadcom ownership, new perpetual licenses are generally no longer available for most product lines (Broadcom has honoured existing perpetual entitlements for now, but with some conditions).

Key characteristics of Perpetual Licenses:

• Ownership and Duration: You gain permanent usage rights for a version of the software, which is a capital asset for the organization.
• Cost Structure: High upfront CapEx investment for the license, then ongoing annual maintenance (OpEx) if support is maintained. Maintenance fees may increase over time (vendors often raise support costs by a small percentage annually, and Broadcom has sometimes imposed significant increases).
• Upgrades: Access to new versions is contingent on maintenance. If maintenance is active, upgrades are included; if not, you’re locked to the last version you paid for.
• Flexibility: You can skip or stop paying maintenance if budgets tighten (at the risk of running outdated software). If the need decreases, you can choose not to renew maintenance on unused licenses. However, if you need to expand usage, you must buy additional licenses upfront, which requires a new capital outlay.
• Renewal and Support: In this model, renewal refers to renewing the maintenance contract. If you let maintenance lapse, you might later pay back-dated fees plus penalties to reinstate support (or forego official support altogether). Notably, you retain the right to use the software you’ve already deployed even without support.

Subscription Licensing (Term-Based or SaaS License):

A subscription license provides the right to use the software only for a defined term (e.g., 1-year, 3-year, or as a month-to-month SaaS service). You pay a recurring fee (usually annual or quarterly) to keep using the product. That fee typically includes support, updates, and often cloud hosting or other services if it’s a SaaS offering.

Subscription is an OpEx expenditure – analogous to “renting” the software. If you stop paying, your right to use the software ends (the product may deactivate, or you’d be out of compliance if you continued usage).

Broadcom has pivoted strongly to subscription models for its software. VMware’s portfolio is now sold via subscription bundles (for example, replacing perpetual VMware vSphere licenses with subscription packages like VMware Cloud Foundation subscriptions).

Symantec’s enterprise security products under Broadcom are largely sold as term subscriptions or as part of broad portfolio license agreements (PLAs) that bundle multiple products into one subscription.

Even CA mainframe software, which traditionally had perpetual or usage-based licenses, is moving toward subscription-like contracts (often multi-year commitments).

Key characteristics of Subscription Licenses:

• Ownership and Duration: You do not own the software; you have access rights for the duration of the subscription term. The vendor retains more control, and the model assumes continuous renewal for continued use.
• Cost Structure: Lower upfront cost but continuous recurring payments (OpEx). Over a long period, total costs can accumulate to more than a one-time purchase would have – this trade-off is examined in detail in the next section. Vendors often bundle support and upgrades into the subscription fee. Broadcom’s subscriptions often require multi-year commitments (e.g., a 3-year paid term) for enterprise deals, which lock in spend but sometimes yield a slight discount versus annual renewals.
• Upgrades: All updates and new versions are included as long as you pay. The vendor often keeps the software at the latest version (especially in SaaS models). Customers benefit from continuous improvements, though in Broadcom’s case, some customers have noted fewer new features post-acquisition, with the subscription mainly ensuring access to the currently supported version.
• Flexibility: In theory, the subscription allows flexibility to scale up or down with usage – you can add more licenses or capacity relatively quickly (often co-terminus with your subscription period). At the end of each term, you might reduce your license count or switch products if your needs change. In practice, Broadcom’s contracts may limit flexibility in the short term (e.g., requiring a baseline commitment for the full term and only allowing adjustments at renewal time). Still, compared to a sunk-cost perpetual license, a subscription lets you discontinue or replace the software after the term if it no longer meets your needs (assuming you have an alternative ready).
• Renewal and Compliance: Subscription renewal is mandatory to continue using the software. Missing a renewal payment can result in loss of access or non-compliance. Broadcom has demonstrated a strict stance here, for example, imposing financial penalties for late renewals and warning organizations using VMware perpetual licenses without active support to renew as a subscription or cease usage. The vendor’s leverage at renewal time is high since customers face a hard deadline to renew or lose the software functionality.

To summarize the differences at a high level, the table below contrasts Perpetual vs. Subscription licensing in the context of enterprise software:

Factor	Perpetual License (plus Maintenance)	Subscription License (Term-Based)
Ownership of Rights	Permanent right to use a version indefinitely (license is “owned” asset).	Right to use is temporary, only during active subscription term (no ownership).
Payment Model	Large one-time CapEx purchase; subsequent yearly maintenance fees (OpEx) for support/updates.	Ongoing OpEx payments (monthly/annual or multi-year) for continued use; little or no upfront fee.
Budget Impact	Upfront hit to capital budget; maintenance is a smaller annual expense. Potentially lower TCO if used for many years.	Spread across operating budget over the years; predictable periodic expense, but the total cost can exceed perpetual if the term extends long.
Upgrades & Support	Included only if maintenance is active (otherwise, stuck on an older version; support optional).	Included in the subscription fee is continuous access to the latest versions and vendor support as long as you subscribe.
Scaling & Flexibility	Must purchase additional licenses for growth (CapEx spend each time). Cannot “return” unused licenses (but can drop maintenance on them).	Can adjust user counts or capacity at renewal (and sometimes mid-term for add-ons). If needs decrease, we can potentially reduce subscription at the next term (if the contract allows). Easier to trial new products as part of subscription bundles.
Renewal Dynamics	Maintenance renewal is optional; non-renewal means no updates/support, but the software can continue running on the current version. Renewal is typically annual, with possible uplift in fees.	Subscription renewal is required to avoid loss of software access. Typically has strict renewal dates; missing renewal may incur penalties or service cutoff. Vendor may enforce compliance (licenses expire). Multi-year contracts are common for enterprises.
Longevity & Lock-in	The software can be used as long as it remains compatible with your environment, even if the vendor changes terms (you have a perpetual right). Risk: eventually, the software may become outdated or unsupported.	Continual renewals needed – long-term use ties you to the vendor’s pricing and terms. Easier for vendors to lock in customers with limited exit options if the software is critical. However, you can choose not to renew and drop the software (assuming you have a replacement strategy).

Recommendations (Overview):

Ensure all stakeholders understand these fundamental differences. Sourcing and IT leaders should educate internal teams on what “perpetual” vs “subscription” truly means in contracts, especially now that Broadcom is shifting models.

Perform an internal license portfolio review: list which Broadcom software licenses you currently “own” perpetually and which are on subscription. This clarity will inform cost analyses, renewal planning, and negotiation strategies in subsequent steps.

Treat this as the groundwork: a clear view of your entitlements and their nature (owned vs. rented) is essential before delving into financial and strategic implications.

Cost Differences Over Time: Total Cost of Ownership Analysis

One of the most critical factors in choosing between perpetual and subscription licensing is the total cost of ownership (TCO) over time. The two models allocate costs very differently over the software lifecycle.

Let’s break down the cost trajectories and examine how Broadcom’s pricing practices influence these costs.

Perpetual License Cost Profile:

The initial acquisition cost is high in a perpetual model. For example, an enterprise might pay $1 million for a perpetual license to a software platform. In addition, there is an annual maintenance fee (commonly around 18–20% of the license price, though it can vary). Using 20% as a typical figure would be $200,000 per year in maintenance.

Over five years, the total paid would be $1 million (initial) + $200k5 (maintenance) = $2 million. If we extend it to ten years (assuming the company keeps paying maintenance to stay supported), it becomes $1M + $200k10 = $3 million.

However, the organization has flexibility with that maintenance spend: it could opt to discontinue maintenance after a few years to save costs (perhaps running the software in a “frozen” state). In such a case, the out-of-pocket cost might remain just the initial $1M (plus whatever maintenance was paid up to the point of cancellation).

Of course, discontinuing maintenance means forfeiting updates and vendor support, which has risks and can incur separate costs (e.g., hiring third-party support or dealing with security issues in outdated versions).

Subscription License Cost Profile:

In a pure subscription model, there is little or no upfront license cost, but the recurring fee is higher than maintenance alone because it includes the right to use the software each year. Suppose the same software in subscription form costs $350,000 per year as a subscription (this figure would be set such that over a certain period, the vendor makes a profit compared to selling perpetual licenses).

The subscription cost totals $1.75 million over five years and $3.5 million over ten years. If you want to keep using the software, you cannot “stop paying”—the spending is mandatory yearly. Vendors often design subscription pricing so that the break-even point versus perpetual + maintenance is in the medium term.

For instance, in this example, by year 5, the perpetual model cost ($2M) slightly exceeds the subscription ($1.75M). But by year 7, perpetual ($1M + 7*0.2M = $2.4M) would likely be cheaper than continuing subscription ($2.45M by year 7).

Beyond that, perpetual can offer significantly lower TCO if you continue to use the software for many years, especially if you eventually stop paying maintenance on shelf components.

On the other hand, subscriptions tend to result in higher cumulative costs the longer the timeframe, e.g., because you’re essentially “repurchasing” the right to use the software every year.

It’s important to note that these calculations depend heavily on the pricing set by the vendor. Broadcom’s approach to pricing has been aggressive in many cases post-acquisition:

• Higher List Prices and Renewal Uplifts: Broadcom is known for raising the list price of the software it acquires and providing fewer discounts, especially to smaller and mid-sized customers. Many organizations reported that after Broadcom acquired Symantec and CA, their maintenance renewal quotes jumped significantly (sometimes 2× to 4× the previous cost). This means the ongoing cost of a “perpetual + maintenance” approach could suddenly spike, eroding the TCO advantage of an owned license. For example, if that $1M license’s maintenance were hiked to 30% annually, the five-year cost would shoot up accordingly. Broadcom’s strategy often involves pricing out low-margin customers – effectively saying, “Pay more or consider leaving.” This must be factored into long-term cost projections for perpetual licenses under Broadcom’s care.
• Subscription Premium: On the subscription side, Broadcom’s new subscription offerings (for instance, VMware’s subscription bundles announced in 2024) are often priced at a premium vs. the old model. The company aims to significantly increase revenue. Broadcom publicly stated revenue goals for VMware that require monetizing subscriptions more heavily. **Industry analysts and consultants have observed **: Broadcom’s new subscription contracts for products like VMware vSphere, Symantec security suites, etc., can result in 3× or more cost over a contract term compared to what customers paid historically with perpetual licenses. This includes scenarios where customers are forced into bundled subscriptions that include products they might not have needed, effectively increasing spend. For example, a mid-market firm that only used Symantec Endpoint Protection (antivirus) might now have to buy a broader security bundle subscription that includes DLP, web security, and others, driving up the total cost even if they don’t fully utilize those extra components.
• Long-Term Lock-In vs. Alternatives: The longer you stay on a subscription, the more you pay, but switching away has its costs. Broadcom is betting that customers will accept higher costs for the promise of continuous updates or due to a lack of easy alternatives (particularly in areas like mainframe software or VMware’s virtualization platform, where outright replacing the technology is a significant undertaking). In contrast, if an organization perceives the cost of Broadcom’s new licensing as untenable, the TCO calculation must include potential transition costs to another solution (e.g., migrating to a different security product or cloud platform). Sometimes, the tipping point for cost is reached when Broadcom’s model is so expensive that reinvesting that money into migration or third-party support becomes justifiable.

To illustrate, consider a five-year scenario for a hypothetical Broadcom software (say, an IT service management tool inherited from CA):

• Perpetual Model: License $500,000 upfront + 20% annual maintenance. Five-year cost = $500k + $100k*5 = $1,000,000. (If Broadcom raises maintenance to 25% after year 1, and 30% later, the five-year might increase to $500k + $120k + $130k + … ~$1.2M).
• Subscription Model: The annual subscription is $160,000 (roughly 32% of the license’s yearly value). The five-year cost is $160k*5 = $800,000. On paper, this looks cheaper than the perpetual route in five years. However, by year 8, the subscription would be $1.28M versus perpetual’s $500k + maintenance (~$1.5M if maintenance continued all years, or still $500k if one stopped maintenance after year 5). The crossover depends on actual maintenance inflation and subscription pricing.

From these examples, the key point emerges:

Perpetual licenses tend to have a lower total cost if you use the software over a long duration without drastic vendor price hikes. In contrast, subscriptions have a lower cost of entry and predictable ongoing spending but can become more expensive over an extended period.

Broadcom’s tactics of raising maintenance fees and eliminating discounts can sometimes narrow or reverse the advantage of perpetual ownership.

Conversely, if Broadcom’s subscription includes new value (like additional features or services that the perpetual model would have charged separately), that could offset some cost concerns; however, many customers feel they are paying more without seeing commensurate new benefits.

Real-World Cost Example:

After Broadcom’s VMware acquisition, some enterprise customers reported that continuing with VMware under the new subscription model would dramatically increase their five-year spending.

In one reported scenario, a company with a large vSphere deployment estimated that the five-year cost of Broadcom’s subscription package was nearly double what a perpetual license + support would have been under VMware’s old pricing.

This was partly because Broadcom required a more expensive bundle and a higher support tier. Such stories are increasingly common in user communities and have put sourcing teams on high alert to scrutinize cost proposals from Broadcom.

Recommendations (Cost Management):

• Perform Multi-Year TCO Modeling: Don’t just look at year-one costs. Model out 3, 5, and even 10-year scenarios for both perpetual (plus maintenance) and subscription options. Include assumptions for maintenance fee increases (e.g., 5-10% annually or specific uplift you’ve been quoted) and subscription price escalators (some contracts have built-in renewal increases after an initial term). Use these models to identify the “break-even” point where one model becomes more expensive. This analysis arms you with facts for internal discussions and vendor negotiations.
• Benchmark Broadcom’s Pricing: Talk to industry peers, user groups, or advisors to understand what others see from Broadcom. If others in your industry saw 200-300% jumps in renewal costs after the acquisition, anticipate that possibility. Benchmarking ensures a quote doesn’t catch you off guard and can validate if Broadcom’s proposal to you aligns with market experiences. It also provides leverage — if Broadcom’s quote is significantly higher than what you know other customers pay, you can challenge it with that knowledge.
• Negotiate Price Protections: If you must move to a Broadcom subscription, negotiate caps on price increases over time. For example, seek to fix maintenance or subscription fees for a multi-year period or put a percentage cap on annual increases at renewal. Large enterprise customers can sometimes secure a multi-year rate lock. This can prevent unwelcome cost surprises and improve long-term TCO predictability.
• Consider Alternatives and Walk-Away Points: Given the potential for cost escalation, identify the point at which Broadcom’s price becomes unsustainable relative to alternatives. Proactively evaluate competitive solutions (even if you don’t plan to switch immediately) so you know your options. In negotiations, credibly considering a switch (or using third-party support on existing perpetual licenses) gives you bargaining power. For instance, if Broadcom quotes a 3x increase, you might counter that you will allocate those funds to migrate to a competitor unless a more reasonable offer is provided.
• Leverage Existing Investments: If you have substantial sunk costs in perpetual licenses, use them in negotiations. Even if Broadcom isn’t officially giving “credit” for owned licenses when converting to subscription, make the case that you deserve a fair transition deal given past investments. Sometimes, account reps can structure a discount or extended term to acknowledge your existing license base (e.g. “transition pricing” that provides a few free months or a reduced rate initially). It never happens unless you ask.
• Total Cost of Risk: Remember that cost isn’t just direct dollars. Factor in the cost of risk – e.g., running software without support to save money has risk (security, downtime). Or sticking with an old version because you can’t afford an upgrade has potential operational costs. These are hard to quantify but should be part of the conversation when you justify budgets. For critical systems, paying more for subscriptions might be justifiable if it reduces risk or adds value. Conversely, if the subscription cost doesn’t deliver proportional value, be ready to question it.

Budgeting Implications: CapEx vs. OpEx Considerations

The choice between perpetual and subscription licensing also impacts how software spending is budgeted and accounted for. This is vital for CIOs and CFOs, as it affects financial planning, approval processes, and tax treatment.

Broadcom’s shift to subscription models forces many software expenses from CapEx to OpEx. Here’s what that means and why it matters:

Capital Expenditure (CapEx) vs Operational Expenditure (OpEx):

• CapEx refers to funds a company uses to acquire or upgrade fixed assets – traditionally, purchasing a perpetual software license is a CapEx investment. It’s often a one-time expense that can be capitalized on the balance sheet and amortized over several years (spreading out the expense’s impact on profit/loss). Capital expenses typically require a business case and management approval, but once approved, they secure the asset for long-term use.
• OpEx refers to ongoing operational costs required for the day-to-day running of the business – subscription fees fall into OpEx. These recurring expenses hit the income statement in the period they are incurred. Operating expenses might come from departmental budgets and are subject to annual budget constraints and approvals.

Budgeting Impact of Perpetual (CapEx-oriented) Model:

When using perpetual licenses, organizations usually budget for a large upfront cost in the project or procurement year. This might be planned as part of a major IT project or refresh cycle.

The advantage is that after making this investment, subsequent years only require budgeting for the relatively smaller maintenance fees (OpEx). Some organizations prefer this model because it allows them to capitalize on the software cost and recognize the expense over time. It can make yearly operating budgets look smaller and more stable.

For example, a CIO might secure a one-time budget to purchase a new Broadcom software tool and commit to ~ paying 20% of that cost each year in OpEx for support, which might be easier to absorb than paying full price yearly.

CapEx purchases can sometimes be timed strategically (e.g., when the company has surplus cash or needs to invest in assets before year-end for tax reasons).

However, CapEx budgets are often harder to approve outside of planned cycles. Finding a big lump sum can be challenging if a new need arises.

Also, once invested, that money is sunk—finance will expect the company to utilize that asset for many years to “get their money’s worth,” potentially leading to reluctance to switch away from that software even if better options appear (because the cost is already amortized).

Budgeting Impact of Subscription (OpEx) Model:

Subscription licensing shifts spending to recurring operational costs. This can simplify the initial approval (no huge lump sum needed, which might bypass capital committee hurdles), but it means the expense recurs each fiscal period. CFOs and finance teams often like OpEx for its predictability and alignment with usage – you pay as you go, which can be seen as more flexible.

Moving software costs to OpEx is attractive in some cases because it preserves capital for other investments and makes it easier to scale costs up or down with business needs (much like how cloud infrastructure is often OpEx, scaling with usage).

However, the downside is that OpEx budgets can become strained as more and more subscriptions pile up. What was a one-time purchase now becomes a “forever” annual cost. Companies might find that, over time, their IT operating budget has ballooned with multiple subscription fees for Broadcom software year after year.

In tight budget years, OpEx is often where cuts happen, which is problematic if those OpEx costs are for essential software that you can’t cut without losing functionality.

Another consideration is accounting/tax: OpEx is fully expensed in the year, whereas CapEx can be depreciated. Depending on accounting strategies, some firms might want certain large expenses to be CapEx (to spread the impact) or OpEx (to possibly take immediate tax deductions).

Broadcom Context – CapEx to OpEx Transition:

Broadcom’s push to subscription forces many customers to reclassify their spending. For instance, a customer who used to purchase Symantec licenses as CapEx now has to budget for Symantec (Broadcom) subscriptions each year.

This can require a mindset shift and internal reorganization. The CIO and IT procurement must work closely with Finance to adjust budgeting processes.

Some organizations establish new budget lines for “Software-as-a-Service” or subscription IT costs, often under operational budgets, to ensure ongoing funding is allocated.

One specific challenge is managing the overlap during transition. If you move from perpetual to subscription, there might be a period where you’re paying maintenance on some perpetual licenses (CapEx already spent in the past) and starting to pay for new subscriptions (OpEx). It’s important to avoid double-paying for similar capabilities.

Ideally, negotiate a transition such that you can retire some of the maintenance spend as you adopt a Broadcom subscription. Broadcom might offer to co-term new subscriptions with existing maintenance renewals or give incentives to transition (though reports suggest Broadcom often expects customers to pay fresh for subscriptions without credit for past licenses, so careful planning is needed to not bust your budget).

Cash Flow and Approval Considerations:

The subscription model’s annual payments may be easier to approve in incremental terms, but the organization must commit to them as ongoing liabilities. Multi-year subscription agreements (common with Broadcom) might require booking the whole multi-year as a commitment or ensuring budgets will cover them in future years.

In contrast, perpetual deals concentrate the expense in year one, which could be a pro or con depending on the company’s financial situation (e.g., companies flush with cash might prefer to invest upfront and own the asset; companies with constrained capital might lean toward subscription to avoid big payments).

Real-World Scenario (Budgeting Perspective):

A large enterprise in the financial sector found that Broadcom’s new model for a CA (now Broadcom) software suite would shift about $5M that was historically a one-time capital project (every 5-7 years) into an ongoing $1.5M/year expense.

The CIO had to explain to the CFO that they won’t have a big spike every few years while the yearly run rate goes up. This required demonstrating that the OpEx approach could be managed within annual budgets and that the absence of big CapEx requests in the future is beneficial.

In another case, a government agency with strict CapEx allocation for software had to request a policy exception to fund a subscription out of what is normally a capital fund – essentially treating a multi-year subscription as a capital lease equivalent. These examples show that internal financial policy can be as important as vendor pricing in determining how to proceed.

Recommendations (Budgeting and Finance):

• Align with Finance Early: If transitioning to subscription, involve your Finance and Accounting teams early to clarify how subscription fees will be handled. Ensure everyone understands that what was once a capital purchase is now an operating expense. This may require reworking budget assumptions or getting approval for a new spend category. Early alignment prevents last-minute roadblocks when the subscription contract is ready to sign.
• Assess CapEx vs. OpEx Preferences: Determine if your organization has a preference or strategic mandate for CapEx or OpEx. Some companies have directives to “move all IT spend to OpEx” to mirror cloud consumption models – if so, the subscription might be easier to justify. Others may have the capital budget available for a large upgrade but limited OpEx room – in such cases, you might negotiate with Broadcom for a custom deal (for example, a larger upfront payment for a multi-year term, which could be treated as a capitalized prepaid expense). Tailor your licensing strategy to what fits your financial strategy.
• Bridge the Gap During Transition: Be careful about overlapping costs. If you still have active maintenance on perpetual licenses, subscribe to avoid paying for two models for the same product at once. Ideally, co-term dates should be set so that a new subscription begins when an old maintenance period ends. Ask Broadcom if they have any transitional licensing programs – even if they don’t advertise it, a strong business case might get you a concession (like a few months of free dual use or a discount that effectively credits some remaining maintenance value). The goal is to minimize any double budgeting.
• Multi-Year Financial Planning: Because Broadcom often requires multi-year subscriptions, plan those out in your financial forecasts. If you sign a 3-year subscription at $X per year, ensure that $X (and any known increase in year 4+) is in the IT budget, not just this year but in the approved plan for future years. Communicate this commitment to executives so there are no surprises that “IT costs went up” – frame it as replacing periodic lumps of CapEx with a steady flow of OpEx for clarity.
• Amortization and Accounting Treatment: Consult with your accounting team on whether there is an opportunity to capitalize a portion of a subscription (sometimes, if you pay a multi-year subscription upfront, it can be treated similarly to a license purchase in accounting terms). While this is more of an internal accounting nuance, it could help mitigate impacts on earnings if that’s a concern. The bottom line is to ensure the licensing cost model aligns with how your company prefers to handle expenses.
• Communicate the Value in Budget Terms: When seeking approval for the new model, articulate the value in financial terms. For example, “This subscription will give us the flexibility to scale down if needed, avoiding sunk costs,” or “Converting to OpEx will make our costs more predictable year-over-year, which finance can plan for.” If the subscription is more expensive over time, be ready to explain why it’s still the chosen route (e.g., “Vendor no longer offers perpetual, so we risk losing support if we don’t switch – the cost of an outage or security breach on an unsupported system could be far worse”).

Flexibility and Scalability of Each Model

In addition to cost and accounting, organizations must consider how each licensing model supports operational flexibility and scalability requirements. This includes adjusting license counts, adopting new technologies, or scaling usage up or down as the business changes.

Here’s how perpetual vs. subscription stacks up, especially under Broadcom’s licensing policies:

Flexibility with Perpetual Licenses: Perpetual licenses give you the freedom to use the software indefinitely, but they are inflexible in scaling and upgrades beyond what you purchased.

• Scaling Up: If your organization needs to expand usage (e.g., add more users, deploy on more servers, increase CPU capacity), you must purchase additional licenses. This often involves negotiating a new purchase or expansion deal with the vendor and securing additional budget. It can be a slow procurement process and requires CapEx funding. However, once purchased, those new licenses also become perpetual assets.
• Scaling Down: If your needs decrease, you can’t “sell back” a perpetual license to the vendor. You might stop paying maintenance on excess licenses to save recurring costs, but the money spent to buy them is sunk. Some organizations end up with “shelfware” – purchased licenses that are not actively used – due to overestimating needs or downsizing. That said, you retain the legal right to those licenses, so if usage increases again, you could put them back into service without new costs (provided you’re okay running whatever version you last had).
• Adopting New Technologies: With perpetual licenses, trying a different product or switching vendors means a whole new purchase; your existing license investment doesn’t easily convert to another product. This can make you less agile in adopting new solutions, as there’s a financial inertia to stick with what you’ve already paid for. Broadcom’s acquired portfolios (like CA and Symantec) often had multiple-point solutions sold perpetually – customers could mix and match what they bought. However, once purchased, a separate purchase was needed if a new security threat emerged requiring a new tool.

Flexibility with Subscription Licenses: Subscription models are generally touted as more flexible because they align costs with usage:

• Scaling Up: Increasing usage is usually easier – you can often add licenses or capacity mid-term (at a pro-rated cost) or at least at the next renewal. If you suddenly need to deploy 100 more instances of a tool, Broadcom’s subscription agreement might allow an immediate add-on of those, with pricing set by your contract. This is attractive for fast-growing or dynamic environments. It may also simplify the administrative side (no need for a new long-term license agreement, just an adjustment to the subscription count).
• Scaling Down: In theory, the subscription allows you to reduce the number of licenses at the next renewal to match reduced needs (e.g., if you downsized a team or retired some servers). Vendors sometimes impose a floor or minimum commitment (especially if you signed a multi-year deal for a certain quantity). Broadcom, for instance, might not allow you to drop below a certain usage level until the multi-year term is complete. Nonetheless, once that term is up, you have the leverage to renegotiate for fewer licenses or even to not renew certain components. This allows for the routine elimination of shelfware, unlike perpetual, where shelfware may sit unused indefinitely.
• Access to New Products: Vendors often bundle products in subscriptions or offer broader access via enterprise agreements. Broadcom has pursued bundled subscription suites – for example, in the Symantec security portfolio, they promote a “portfolio license agreement” where one subscription covers a range of products (endpoint security, data loss prevention, web proxy, etc.). This can allow customers to deploy new components without separate purchases if they are covered in the bundle. The trade-off is that you are paying a lot upfront, so it only makes sense if you truly plan to use those multiple tools. Still, compared to perpetual, it’s easier under a bundle subscription to start using an additional module (download and deploy since you’re already licensed) versus the old model of buying a new module license.
• Technology Change and Migration: With subscriptions, if a new technology emerges or your strategy shifts (say, moving to cloud-native solutions instead of on-prem), you can choose not to renew the subscription for the old software and adopt a new solution. Perpetual licenses might hold you back (“We spent so much on that tool, we should keep using it”), whereas a subscription encourages evaluating value continually. However, this theoretical agility can be hampered if you’re in the middle of a multi-year subscription or if switching costs are high. Broadcom’s contracts often try to lock in customers for 2-3 years at a time, reducing short-term agility, but at least at those renewal points, you have a decision to make.

Broadcom’s Approach to Flexibility: It’s worth noting that while the subscription model inherently promises flexibility, Broadcom’s execution has sometimes limited it:

• Rigid Contract Terms: Broadcom tends to standardize and co-term licenses. They prefer customers to have one big renewal date for all Broadcom software. This can be convenient, but it also means if you want to adjust one product, you might have to wait for the common anniversary. Also, multi-year commitments mean you can’t easily drop products mid-term without breaching the contract.
• Minimums and Bundles: As seen with VMware, Broadcom increased minimum license counts (e.g., requiring a minimum of 72 CPU cores licensed, even if a customer’s environment was smaller). This kind of policy reduces flexibility for smaller deployments or edge cases. Bundled suites mean you’re locked into buying a full package even if you only use part – this “all or nothing” approach is the opposite of fine-grained flexibility. It’s a conscious trade: simplicity and breadth versus pay-as-you-use precision.
• Response to Customer Needs: On the positive side, because Broadcom’s revenue now depends on renewals, they may be motivated to keep customers reasonably satisfied so they renew. In some cases, if a customer’s usage dropped dramatically (say, you divested a business unit), Broadcom might reduce the subscription at renewal if that’s the only way to keep the customer at all. This contrasts with perpetual, where the vendor already has your money and may be less inclined to adjust anything (aside from offering a smaller maintenance renewal). So, the relationship dynamic can sometimes give the customer a bit of leverage in a subscription scenario if they are prepared to walk away.

Real-World Scenario (Scalability):

A global retailer using a Broadcom (Symantec) security suite on a subscription was able to quickly scale up their license count by 15% during a year when they acquired another company simply by notifying Broadcom and getting a prorated invoice for the additional users – something that would have taken a longer procurement process under a perpetual model.

On the other hand, a different company using VMware reported frustration that after Broadcom’s changes, they could not reduce their license count for vSphere at renewal without penalties because they had signed up for a bundle that assumed a certain size – so even though they moved some workloads to the cloud and needed fewer VMware licenses, they were effectively stuck paying the higher amount until the contract term ended.

Recommendations (Flexibility & Scalability):

• Right-Size and Optimize Continuously: If you adopt subscription licensing, treat each renewal as an opportunity to “right-size” your licenses. Don’t just rubber-stamp a renewal for the same quantities. Perform an audit of actual usage: Are there modules or seats not being fully utilized? Plan to break down to what you need. Be prepared that Broadcom may resist reductions (since it cuts their revenue), but come with data to justify it. It’s easier to negotiate a size reduction at renewal time than mid-term.
• Negotiate Contractual Flexibility: When entering a Broadcom subscription agreement, include terms that allow some flexibility. For example, flex-up/flex-down clauses where you can reduce license counts by a certain percentage at renewal without penalty, or the ability to swap one product for another equivalent one in the Broadcom portfolio if your needs change. Large customers might negotiate “enterprise license agreements” that allow pooling or transferring usage across business units or geographies, providing more internal agility. Even if Broadcom’s standard contract doesn’t offer this, it’s worth asking and pushing for concessions if your environment demands it.
• Plan for the Worst-Case (Lock-In): Despite best efforts, you might find yourself locked into more licenses than you need or unable to easily exit a product due to contractual commitments. Always have a contingency plan: for example, if you must sign a 3-year deal for more licenses than you currently use (due to a vendor minimum), devise a project to increase adoption internally so those licenses don’t go to waste – extract value by deploying the software more widely. Conversely, if you fear being stuck, develop an exit strategy over the long term (perhaps exploring alternative solutions in parallel so that you have a choice when the contract is up).
• Utilize Broadcom’s Bundles Strategically: If Broadcom offers a portfolio bundle and you choose to go for it, make sure you leverage that bundle’s breadth. Deploy the additional products, run proof-of-concepts, and see if they add value. Since you’re paying for them, you might as well get the benefit. Using more integrated tools can also improve your security or IT posture. But if you know you only need one product, don’t be afraid to push back on bundle proposals – sometimes a bundle can be a costly upsell with marginal benefit. It’s flexible only if you utilize it.
• Monitor Usage & Avoid Shelfware: Implement internal processes to track license usage closely. In a perpetual world, shelfware was a sunk cost (embarrassing but not ongoing); unused licenses are money down the drain every term in a subscription world. Quickly identify if you are over-subscribed and take action at the next adjustment point. Broadcom’s tools may not automatically tell you usage (especially for on-premises software), so you might need your tracking or to request usage reports if applicable.
• Leverage Vendor’s Desire for Retention: In subscription models, vendors theoretically have to re-earn your business at each renewal. Use that to your advantage: provide feedback on what features or terms you need to continue. If Broadcom wants to keep a customer, they might, for example, allow a temporary reduction in usage or throw in an extra product at renewal to sweeten the deal. Be vocal about your needs and make renewal a two-way discussion, not just an invoice.

Renewal Terms and Strategy: Perpetual vs. Subscription

Renewals are a pivotal point in the software asset lifecycle, and the nature of renewals differs greatly between perpetual and subscription models.

For IT procurement and sourcing leaders, understanding these differences is key to avoiding surprises and ensuring continuity.

Explore how renewal terms work for each model and Broadcom-specific renewal considerations.

Renewals in the Perpetual License Model:

For perpetual licenses, the primary recurring element is the maintenance (support) renewal, usually on an annual basis:

• Optionality: Critically, maintenance renewals are technically optional. The organization can decide whether to renew support yearly (or for a multi-year period). A company might skip or defer maintenance to save money if budgets are tight or the software is not critical. They would lose access to updates and vendor help, but they could continue running their last supported version. This optional renewal gives the customer some leverage – the vendor has to convince them to keep paying maintenance.
• Renewal Process: Typically, the vendor (or reseller) sends a renewal quote for maintenance before the current term expires. Vendors often have standard increases (e.g., a 3-5% uplift on maintenance fees year-over-year baked into contracts). Some, like Broadcom, might reassess and significantly raise maintenance at renewal, especially after an acquisition. If the customer lets maintenance lapse and later wants to reinstate it, vendors often charge a “reinstatement” fee – possibly all back-dated fees plus a penalty. Under Broadcom, anecdotal reports suggest tough stances: e.g., if you skip Symantec maintenance for a year, Broadcom might require you to pay all missed fees (sometimes at the new higher rates) to get back on support or insist you move to a subscription.
• Contractual Terms: Perpetual licenses typically had perpetual agreements with separate support terms. The license agreement might not expire, but the support agreement does. If you have the software deployed and are willing to self-support, you are not in breach of contract by not renewing support (unless there’s a clause we haven’t seen commonly). Broadcom’s EULAs historically allowed use in perpetuity once paid. However, customers need to watch out for any changes Broadcom might introduce in terms (e.g., requiring a subscription for any continued use of updates).
• Vendor Attitude: When a vendor is primarily in a perpetual license business, they focus on the initial sale and then on keeping you on maintenance. They might negotiate a discount or one-time concession to keep you if you threaten to drop maintenance. Broadcom, though, seems less accommodating here – in one striking example in early 2025, Broadcom reportedly sent cease-and-desist letters to VMware customers who had perpetual licenses with expired support contracts, effectively telling them to stop using the software or face legal consequences. This is highly unusual (and controversial) since perpetual users ordinarily have a right to use their software. It underscores Broadcom’s aggressive approach to pushing customers off perpetual arrangements by any means necessary.

Renewals in the Subscription Model:
For subscription licenses, renewal is not optional if you want to continue using the software:

• Automatic or Manual Renewal: Many subscriptions are sold as multi-year agreements. For instance, Broadcom might sign you to a 3-year subscription contract. At the end of that term, you must renew for another term or the agreement lapses. Some cloud-like subscriptions could be annual or even monthly, but enterprise deals are usually annual at a minimum. Broadcom tends to avoid month-to-month; you’ll likely be on yearly terms even if you pay annually.
• Hard Deadline: A hard end date is typically on your right to use the software. If day 366 passes without a renewal, you are technically unlicensed. Practically, some on-prem software might not shut off immediately (e.g., VMware vSphere might keep running, but you’d be out of compliance/audit risk). Broadcom has instituted penalties for late renewals – for example, partners have shared that Broadcom will charge an extra 20% fee if a subscription is not renewed by the anniversary and needs to be reinstated later. This is akin to punitive late fees to enforce timely renewal.
• Renewal Negotiation: Subscription renewals are a chance to renegotiate terms or at least quantities. However, the vendor holds more leverage because the customer can’t simply coast without renewing – the pain of potential downtime or loss of support pressures customers to sign renewal quotes quickly. Broadcom sales teams have been known to reach out proactively well before renewals, especially if support contracts from a prior regime (e.g., VMware’s old support) are coming up. They use this to propose a new (often more expensive) subscription contract. Customers should expect intense engagement from Broadcom when a renewal is on the horizon.
• Price Increases: Vendors may attempt to raise subscription fees at renewal, especially if the initial term had a promotional discount. Broadcom’s track record indicates they won’t avoid increasing costs – many VMware customers are bracing for bigger bills at their first renewal under Broadcom’s ownership. To mitigate this, customers should seek multi-year price locks upfront or negotiate limits on renewal increases, as mentioned earlier.
• Co-term and Bundling at Renewal: Broadcom likes to simplify its sales by co-terminating contracts. That means if you have multiple Broadcom software subscriptions, they may try to align them to the same renewal date and even bundle them into one master renewal. This can be convenient administratively, but sometimes bundling can obscure individual product pricing and make it harder to drop a specific product. For example, if your Symantec endpoint and data loss prevention subscriptions are co-terminous and bundled in one contract, Broadcom might send one renewal covering both. If you wanted to drop one of them, you’d have to explicitly separate the contracts or negotiate that change.
• Audit and Compliance Risk: With subscriptions, renewals are closely tied to compliance. Broadcom has indicated it will step up compliance audits – one tactic could be auditing customers near renewal to ensure they aren’t using more licenses than subscribed (true-up audits). Also, as noted, for perpetual licenses, Broadcom might audit to see if you’re using software without active support (to force a subscription sale). Always ensure you comply with entitlements; an audit right before renewal can severely weaken your negotiating position if they find you over-deployed or lapsed.

Vendor Relationship and Renewal: The nature of renewals also affects the ongoing relationship:

• In perpetual scenarios, if you’ve paid upfront, the vendor might pay less attention to you until it’s time to renew maintenance or sell you something new. Some Symantec customers pre-Broadcom went years without much direct sales interaction if everything was humming along. Post-acquisition, Broadcom’s account management style changed – fewer touches for small clients (they were deprioritized), but very direct engagement for big ones (often with high-pressure tactics to sign multi-year deals).
• In a subscription, the vendor ostensibly should be more involved to ensure you renew. Some companies do this via “customer success” teams that help you adopt features and see value. It’s unclear if Broadcom has invested heavily in such customer success for all products; their reputation is more about driving financial metrics than hand-holding customers. As a sourcing leader, you might need to proactively manage the relationship: schedule business reviews, demand roadmaps, and value justification from Broadcom as renewal approaches. Make them earn your renewal in terms of demonstrated value, not just because you have no choice.

Real-World Scenario (Renewal Experience):

A medium-sized software firm using Broadcom’s (CA) project management tool faced a shock when their support renewal arrived after the Broadcom acquisition – the price had doubled, and it was packaged as a two-year renewal instead of one, effectively pushing them into a longer commitment.

When they hesitated, Broadcom implied that if they let it lapse, reactivating later would incur back fees far exceeding the increase. The customer felt cornered and ultimately negotiated a slightly smaller uplift by committing to a multi-year subscription conversion.

In another example, a CIO of a manufacturing company noted that Broadcom representatives started the renewal conversation for their security software almost 9 months in advance, pressing for an expanded deal.

The CIO leveraged that window to evaluate alternative vendors, which he openly shared with Broadcom. This led Broadcom to slightly temper their price increase in order to secure a renewal before the competition could gain a foothold.

These cases underline that renewals under Broadcom require early preparation and a firm strategy.

Recommendations (Renewal Strategy):

• Start Renewal Prep Early: Mark your calendar 12 months (or at least 6 months) before a major Broadcom license term expires to begin renewal preparations. Early engagement allows you to collect usage data, assess satisfaction, and explore options. It also sends Broadcom a message that you are proactive. Broadcom often reaches out early; beat them to the punch with your internal plan.
• Audit Your Usage and Entitlements: Before negotiating any renewal, do an internal audit. Know exactly what you have deployed and what you’re entitled to. If you find you’re underutilizing something, plan to negotiate a reduction. If you’ve overdeployed beyond your license, address it proactively (you should bring it up than they find it in an audit, perhaps by buying additional licenses or adjusting usage). Having a clear understanding prevents unpleasant surprises during renewal talks or audits.
• Protect Perpetual Rights: If you still have perpetual licenses, be cautious about giving them up. Broadcom’s sales reps might encourage “trading in” perpetual licenses for a subscription. However, make sure any transition is clearly documented. If you have a perpetual entitlement, you may want to retain the right to use it as a fallback. For example, if you convert to a subscription, clarify whether you can revert to using the perpetual version if you choose not to renew the subscription later (in many cases, Broadcom will consider that not allowed if you’ve moved to a new version under subscription). Maintaining both might not be possible, but know what you’re giving up. If you’re unsure, keep the perpetual support going in parallel until you’re confident in the new arrangement.
• Negotiate Renewal Terms at Initial Contract: When you first sign the deal, it is the best time to set the stage for painless renewals. Push for clauses in the contract about renewal pricing (e.g., “renewals capped at X% increase” or “right to renew for an additional 2 years at a predetermined rate”). Also, as discussed earlier, try to include flexibility for reducing scope at renewal. Broadcom contracts might not include these, but large customers have inserted such protections. Even if smaller, ask – the worst they can say is no.
• Explore Third-Party Support: For perpetual licenses that you choose not to renew maintenance on, consider third-party support providers (like Rimini Street, Spinnaker, etc., though they usually focus on ERP, some are branching to other software). This can be a tactical move to save costs and buy time while formulating a long-term plan. If Broadcom’s renewal quote is exorbitant, shifting that product to third-party support for a year or two might keep you safe and supported. At the same time, you evaluate alternatives or wait for Broadcom to potentially soften its stance. Just ensure that contractually, you’re allowed to stay on the older version (i.e., you have the media/keys you need).
• Be Prepared for Hardball Tactics: Broadcom has shown it will use tough tactics like audit threats or cut-off warnings. Don’t be caught off guard. Involve your legal team when needed – if you receive a letter implying you must stop using software, understand your rights. Often, these are scare tactics, but you must respond appropriately. If you’re legally in the right (using a perpetual license within the terms), you have leverage. If you’re out of compliance, negotiate a settlement or new agreement rather than simply capitulating to an initial onerous offer.
• Maintain Executive Communication: Because renewals can lead to large spikes in cost or decisions about potentially mission-critical systems, keep your C-suite and business stakeholders informed. Well ahead of renewal, brief the CIO/CFO on scenarios (“If we renew with Broadcom, it might cost $X vs. if we switch, cost $Y with migration”). This ensures you have organizational backing for whatever path you choose. Surprising leadership at the last minute with “our renewal doubled, we need more budget” is a recipe for crisis. Instead, forecast and socialize those possibilities early, which might also galvanize support for negotiating harder or exploring other solutions.

Transitioning from Perpetual to Subscription: Guidance for Organizations

Many organizations today find themselves in a transition phase: historically holding perpetual licenses (especially for products acquired by Broadcom) but now being nudged or forced into subscription models.

This transition must be managed carefully to avoid business disruption and financial waste.

Below are strategies and best practices for navigating a move from perpetual to subscription in the Broadcom context:

1. Assess Your Current State: Start with a comprehensive audit of your current licenses:

• Identify all Broadcom (including former CA, Symantec, VMware) software in use.
• Classify which are perpetual licenses (and note if they are under maintenance or no,t and when support ends) versus any that are already subscribed.
• Note contract end dates, renewal dates, and any entitlements or special terms (e.g., do you have rights to certain quantities, price locks from prior contracts, etc.).
• Determine the criticality of each system to your operations and whether each is expected to remain part of your IT landscape long-term.

Having this baseline will tell you which licenses are candidates for transition. For example, you might find you have a Symantec DLP perpetual license with support ending next year – that’s a prime candidate where Broadcom will push a subscription renewal.

Or you might have VMware perpetual vSphere licenses for which support is ongoing now, but you know Broadcom won’t sell you any new ones if you expand, meaning any new needs go to subscription.

2. Prioritize and Strategize Per Product: Not everything has to transition simultaneously. Prioritize based on business needs and vendor pressure:

• If a product is mission-critical and Broadcom is ending support or forcing a change, that goes to the top of the list. Example: If Broadcom announces end-of-support for your version of a mainframe tool unless you shift to a new subscription version, you need a plan for that first.
• If a product is less critical or has viable alternatives, you have more leverage to refuse a forced move. You might even plan to phase it out rather than convert. Example: A smaller Symantec utility you can replace with another vendor’s tool – rather than subscribing anew, you might let it sunset.
• For each product, decide if your strategy is to Migrate, Substitute, or Maintain:
  • Migrate: Embrace Broadcom’s new model for that product (subscription) because you intend to keep using it, and there’s no good replacement (e.g., you’ll migrate your existing licenses to Broadcom’s subscription offering when due).
  • Substitute: Look for alternatives (other vendors or cloud services) to replace the product entirely, thus avoiding Broadcom’s new license costs. This is more feasible for things like security software or IT management tools, where competitors abound, less so for unique mainframe software or VMware virtualization (though alternatives exist, they’re a big change).
  • Maintain: Try to hang onto the status quo for as long as possible – e.g., keep using the perpetual license without upgrades or with third-party support, effectively delaying any decision. This holding pattern can buy time, but it’s not a long-term solution if the product is core.

3. Engage Broadcom (with Caution) for Transition Options: Open a dialogue with Broadcom about their transition offers:

• Some vendors offer trade-in credits or migration programs (e.g., “Bring your own license to subscription” deals). Broadcom’s public stance has been fairly strict (“no exchanging perpetual for subscription, you have to buy a subscription new”), but in negotiations, especially for large accounts, they might offer custom incentives. For instance, they might discount a subscription if you commit to dropping perpetual usage by a certain date or bundle additional value.
• Ask specifically about your entitlements: “We have 1000 perpetual licenses; if we move to your subscription, is there a migration path, or do we effectively repurchase?” Even if the answer is unpalatable, it’s good to get it on record. Sometimes, just asking these questions signals to Broadcom that you’re scrutinizing the deal closely, and they may soften terms to avoid you walking away.
• If Broadcom isn’t offering anything and says, “You must subscribe,” consider leveraging your account rep and reseller relationships. They often want to close deals and might have flexibility, such as extended payment terms or slight discounts that aren’t advertised.

4. Plan the Financial Transition: As covered in the budgeting section, ensure you plan for the financial aspect:

• Just because something is perpetual doesn’t mean it was free – you might still be paying maintenance. That maintenance cost will roll into the subscription fee when you cut over to a subscription. Do a side-by-side of what you pay now vs. what the proposed subscription will cost. This gap (often an increase) needs management approval.
• If the transition is phased (say you’ll move one product this year and another next year), forecast those changes. A multi-year roadmap of license transitions can help the CFO allocate the budget properly across years.
• If you have to write off previously capitalized software value, involve accounting. Retiring a perpetual license early (if it was supposed to be amortized longer) might be a hit to the books. It’s not a show-stopper usually, but it’s worth accounting for.

5. Technical and Operational Readiness: Transitioning models might come with technical changes:

• A perpetual license might be for Version X of software, while the subscription could require moving to Version Y (maybe a cloud-hosted version or simply the latest release). Ensure your teams are ready to upgrade or migrate data if needed. Broadcom may bundle “free” upgrade assistance or tools if moving to their new platform, but check compatibility and testing needs. For example, VMware’s shift to subscription might encourage moving to VMware Cloud Foundation, which could be a significant architectural shift.
• If you plan to drop a product (substitute strategy), line up the new solution deployment to coincide with the old license’s end-of-life. For instance, if you decide to replace Symantec Endpoint Protection with a different antivirus by the time your support ends, schedule that project and don’t let Broadcom push you into an interim short subscription unless needed.
• Inform your operational teams (support desk, system admins) of potential changes in vendor support channels or processes once you switch to Broadcom’s subscription. Many Symantec customers, for example, found that after Broadcom took over, the support portal and procedures changed. Be prepared for those nuances—arrange any necessary training or account setup before the cutover.

6. Change Management: Communicate within your organization about the shift:

• Users and stakeholders should be aware of any licensing changes that may affect them (e.g., if license enforcement is stricter under subscription or if any usage tracking tools need to be installed).
• The procurement and accounts payable teams should be informed that invoices might come differently (e.g., annually from Broadcom instead of from a reseller if Broadcom moves you to direct sales).
• The budget owners must adjust their expectations if a cost shifts from CapEx to OpEx. You might have to explain to a business unit why they can’t “buy” a license with a one-time project budget anymore, but must allocate funds annually.

7. Execution and Negotiation Tips: When it comes time to execute the transition:

• Negotiate a Phase-in if Possible: If Broadcom’s subscription is significantly more expensive, see if you can phase it in. For example, maybe a two-year step-up: first year at a lower price or with fewer features while you adjust, then full price later. This could help with internal acceptance and cash flow.
• Lock Multi-Year Rates: If you commit to a subscription, try to sign a multi-year deal that locks the rate (as repeatedly recommended). This shields you from immediate next-year hikes. Just be cautious about overcommitting the term length if you’re not 100% sure about staying with the product.
• Retain Rights in Writing: Ensure that your new agreement documents any perpetual licenses you give up or retain. If the deal is, for instance, that you will stop using your perpetual licenses once you transition to subscription, make sure the contract doesn’t accidentally terminate your perpetual rights immediately unless that’s intended and acceptable. Legal language matters here – involve counsel or licensing experts in reviewing.
• Migrate Support Tickets and Knowledge: If you had open issues or long-term support arrangements under your old maintenance, ensure these carry over. In some cases, switching the licensing model caused confusion in vendor support systems. Clear this up by communicating with Broadcom’s support management as you switch.

8. Keep an Eye on Results: After transitioning, monitor the outcome:

• Track your actual usage and costs in the new model. Validate that you’re using what you paid for and that no unexpected charges appear.
• Gather feedback from technical teams on any improvement or degradation after moving to a subscription (e.g., did support responsiveness change? Are you getting updates as promised?). This will inform future negotiations—if Broadcom claims a subscription provides better service, you should verify if that’s true in practice.

Recommendations (Transition Planning):

• Develop a Transition Roadmap: Create a written plan or timeline for how you will handle each Broadcom software product over the next 1-3 years. This roadmap should include key dates (support end, renewal deadlines), decision points (evaluate alternatives vs. renew), and responsible owners. Having a roadmap helps coordinate budgeting and ensures nothing falls through the cracks. It is also a communication tool to show executives your proactive strategy in dealing with Broadcom’s changes.
• Engage Independent Expertise: Consider consulting with independent licensing experts or firms (if budget allows) who have experience specifically with Broadcom (Symantec/CA/VMware) transitions. They can provide insights into possible concessions, pitfalls to avoid in contracts, and maybe benchmark data. As an internal team, it’s hard to know how far you can push Broadcom, but experts who see multiple clients’ deals have that context. Even Gartner or similar advisory services might have published negotiation guides for Broadcom – leveraging those can strengthen your hand.
• Communicate to Internal Stakeholders: Keep your CIO, CFO, and possibly other leaders (CISO for security products, etc.) informed of the transition approach and progress. Broadcom negotiations can become high-stakes if the costs are large or a critical system’s future is in question. You want leadership backing if you take a hard line (e.g., “We will walk away from product X if terms aren’t acceptable”). Conversely, if leadership is set on staying with Broadcom regardless, know that too, as it changes your negotiation tactics (you might then focus on getting the best price rather than considering alternatives).
• Use Transitions as Leverage Points: A transition is a high leverage point because Broadcom wants to secure your long-term revenue. Use that to get the best deal: bundling discounts, extended support for some legacy items, and services thrown in (maybe Broadcom could include some professional services for deployment or training licenses). Think of anything that would add value to your organization and ask for it as part of the package. It’s easier to get concessions when you agree to switch models than later.
• Be Prepared to Say No: If Broadcom’s subscription offer or terms are unreasonable, decline and stick with what you have (if feasible) or switch to a competitor. This could mean running an older version longer or doing a rapid migration, which is not ideal, but sometimes, that forces a vendor to reconsider. Broadcom is known for sticking to their guns on pricing. Still, several customers (especially smaller ones) have walked away from Broadcom products entirely after the acquisition due to cost. If you have to, you should be ready to join that group for the sake of your organization’s ROI. Always have a Plan B, even if it’s painful – it strengthens your resolve in negotiations, and sometimes the mere possibility will make Broadcom more flexible.
• Document Everything: Throughout the transition negotiations, document promises and discussions. If a Broadcom rep verbally tells you something (“We’ll allow you to use the old licenses for 6 months during migration” or “You can cancel part of the bundle next year”), get it in writing or in the contract. People can change roles, and memories fade – you need contractual or written evidence of any special arrangements. This will save you headaches later and ensure both sides have the same understanding.

Conclusion

Broadcom’s emphasis on subscription licensing is part of a wider industry trend. Yet, it comes with its flavour of challenges due to Broadcom’s business practices and the critical nature of the software it now sells.

Perpetual licenses offered ownership and potential cost savings over a long horizon but required capital investment and carried the risk of obsolescence. Subscription licenses promise flexibility, access to the latest features, and smoother OpEx budgeting. Still, they can lead to higher long-term costs and give the vendor greater control over the customer relationship.

For sourcing professionals, CIOs, and IT leaders, the shift from perpetual to subscription in the Broadcom universe is not just a simple change in payment scheme – it’s a strategic inflexion point that affects financial planning, operational agility, and vendor management tactics.

By clearly understanding the differences and implications outlined above and following the provided recommendations, organizations can better negotiate with Broadcom and make decisions that align with their business objectives and risk tolerance.

In summary, carefully evaluate the total cost of each model for your situation, align your approach with your company’s financial preferences, insist on flexibility to meet your changing needs, proactively manage the renewal process to avoid pitfalls, and approach any transitions methodically with a plan.

With diligent preparation and a firm strategy, you can successfully navigate Broadcom’s licensing landscape and turn what could be a difficult negotiation into an opportunity to optimize your software portfolio and vendor terms.