Managing Broadcom Licensing During Cloud Migrations
Introduction – The Migration Licensing Trap
Broadcom’s acquisition of VMware means many enterprises must rethink how they handle VMware licensing when moving to the cloud.
A gradual cloud migration can create a licensing trap: you could end up paying twice for the same VMware capabilities – once for your on-premises licenses and again for cloud subscriptions. Read our complete guide to Broadcom Cloud & Hybrid Licensing Strategies: Optimizing On-Prem and Cloud Investments.
This double-paying risk arises if you maintain on-prem vSphere/vSAN licenses while also subscribing to VMware Cloud services during the transition.
By default, vendors like Broadcom/VMware do not automatically allow seamless license portability or overlap; if you do nothing, you may end up paying for two environments simultaneously. CIOs, IT procurement leads, and cloud architects need to be proactive and strategic to avoid this trap.
In this guide, we explain how to manage Broadcom licensing during a cloud migration to prevent overspending.
We’ll cover strategies such as negotiating concurrent use rights, leveraging BYOL (Bring Your Own License) options, planning a license wind-down during migration, and utilizing negotiation tactics to secure flexibility.
The goal is to make your VMware license migration to the cloud cost-efficient – ensuring you only pay for what you actually use, and not a krona more.
Concurrency & Migration Licenses
One of the best strategies to avoid double payment is negotiating concurrency rights or “migration licenses” for the transition period.
In a typical migration, you may need to run workloads in both environments (on-premises and cloud) simultaneously for several months. Without special terms, you’d need full licenses for both, essentially doubling your payment.
To prevent that, ask Broadcom for dual-use rights during the migration:
- Negotiate a grace period for dual use: Request a clause that allows you to run licenses in both environments concurrently for a limited time (e.g., 3, 6, or 12 months) without incurring additional charges. This means you can spin up VMware Cloud resources while still operating on-prem systems until cutover, with no financial penalty.
- Obtain temporary “migration licenses”: In some cases, Broadcom may provide short-term licenses or keys specifically for migration. These migration licenses let you support both platforms in parallel. For example, you might secure a 6-month dual entitlement where your on-prem vSphere license can also cover an equivalent VMware Cloud instance during that window.
- Document the timeline: Clearly define the duration and scope of concurrency rights. Typically, enterprises aim for 3–12 months of overlap depending on project length. Ensure the contract says that during this period, you won’t be charged twice for the same workloads.
By securing concurrency or dual-use rights, you avoid the scenario of paying for two sets of licenses. Essentially, it buys you time to migrate gradually.
Always get this in writing in your Broadcom/VMware agreement – verbal assurances won’t protect you if an audit or invoice comes. A little negotiation upfront for a migration clause can save huge costs by preventing overlap fees.
Optimizing cloud deployments, Reserved vs On-Demand VMware Cloud Capacity: Cost Strategy Under Broadcom.
BYOL vs. Non-BYOL Models (Using Existing Licenses in Cloud)
Another key consideration is whether you can leverage existing VMware licenses in the cloud – the classic Bring Your Own License (BYOL) approach.
Depending on Broadcom’s policies and the cloud platform, BYOL may or may not be allowed for VMware products:
- Clarify VMware Cloud’s BYOL policy: Historically, services like VMware Cloud on AWS were sold as all-inclusive subscriptions (you paid for hosts and the VMware software was bundled, with no BYOL for vSphere/vSAN). Under Broadcom’s stewardship, there’s a shift toward “bring-your-own-subscription” models for cloud. For example, Broadcom is introducing portable VMware Cloud Foundation subscriptions that customers purchase directly and then apply to cloud hosts (on AWS, Azure, etc.). Check if your target cloud supports BYOL for VMware. If yes, you might apply existing licenses or converted subscription credits to the cloud deployment.
- If BYOL is allowed, you could potentially reuse your on-prem licenses in the cloud, which prevents paying for the software twice. Ensure you understand the mechanics – you may need to convert perpetual licenses into a portable subscription format. This can be complex, but essentially it means the value of your current licenses travels with the workload to the cloud, rather than being stranded on-premises.
- If BYOL is not permitted: Often, you’ll find that you must pay for VMware software again in the cloud (as part of the service subscription), leaving your on-premises licenses unused but still under a maintenance contract. In this case, proactively negotiate offsets for stranded licenses. For instance:
- Credits or discounts: Ask Broadcom to provide cloud credits or discounted pricing to account for the investment you’ve already made on-prem. If you have a year left on your on-premises support for 100 CPUs, they may be able to credit a portion of that value toward your VMware Cloud subscription.
- License trade-in: In some agreements, vendors allow you to trade unused licenses for new subscriptions. Propose converting your on-prem license entitlement (or remaining support term) into a VMware Cloud subscription of equivalent value. Even if Broadcom doesn’t advertise this, a strong business case can make them consider a custom arrangement.
The goal is to avoid “stranded” investment – where your costly perpetual licenses sit idle as you pay anew in the cloud. BYOL is ideal for preventing this, but if unavailable, don’t accept paying full price twice.
Negotiate a bridge, whether through formal BYOL usage, credits, or a transitional discount.
This requires clear communication: tell Broadcom your migration plan and that you expect financial recognition for existing licenses in any cloud transition.
License Wind-Down Strategies
Managing your on-prem licenses as you migrate is crucial. You should plan a license wind-down: a gradual reduction of on-prem license counts (and support costs) in sync with your cloud migration milestones. This prevents the need to pay for multiple on-premises licenses that are no longer required.
Here’s how to approach it:
- Tie the license reduction to migration milestones: From the start, discuss a license reduction schedule with Broadcom. For example, if you know that each quarter you’ll migrate 25% of workloads to the cloud, negotiate that you can reduce your on-prem license count by 25% each quarter accordingly. This could be formalized as an agreed-upon schedule or, at the very least, an option to drop units at certain checkpoints.
- Proportional maintenance reduction: Ensure that as you retire on-prem capacity, you can decrease maintenance fees proportionally. Maintenance (support/updates fees on perpetual licenses) often renews annually. Rather than renewing all licenses at full count while half will be idle, work out a plan, such as “we will renew support for only 70% of our licenses this year, then 40% next year,” tracking the migration progress. Ideally, put a clause that maintenance fees shall reduce in proportion to workloads migrated off on-prem infrastructure.
- Align migration with renewal cycles: Look at your contract renewal dates for VMware support or enterprise agreements. It’s time to migrate to align with these renewals, so you have leverage. For instance, if your support renewal is every July and you plan to migrate a significant portion in Q3, consider requesting a short renewal term or a flexible renewal that accounts for the upcoming reduction. Never lock in a multi-year renewal for the full on-prem environment if you know you’ll be scaling it down – instead, negotiate a ramp-down in that renewal.
- Avoid overcommitment: Vendors might push you to keep a high commitment “just in case.” Resist that; instead, maybe negotiate elasticity – the ability to drop some licenses without penalty. If Broadcom is unwilling to formally commit to reductions mid-term, then consider renewing for a shorter term for on-prem licenses (e.g., a 1-year renewal instead of 3) so that you’re not stuck paying for unused capacity.
By planning a wind-down, you minimize wasted spend on-premises. Each workload that migrates should eventually allow you to retire a portion of your on-prem licenses.
When handled correctly, your cost for on-premises VMware will shrink in near real-time with your migration, rather than lingering as a significant fixed cost.
Importantly, make this part of your negotiation: vendors won’t volunteer to charge you less; you have to bake the reductions into the contract or renewal.
More insights, Integrating Cloud Services into Broadcom Agreements – How to Align On-Prem and VMware Cloud Contracts.
Migration Program Incentives
Broadcom encourages customers to adopt VMware Cloud subscriptions, providing an opportunity to leverage migration incentives.
Many software vendors offer special deals if you commit to their new platform, and Broadcom/VMware is no different.
Use your planned migration as a bargaining chip:
- Ask about migration incentive programs: Inquire if Broadcom has a formal cloud migration program – sometimes called “migration accelerator” or similar – that provides discounts, credits, or extended terms for customers moving to VMware Cloud. Even if there’s no public program, expressing a strong intent to migrate might get you custom incentives (vendors often handle these cases on a case-by-case basis for big clients).
- Commit to cloud to get on-prem relief: Structure the negotiation as a trade: “If we commit to moving X% of our environment to VMware Cloud, we expect relief on Y% of our on-prem costs.” For example, you might say you’ll sign up for a substantial VMware Cloud subscription (say, a 3-year commitment for 50 hosts) in exchange for being allowed to terminate support on an equivalent number of on-prem hosts without penalty. Broadcom gains a cloud customer; you avoid double costs.
- Early adopter discounts: If you are among the early movers, use that to your advantage. Broadcom may be eager to show VMware Cloud adoption numbers and could offer one-time discounts. This may be offered as reduced subscription pricing, complimentary extra months of service, or credits applied to your account. Negotiate for a cost-neutral transition where possible, meaning that these incentives offset any overlap costs.
- Bundle into an Enterprise Agreement: If your enterprise typically negotiates an Enterprise License Agreement (ELA) with VMware/Broadcom, incorporate the migration plan into it. Bundle both on-prem and cloud spend in one holistic deal. Vendors often give better discounts on larger, bundled deals. By stating, “We will spend $XYZ on VMware Cloud over 3 years, plus maintain some on-prem usage,” you can negotiate for volume discounts or flexible terms that cover both environments. The key is to make the vendor feel secure about future revenue, so they’re more willing to accommodate your requests on timing and overlap.
In summary, don’t quietly migrate – use the migration as leverage. Let Broadcom know that your continued business (and expansion into their cloud offerings) depends on getting a fair financial arrangement.
This shifts the conversation from just “customer wants to reduce licenses = vendor loses money” to “customer will invest in new Broadcom offerings if we ease their transition.” It’s a win-win scenario you should aim to craft.
Case Example – Gradual Data Center Migration
To illustrate these principles, consider a real-world scenario:
Company ABC runs 5,000 vSphere cores on-premises in its data centers. They plan a phased migration, where 50% (2,500 cores) will be moved to VMware Cloud over the next 12 months.
Without licensing management, ABC would face a significant overlap: still paying for support and maintenance on all 5,000 on-premises cores while also incurring costs for 2,500 cores’ worth of cloud subscriptions – effectively 150% of the costs during the migration.
Strategy in action:
- Phase-down licensing: ABC negotiates upfront that as each wave of servers migrates, the corresponding on-prem licenses can be retired. In Q1, they migrate 1,000 cores (20%). Broadcom agrees to let them reduce their on-prem support footprint by 20% immediately, avoiding spending on now-unused licenses. In Q2 and Q3, more cores are moved, and support costs step down accordingly.
- Concurrency grace period: During each migration wave, ABC utilizes a concurrency clause to run 1,000 cores in the cloud and on-premises simultaneously for 3 months. This ensures a safe cutover with testing and fallback, all without incurring double costs. They had negotiated 6 months of dual-use rights, which they ended up using in chunks wave by wave.
- Cloud credits for trade-in: ABC had just renewed a year of maintenance on those 5,000 cores. Rather than losing that investment, they negotiated that any unused maintenance value of the migrated core is credited toward their VMware Cloud bill. The 2,500 cores that were moved mid-year had 6 months of support prepaid – that portion becomes a credit, reducing the cloud subscription cost for those new VMs. Essentially, the money they already paid is repurposed instead of wasted.
- Outcome: By the end of the migration, ABC successfully transferred half of its workload to the cloud with minimal financial impact. They weren’t paying for all 5,000 cores on-premises throughout the year – the cost curve for on-premises trended down as cloud costs ramped up. Thanks to credits and discounts, the total spend at any given time stayed roughly flat (cost-neutral). ABC avoided the trap of double-paying, and Broadcom still retained the business (just shifted to cloud revenue).
This example demonstrates that with planning and negotiation, a phased migration can be a cost-effective approach. The keys were tying license costs directly to migration progress and insisting on contract terms that made it possible.
A poorly managed migration, by contrast, might have resulted in ABC paying for 7,500 cores worth of licenses (5,000 on-premises + 2,500 cloud) during the transition – a budget blowout.
Instead, ABC treated licensing as part of the migration project plan, not an afterthought.
Negotiation Tactics to Secure Flexibility
When dealing with Broadcom (or any major software vendor) for a migration, negotiation is your tool to secure flexibility. Broadcom’s default contracts may be rigid, but they are often open to custom terms for committed customers.
Use these tactics:
- Be transparent about your roadmap: Let Broadcom know early and explicitly that you have a cloud migration plan in place. Outline the expected timeline and scale of your migration. This openness can actually strengthen your hand: it signals that you are planning future spend (on cloud) but also that you need their cooperation to make it viable. Emphasize that you want to continue using VMware (now Broadcom’s product) long-term, just in a different deployment, and you need them to partner with you on the transition.
- Insist on portability and conversion clauses: Don’t assume you can later work something out informally – get critical terms in writing in the contract or renewal. Key clauses to include are those granting portability of licenses and conversion of value from on-prem to cloud. Make it plain English so everyone understands the intent. For example, include clauses such as:
- Concurrency: “Customer may operate licenses in both environments for up to 6 months during migration without additional charge.”Portability: “On-prem license value may be converted to VMware Cloud credits upon migration.” (Meaning if we stop using some perpetual licenses, we can apply their residual value to cloud services.)Reduction: “Maintenance fees shall be reduced
- Bundle and leverage spend: As mentioned earlier, try to bundle your cloud commitment with existing agreements to maximize savings. If you’re negotiating a large renewal or enterprise license agreement, make the cloud migration part of that deal. This gives you more leverage to negotiate favorable terms (discounts, flex rights) because the vendor sees the bigger picture of revenue. It’s harder for them to say no when a lot of future business is on the table.
- Time your negotiations with leverage points: Your strongest negotiation leverage often arises right before a renewal or a major purchase. Align your request for migration terms with these moments. For example, if Broadcom knows you might otherwise shrink or cancel a support renewal due to cloud migration, they have an incentive to cut a deal that keeps you in their ecosystem (via VMware Cloud). Also consider external leverage: if you have alternatives (such as using a different cloud technology or even third-party support for VMware), subtly make them known. Broadcom is more flexible if they fear losing the account entirely.
- Don’t accept vague promises: If a sales rep says, “Sure, we’ll work with you during migration,” thank them, but push to make it concrete. What exactly will they allow? Can they include it in the contract or send it via an official email? Always capture those promises formally. One tactic is to write up a “memo of understanding” after calls, listing the agreed points (e.g., dual use for 6 months, etc.) and ask them to confirm. This way, if personnel change or memories fade, you have a record to enforce.
Approaching Broadcom with a firm, well-reasoned request and demonstrating your knowledge (perhaps even referencing other vendors’ practices or industry standards) can encourage them to grant these concessions.
Remember, if you don’t ask, you don’t get – especially in enterprise software deals. Negotiating for flexibility is expected in these circles, and Broadcom’s team will usually come to the table if the business case is compelling.
Checklist – Migration Licensing Must-Haves
Before finalizing any migration plan or signing off on a VMware licensing contract, ensure you have the following migration licensing must-haves covered:
- ✅ Concurrency Clause: A clear right to run on-prem and cloud environments simultaneously for a defined period without extra fees. This avoids being out of compliance or double-charged during overlapping use. (E.g., 6 months of dual usage rights during migration.)
- ✅ Portability / Credit Conversion: An agreement that you can transfer the value of on-prem licenses to the cloud. This could be via a formal BYOL arrangement or a credit system. The key is that your prior investments aren’t lost. (E.g., unused support on a retired server becomes a credit towards VMware Cloud.)
- ✅ Maintenance Reduction Schedule: A plan or clause for reducing on-prem maintenance costs in stages as systems migrate. You should not be required to pay full maintenance on systems you intend to decommission. (E.g., support contract drops 20% every quarter in line with migration completion.)
- ✅ Cloud SLA and Pricing Protections: Confirm the cloud service (VMware Cloud on AWS or others) comes with appropriate SLA guarantees and that your pricing is locked or predictable. If you’re moving critical workloads, ensure the contract includes service level agreements for uptime/performance. Also seek pricing protection – for instance, no surprise price hikes during your committed term, or the ability to renegotiate if the service cost changes materially. This ensures your migration doesn’t lead to unstable or unexpectedly high costs in the cloud.
Use this checklist when reviewing proposals or drafting contract amendments. If any of these items are missing, go back to the negotiating table.
It’s easier to secure these rights before you sign, rather than try to fix the deal later. Having these must-haves will greatly smooth out the migration, both technically and financially.
FAQs
Q: Can I use my existing VMware perpetual licenses in VMware Cloud (or other public clouds)?
A: Not directly in most cases. Traditional VMware Cloud on AWS subscriptions included the necessary VMware licenses in the service cost, so you couldn’t just apply your own vSphere license to reduce that price. Broadcom’s new “bring your own subscription” model aims to allow portability, but it requires converting to a subscription license type compatible with cloud use. In practice, you should assume your old licenses can’t simply be dropped into the cloud like plugging in a key. You’ll either be buying a new subscription or converting your license via a program. Always verify with Broadcom if there’s an approved BYOL path for the specific cloud service you’re targeting (AWS, Azure, Google, etc.). If not, focus on negotiating credits or trade-ins rather than trying to reuse keys in a way that isn’t allowed.
Q: How do I reduce on-prem maintenance costs during the migration without violating my contract?
A: The safest way is to negotiate the reduction ahead of time. Talk to Broadcom about your migration timeline and get an agreement (in writing) that you can drop a certain number of licenses from maintenance at specified points. Suppose you’re mid-contract and didn’t pre-negotiate. In that case, you have limited options – you might appeal to your account manager for a concession given changing business needs, or opt not to renew some licenses at the next anniversary. Some companies choose not to renew support on a portion of licenses once they’ve migrated those workloads, even if it means those licenses lapse – essentially accepting a partial overlap until renewal comes. However, this can be risky if your contract doesn’t allow partial cancellation. That’s why building a flexible renewal or a custom clause beforehand is important. In short: plan reductions as part of your contract renewal, and you’ll legally and cleanly reduce costs as you migrate.
Q: Does Broadcom offer specific migration discounts or programs for moving to VMware Cloud?
A: Broadcom hasn’t widely publicized a cookie-cutter migration discount program (at least not as of now), but they do negotiate on a case-by-case basis. Many customers have reported that if you commit to VMware Cloud usage, Broadcom is willing to strike a deal – this might look like discounted VMware Cloud credits, bundle deals, or more favorable terms on your existing licenses. They’re also introducing incentives for using portable subscription licenses (so you pay them for software even in cloud deployments). It’s best to ask your Broadcom rep directly: “What can you offer to ease our transition to VMware Cloud?” Expect them to evaluate based on the size of your move and strategic value. Also, keep an eye on any announcements – Broadcom could roll out formal programs as more customers migrate. In the absence of an official program, use your own leverage: if moving to VMware Cloud, push for a custom incentive (as described in earlier sections).
Q: How can we avoid double-paying for VMware during the transition?
A: It boils down to careful planning and negotiating the right terms. To avoid double-paying:
- Secure dual-use rights to avoid paying for two full environments simultaneously (concurrent usage without additional cost).
- Stagger your license commitments so that on-prem costs ramp down exactly when cloud costs ramp up (no lengthy overlap).
- Convert or credit investments – if you’ve already paid for on-premises, have that value applied to your cloud spend so you’re not paying in two places for the same capacity.
- Align timing – e.g., let maintenance expire as you turn on cloud hosts, rather than renewing it blindly.
In practice, combine all the strategies discussed: concurrency clauses, BYOL/credits, wind-down schedules, and possibly short-term third-party support for any brief overlaps (some companies use third-party support for a few months on legacy gear being phased out, which can be cheaper).
The result should be that at any given point, you’re only paying once for a given workload – either on-prem or cloud, but not both. If you notice a period where costs accumulate, review your migration plan and contracts to eliminate that overlap.
Final Section – 5 Actionable Tips
To wrap up, here are five actionable tips for managing Broadcom/VMware licensing during a cloud migration:
- Secure concurrency rights at the start: Don’t begin migrating without a deal for dual usage. Nail down a concurrency clause early, allowing parallel on-prem and cloud operations for a set time.
- Negotiate portability or credits for old licenses: Never assume the value of your existing licenses is lost. Always negotiate a way to repurpose your investment – whether through BYOL use, converting to subscriptions, or getting cloud credits.
- Phase down maintenance as you go: Treat support contracts as dynamic and evolving. Scale down on-prem maintenance commitments with each migration phase. This requires planning with Broadcom so you’re not stuck overpaying for idle licenses.
- Bundle migration into broader negotiations: Whenever possible, bundle your migration plans with a larger contract or renewal negotiation to maximize benefits. Use the promise of new cloud spend to get better terms and discounts across the board. In an Enterprise Agreement, explicitly include your cloud transition to get enterprise-level concessions.
- Align migration with renewal cycles for leverage: Time your moves so that you’re making licensing decisions at natural contract end-points. Align major migrations with contract renewals or hardware refreshes to ensure seamless integration. This way, you can choose not to renew certain licenses or switch models without penalty, forcing the vendor to come to the table with solutions that prevent double payment.
By following these tips and the strategies outlined above, you can turn what is often a vendor-friendly situation (where the customer pays for two environments) into a customer-optimized outcome.
Cloud migration should be an opportunity to modernize and potentially save costs – not a period of incurring higher expenses than ever.
With strategic licensing management, you can ensure a smooth, cost-effective transition to VMware Cloud (under Broadcom) and avoid the dreaded double-pay trap.
Enjoy the cloud benefits, and rest easy knowing your licensing is under control!
Read about our Broadcom Licensing Consulting.
