Broadcom Enterprise License Agreements (ELA/PLA)
Introduction – What Are Broadcom Enterprise Agreements?
Broadcom’s Enterprise License Agreement (ELA) and Portfolio License Agreement (PLA) are umbrella contracts that cover multiple software products under one unified deal. They typically span several years and bundle various Broadcom software divisions – for example, combining VMware virtualization, Symantec security, and CA mainframe tools into a single contract. In essence, an ELA/PLA offers a one-stop license agreement with a fixed overall fee (often paid annually) for broad rights to use a portfolio of Broadcom products.
Enterprise License Agreement (ELA): This is a general term for a multi-product, multi-year agreement with Broadcom. It simplifies licensing by co-terminating all included products on the same end date under consistent terms. An ELA sets a predetermined cost for the term, covering software licenses (and usually support).
Portfolio License Agreement (PLA): Broadcom often uses the term PLA, especially for deals inherited from CA Technologies and other acquisitions. A PLA is essentially Broadcom’s branded enterprise agreement, historically common in mainframe licensing. For example, CA (now Broadcom) offered PLAs that allowed mainframe customers to use a range of CA software up to a certain capacity (measured in MSUs) for a flat fee.
Today, Broadcom PLAs extend across its entire software lineup, not just the mainframe – they grant enterprise-wide usage rights to a broad set of products under a single contract.
In summary, both ELA and PLA refer to all-in-one Broadcom agreements, with PLA highlighting the “portfolio” aspect (often an all-you-can-use style bundle across Broadcom’s catalog).
Broadcom’s Post-Acquisition Approach
Broadcom has become known for its rigid, upfront-heavy licensing style, especially after acquiring companies like CA, Symantec, and, most recently, VMware. Post-acquisition, Broadcom tends to standardize and consolidate licensing programs:
- Elimination of Legacy Programs: After the VMware acquisition, Broadcom dismantled VMware’s previous enterprise licensing programs (such as VMware’s Volume Purchasing Program and flexible ELA discounts). Instead of honoring legacy discount schemes or renewals as-is, Broadcom requires customers to move to its own style of agreements. The same happened with CA and Symantec – any special legacy arrangements were eventually aligned to Broadcom’s uniform policies.
- Subscription-Only Focus: Broadcom has aggressively shifted all acquired products towards subscription licensing (fixed-term licenses with support included). For instance, VMware customers who once bought perpetual licenses with annual support must now transition to subscriptions or Broadcom ELAs to stay current. This one-size-fits-all subscription strategy is a hallmark of Broadcom’s approach, ensuring recurring revenue but reducing flexibility for customers.
- Cross-Portfolio Bundling: Broadcom leverages acquisitions to cross-sell and bundle products from different portfolios into one deal. If you were a VMware-only customer, you might now be pitched a broader ELA that also includes security and mainframe products – and vice versa. The company’s sales strategy often proposes mega-deals covering “everything Broadcom” to large enterprises. This bundling can streamline procurement (one big contract instead of many smaller ones), but it also increases account lock-in. Broadcom’s goal is to become deeply embedded in your environment across domains, making it harder for you to drop any single component.
- Rigid Terms and High Commitments: Broadcom is known for hardline contract terms. They often require sizable upfront commitments (both in spend and in quantities of licenses). Contracts tend to be less customer-friendly than those of the acquired companies – for example, Broadcom’s templates may include stricter compliance audit clauses and limited termination rights. Discounts are usually smaller than what customers might have received prior to the acquisition, unless you agree to a very large, multi-portfolio commitment. In short, Broadcom’s post-acquisition stance is: fewer discounts, more standardization, and bigger deals.
Overall, if you’re coming from a legacy VMware/CA/Symantec background, expect Broadcom to “reset” your contract terms. Negotiations will likely start from Broadcom’s standard framework rather than your historical pricing or allowances.
This shift can be jarring, but understanding Broadcom’s approach is the first step in preparing for it.
Pros of a Broadcom ELA/PLA
A Broadcom enterprise agreement, despite its challenges, offers several potential benefits for customers who manage it well:
- Simplified Vendor Management: Consolidating multiple products under a single ELA/PLA results in a single master contract and a unified renewal date. This one-stop shop approach eliminates the hassle of managing multiple licenses and support agreements. All software in the deal expires simultaneously, so you negotiate with a single vendor (Broadcom) on a single timeline. This co-termination and unified contract can save a lot of procurement and legal effort over the years.
- Volume Discounts & Cost Predictability: By committing to a large bundle, customers can unlock better pricing. Broadcom often provides volume discounts when you consolidate multiple product purchases into a single agreement. The upfront cost may be high, but it’s typically lower than the cost of buying each product separately. Additionally, an ELA typically fixes your spending for the term – you pay a known annual (or quarterly) fee that covers all included licenses and support. This makes budgeting easier: you get a predictable spend with no surprise true-up bills as long as you stay within the agreed usage. If fully utilized, a well-structured PLA can reduce the total cost per unit (e.g., cost per user or per server) compared to ad-hoc purchases.
- Broad Portfolio Access and Flexibility: An ELA can serve as an “all-you-can-use” buffet for Broadcom software. Enterprises often gain enterprise-wide access to multiple tools. This means you can deploy additional products or features on the fly without separate procurement, as long as they are included in the agreement. For example, a company might primarily enter a Broadcom ELA for VMware vSphere. Still, the deal could also include rights to try Symantec endpoint security or DevOps tools from the CA portfolio. This broad access can foster innovation – you have the freedom to pilot new solutions internally without going through purchasing hurdles. It’s like an insurance policy: if a new need arises (say, a sudden requirement for a new security tool), you might already be entitled to use Broadcom’s solution under the ELA at no extra charge.
- Co-Termed Support & Services: In a Broadcom ELA, support and maintenance for all included products are usually bundled into the agreement. You typically get a consistent support level across the board (often standard or premium support for all products under the ELA). This consolidated support can be advantageous – you may have a dedicated Broadcom support team or account manager who understands your whole environment. It also eliminates the need for separate support renewals; everything is covered as part of the ELA fee. Broadcom may even include extras for large deals, such as training credits, consulting hours, or health checks, to sweeten the deal. All these can enhance the value you receive and streamline your interaction with Broadcom for assistance.
- Predictable, Simplified Budgeting: Because an ELA bundles many costs into one line item, finance teams appreciate the predictability. Rather than many different renewal quotes hitting at different times, you have one fixed fee (which might have a pre-agreed slight increase yearly or be flat). This converts software expense into a steady operational expenditure over the term. It avoids big one-time capital purchases and spreads costs out. Internally, it’s often easier to justify and obtain approval for a multi-year flat subscription than for multiple piecemeal purchases. In essence, the ELA can function like a subscription to Broadcom’s software portfolio, with predictable costs and minimal fluctuation.
Cons of a Broadcom ELA/PLA
Despite the upsides, there are significant risks and downsides to entering a Broadcom umbrella agreement. Buyers must be aware of these common pitfalls:
- Large Upfront Commitments & Lock-In: Broadcom ELAs typically require a substantial commitment – both financially and in terms of product scope. Once you sign, you are locked in for the term. It’s very difficult (or impossible) to drop a product or reduce licenses mid-term if your needs change. If you realize after a year that you don’t need a particular security software in the bundle, you’re still stuck paying for it until the ELA expires. This all-or-nothing lock-in can hinder flexibility; you might feel compelled to keep using something suboptimal because you’ve already paid for it. Also, migrating away from Broadcom at the end of the term becomes an “all eggs in one basket” situation – the renewal is a single point of negotiation with a lot at stake.
- Shelfware Risk (Under-Utilization): The buffet nature of a PLA means it’s easy to over-buy. Broadcom’s sales pitch often encourages including extra products or excess capacity “just in case” you need them. The result: many customers end up with shelfware – licenses for software that never get deployed internally. For example, you might agree to the enterprise-wide use of ten Broadcom products, but actually use only five or six. The rest sit unused, representing wasted budget. This risk is high if the deal was sold on future promises (e.g., “we might use this tool down the road”). Unused software not only wastes money, but it can also inflate your renewal costs (Broadcom will argue you have the right to use all those tools, even if you didn’t, so they’ll want to charge for them again). Without careful planning, an ELA can result in significant overspending on unnecessary items.
- Limited Flexibility and No “True-Down”: Traditional Broadcom agreements are quite inflexible. There’s typically no built-in right to reduce license counts (no true-down) during the term if your usage decreases. You also typically cannot remove a product from the bundle if you decide to switch to a competitor or no longer need it. In other words, you commit to a fixed bundle and quantity for multiple years, with no easy escape. If your company downsizes, you still pay the same fee. If Broadcom discontinues or changes a product, you don’t automatically get a refund or substitution unless you negotiated it. This rigidity means you must forecast your needs very carefully – a challenging task spanning 3-5 years – and live with any overestimation until the next renewal.
- Opaque Pricing: When Broadcom bundles dozens of products into one price, it becomes hard to tell what you’re actually paying for each component. You might receive a quote stating that the PLA costs $X million in total, with an alleged overall discount; however, there’s little transparency on how that breakdown is calculated by product or license metric. This opacity is by design: it can mask overpriced elements and makes it hard for you to argue for removing something (“How much would we save if we dropped Tool Y?” is unclear when pricing isn’t itemized). It also makes it tricky to compare the bundle cost vs. buying a subset à la carte. Lack of cost clarity can lead to overpaying for certain products in the mix and can reduce your leverage in renewal negotiations (since you don’t know which pieces carry the most cost).
- High Renewal Stakes (Leverage Loss): While an ELA can secure good pricing in the initial term, it often shifts leverage to Broadcom at renewal time. Because all your critical software licenses expire at once, Broadcom knows you have to come back to the table. If you haven’t negotiated price protections, you could face a sharp price hike at renewal. There have been cases where Broadcom has proposed renewals at dramatically higher prices (sometimes double or triple the prior rate) for customers who are deeply dependent on their portfolio. If you’re fully invested in Broadcom’s stack, your bargaining power to push back on such increases is limited – migrating away from multiple platforms all at once is usually impractical. Thus, an ELA can become a trap if you don’t secure safeguards for future pricing. Broadcom’s strategy often is to entice with a decent first-term deal and then reclaim margin later.
- Strict Audit and Compliance Terms: Broadcom is known for stringent compliance enforcement. Their ELA contracts often include broad audit rights. If you’ve deployed more than your licensed quantities (even inadvertently), Broadcom can hit you with steep penalties or push you into an even bigger agreement mid-term. Especially with complex metrics (like mainframe capacity or VMware cores), it’s easy to slip up on compliance. The risk of audits and the pressure tactics at renewal (e.g., threatening to cut off support if a new deal isn’t signed by the expiry date) are real concerns under Broadcom. This means buyers must be diligent in tracking their usage and negotiating any audit-related clauses to ensure fairness (for example, requesting reasonable notice and remediation periods if a discrepancy is found).
In short, a Broadcom ELA/PLA can simplify your life in the short run but can also expose you to overspending and lock-in if not carefully managed. Knowing these cons helps you plan mitigation strategies before signing anything.
Negotiation Strategies for Broadcom ELAs
When approaching a Broadcom enterprise agreement negotiation, preparation and strategic negotiation are key.
Here are critical tactics to consider to get the best outcome and avoid common traps:
- Define the Scope Clearly: Only include the products and capacity that you truly need. It’s tempting to accept Broadcom’s suggestion to bundle “everything,” but every extra component adds cost and potential shelfware. Before negotiations, do an internal audit of your actual needs and usage. Define which Broadcom products are in scope for the deal and which are out. Stick to this scope during talks. By limiting the ELA to necessary software (plus perhaps a small buffer for growth), you avoid paying for irrelevant products. Broadcom will push for a larger bundle, but you can push back – make it clear that you’d rather negotiate some items separately than include things you won’t use in the ELA.
- Secure a Growth Buffer: Negotiate provisions that allow some usage growth without an immediate price increase. For instance, you might anticipate a 10% expansion in VMware workloads over the next year – ensure the ELA can accommodate that growth. This can be written as an allowance (e.g., “up to X more cores or users at no additional charge”) or a predetermined pricing for added units (e.g., any extra units at the same per-unit price as the initial, so there’s no surprise premium). A growth buffer protects you from minor usage upticks triggering a whole new purchase. It also gives you flexibility to expand your environment within the term. Also, ensure that you clarify true-up processes: if you exceed the agreed-upon quantities, how will those be priced? Ideally, cap the rates for any overage to avoid punitive costs.
- Lock-In Price Protections: One of the most important negotiation points is preventing future price spikes. Cap the increases Broadcom can impose – both during the term and at renewal. For example, include in the contract that the annual subscription fee cannot increase by more than a certain small percentage (or remain flat) each year. Even more crucial, set a cap on renewal uplifts: e.g., at renewal, prices won’t rise more than X% above the last year of the term, or the same discount level off list price will carry forward. Without such caps, you might receive, say, a 50% discount now, which later vanishes. Don’t rely on verbal assurances; ensure that your discounts and rates are protected in writing for the future. Broadcom is often resistant to limiting their future pricing, but you have to try – even a modest cap (like “no more than 5-10% increase at renewal”) is better than an open door. This ensures that the “good deal” you negotiate now doesn’t become a budget buster later.
- Ensure Co-Terming of All Products: If you’re consolidating multiple existing contracts into one ELA, align them so they co-term (end at the same time). Broadcom usually does this by default in an ELA, but double-check. Co-terming means you won’t have some products expiring earlier than others, which could undermine your leverage. The power of an ELA is that everything is tied together so that you can use the full value of the portfolio as negotiation leverage at renewal. Also, co-terming simplifies administration and ensures you don’t accidentally miss a renewal for a smaller component (since it’s all one package). In negotiations, verify that any products you roll into the ELA (perhaps ones with a later original end date) are either extended or prorated to match the new end date of the ELA.
- Plan for Discount Continuity: Broadcom may offer an attractive discount for the initial term, especially if you’re making a significant commitment. It’s critical to tie that discount to future purchases and renewals. Negotiate a clause that stipulates any additional licenses added during the term will be subject to the same discount percentage. Similarly, state that renewal pricing will honor the same discount off list (or at least not fall below a certain threshold). For instance, if you receive 30% off the list price in the ELA, the contract could say that the renewal will also be calculated at no less than a 30% discount on the current rates. This protects you from the scenario where Broadcom gives you a deal now but later says “that was a one-time special” and tries to charge full price. Maintaining discount continuity is essential for long-term savings.
- Demand Transparency: Request that Broadcom provide a detailed pricing breakdown by product or license metric. While they prefer to present one lump sum, insist on insight into how that sum was derived – at least for your own analysis. Knowing, for example, that 70% of the cost is coming from VMware and 30% from Security (as an example) helps you gauge if the deal allocation makes sense. It can also guide you on what to trim. If Broadcom’s quote is very opaque, you might request a side letter or internal breakdown (even if it’s not in the contract) to understand unit pricing. During negotiations, this transparency lets you identify any overpriced elements and push back or remove them. It also sets a baseline for future true-ups (so you know how much an extra unit will cost).
- Negotiate Flexibility Clauses: Given Broadcom’s default rigidity, try to incorporate some flexibility into the ELA terms. For example, consider including a “true-down” option or a mid-term review. Perhaps after year 2, you could have the right to adjust volumes downward by a small percentage if you over-committed (or at least repurpose that value towards other products). While Broadcom rarely allows dropping commitments, you may be able to negotiate the ability to swap one product for another of similar value if your needs change. Even a clause like “if product X is not internally adopted by 50% of departments by year 2, the customer may remove it and reduce fees proportionally” can be worth pursuing. These clauses are tough to get, but any added flexibility can save you money if your situation changes. At a minimum, ensure there is no automatic renewal – you want the contract to end and require a conscious decision to renew, so you can renegotiate on a fresh basis (and walk away if needed).
- Align with Business Strategy: Tailor the ELA structure to your organization’s plans. For instance, if you anticipate a major shift (such as moving part of your data center to the cloud, which could reduce VMware usage within two years), factor that in. Perhaps consider negotiating a shorter term or an exit option around that time. If you’re concerned about a division being spun off, include terms to transfer or sublicense the necessary portion of the agreement. Broadcom contracts can be strict regarding transferability and divestitures, so consider negotiating upfront if you require flexibility in these scenarios. Also, align the ELA term with your budget cycles: if your funding is approved in 3-year blocks, a 3-year ELA makes sense; if you only have annual approval, maybe structure it with annual opt-outs or a shorter term. The key is not to let Broadcom’s standard 3-year term or bundle dictate what’s best for you – propose a structure that fits your enterprise’s roadmap.
- Utilize Timing and Leverage: Broadcom’s sales team is tasked with meeting quarterly and annual targets. Use this to your advantage. Plan your negotiation timeline such that final decisions coincide with Broadcom’s quarter-end or fiscal year-end. During those periods, Broadcom may be more flexible on pricing and terms to secure the deal. However, balance this with your own readiness – never let their deadlines force you into a rushed decision. Be willing to walk away or delay if the terms aren’t right. Also, maintain alternative options (even if theoretical). Broadcom is more likely to concede on terms if they know you have considered other vendors or strategies. Even if replacing VMware or Symantec entirely is unlikely, obtaining competitive quotes or having a transition plan in place can strengthen your position. In short, negotiate hard, backed by data and options, and don’t be afraid to say “no” to a bad deal – Broadcom often comes back with a better offer if they sense you truly might walk.
Portfolio License Agreement (PLA) Specifics
Broadcom’s Portfolio License Agreement (PLA) originated in the CA Technologies (mainframe software) world and comes with its own nuances.
In a mainframe context, PLAs often allow a form of “all-you-can-eat” usage across various tools, measured in mainframe capacity units (such as MSUs, Millions of Service Units).
Key specifics and tips for PLAs, especially in mainframe environments, include:
- MSU-Based Licensing: Mainframe PLAs typically set a baseline of MSUs that you are allowed to use for the included software. You might commit to, say, 5,000 MSUs of capacity covering several CA mainframe products. It’s important to size this baseline correctly. Negotiate a buffer for MSU growth – for example, the contract might permit up to 10% MSU growth over the term without an extra charge, or define a reasonable incremental cost for additional MSUs. Without such clauses, if your mainframe workload grows beyond the baseline, Broadcom could enforce steep overage fees or push you to a higher-priced agreement.
- Pricing and True-Forward: PLA discounts on mainframe software can be significant if you consolidate many tools. Ensure the pricing is locked or capped similarly to other ELAs – Broadcom often puts uplift clauses (e.g., 7% annual increase) in these deals. Try to cap annual price increases or negotiate a flat fee for the term. Also, clarify the handling of any reduction in usage: while true-down is rare, you might at least secure rights to adjust the mix of products used within the MSU pool (using unused capacity of one product for another, for instance).
- Audit Protections: Broadcom will likely conduct audits of mainframe usage to ensure you’re within the contracted MSUs. To avoid nasty surprises, include fair audit provisions. For example, you could request audits at most once per year, with 60 days’ notice, and no financial penalties if any overage is promptly addressed by purchasing additional capacity at the pre-agreed rate. Ensure the PLA specifies how usage is measured (e.g., peak MSUs, average) so you can monitor usage internally and remain compliant. Clarity here prevents disputes later.
- Legacy CA Contract Terms: If you had any grandfathered clauses from old CA deals (like special pricing or uncapped growth rights), bring them to the negotiation. Broadcom might not honor them outright, but you can use them as leverage to argue for similar treatment in the new PLA. For example, if your old contract allowed a certain workload without extra charge, negotiate a transitional credit or allowance in the Broadcom PLA to cover that.
In summary, PLA focuses on mainframes and is primarily concerned with managing capacity commitments and ensuring predictability. They can be beneficial if your mainframe environment is stable or growing modestly, as they provide cost certainty.
Be vigilant about growth clauses and audit terms to avoid the mainframe software bill unexpectedly ballooning.
VMware Contract Changes Under Broadcom
VMware customers have experienced some of the most dramatic contract and licensing changes under Broadcom’s ownership.
If your enterprise uses VMware, here are the key changes and what they mean:
- Per-CPU to Per-Core Licensing: One fundamental change is the shift in how VMware vSphere (and related products) are licensed. VMware historically sold licenses per CPU socket (with some core count limits), but Broadcom has moved to a per-core model. For example, a vSphere license might now cover up to 32 cores; if your servers have a 64-core CPU, you need two licenses for that one CPU. This effectively can double the cost for high-density hardware. It’s essential to recalculate your VMware needs under the new metrics – many customers have found that they need more licenses after this change, significantly impacting the cost equation.
- Simplified (Bundled) Product Offerings: Broadcom has streamlined VMware’s product portfolio, consolidating many SKUs into a few bundles. Instead of a long list of editions and add-ons, VMware by Broadcom now pushes a handful of comprehensive suites (for instance, VMware Cloud Foundation, or combined offerings that include vSphere + vSAN + NSX together). This means you might no longer be able to buy just one component on its own as easily; Broadcom encourages buying the whole stack. While this simplicity can be convenient, it also means you could be forced to purchase capabilities you don’t need as part of a bundle. Always evaluate if the new bundles align with your requirements or if they include “extras” that inflate cost.
- End of Perpetual Licenses & Legacy Programs: Broadcom ended VMware’s perpetual licensing sales immediately post-acquisition. All VMware licenses moving forward are subscription-based (term licenses). Additionally, VMware’s traditional enterprise programs – such as the VMware Enterprise License Agreements (which some customers had) or Volume Purchasing Program (which provided discounts based on points for large purchases) – have been discontinued or are being phased out. In practice, this means that if you have a VMware ELA that grants certain entitlements or discounts, you will likely need to renegotiate under Broadcom’s new terms when it expires. There is no automatic “carry-over” of those old contracts. Broadcom generally starts anew, with no guarantee of your previous discount levels or special terms.
- Reduced Discounting and Loyalty Incentives: Under VMware’s old regime, long-standing customers or those with large deals might have enjoyed substantial discounts, renewal price protections, or loyalty rewards. Broadcom has largely eliminated such loyalty programs. Discounts on VMware products now tend to be leaner unless you’re bundling into a big multi-product ELA. Broadcom offered some limited-time incentives (for example, early on, they had a program that provided a significant first-year discount for customers who quickly converted to subscription licensing). However, those are time-bound offers, not ongoing loyalty programs. The net effect is that many VMware customers have received higher price quotes for renewals or expansions compared to what they were accustomed to, and they must negotiate harder for any discounts.
- Contract Terms Reset: Expect Broadcom to utilize its standard contract templates for VMware going forward. This means stricter terms and conditions. Things like support definitions, liability clauses, and audit rights will align with Broadcom’s norms (which can be less flexible than VMware’s older customer agreements). If your VMware contracts included any favorable clauses (such as a gentle audit process or a price hold for certain upgrades), assume those are off the table unless you explicitly negotiate them back in. It’s critical to review any new VMware quotes or agreements from Broadcom carefully – don’t assume they mirror the past. Many VMware customers have been caught off guard by terms like non-cancellation clauses, mandatory multi-year commitments, or auto-renewal language in Broadcom’s paperwork.
In summary, VMware, now owned by Broadcom, is a new ballgame. You’ll be dealing with subscriptions, potentially higher quantities due to per-core counting, and fewer built-in discounts.
Be prepared to adjust your licensing strategy – for instance, consider whether you truly need every component of a Broadcom VMware bundle, and be ready to push back or seek concessions if the new model drastically raises your costs.
Also, factor the subscription shift into future planning. If you were accustomed to buying licenses as a capital expense, now VMware will be a regular operating expense, likely at a higher run rate over time.
Subscription vs. Perpetual Licensing in ELAs
Broadcom’s licensing strategy heavily favors subscription-based licensing over the old perpetual model. This shift has pros and cons that every enterprise should weigh:
- Broadcom’s Push for Subscriptions: Broadcom has made it clear that subscriptions are the future for all its software products. Perpetual licenses (where you buy once and own the rights indefinitely, then pay optional support) are being phased out. In an ELA context, this means your agreement will almost certainly be structured as a subscription – you pay recurring fees and in return get the right to use the software during the term, plus support and upgrades. Broadcom leadership sees this as aligning with modern “as-a-service” trends and ensuring a steady revenue stream. For customers, it means you’re continuously paying to use the software, and if you stop paying (or the term ends without renewal), you lose access.
- Cost Implications: Upfront vs Ongoing Cost is a key difference. A perpetual license may have a higher upfront cost but lower ongoing maintenance fees, whereas a subscription spreads the costs but continues as long as you need the software. Over a long period, subscriptions often end up costing more than a perpetual + maintenance model would have. Many customers have experienced sticker shock when comparing 3-5 years of subscription fees to what they used to pay for perpetual licenses – it can be multiple times higher for the same usage. However, subscriptions do include all updates and usually higher-tier support, which under perpetual might cost extra. The budgeting also shifts from a capital expenditure (CAPEX) model to an operating expense (OPEX) model – this can be easier for some companies to approve. Still, it means software spend is now a recurring line item that can increase over time.
- Flexibility and Upgrades: With subscription ELAs, you typically get access to the latest versions of all products. There’s no worry about paying for an upgrade or being stuck on an old version because you didn’t buy an update. This can be a significant benefit if your strategy is to stay current on software for security and performance. In contrast, perpetual licenses only entitle you to the specific version you purchased (unless you have active support, which provides updates). Broadcom’s subscription model ensures you’re always entitled to the newest features. On the flip side, if you were perfectly happy with an older version and didn’t need new features, under perpetual you could skip upgrades and save cost – that’s not an option in a subscription; you’re paying for the updates whether you use them or not.
- Broadcom’s “Subscription Strategy” Rationale: It’s worth noting why Broadcom is so firm on subscriptions. They have stated goals of increasing recurring revenue and simplifying the product offerings. From their perspective, having everyone on subscriptions means no more support for legacy versions indefinitely and a more predictable financial outlook. In negotiations, this means you have limited choices – asking for a perpetual option is unlikely to be successful (Broadcom has even applied this policy uniformly to all customers, industries, and geographies). The best you can do is negotiate the subscription terms favorably, because the train has left the station on perpetual licensing. Some customers attempt to maximize the value of their existing perpetual licenses (e.g., keeping them in use for as long as possible). Still, Broadcom will eventually end support for older versions, forcing the upgrade.
Bottom line: Under Broadcom ELAs, expect subscriptions to be the dominant model. You should model out the long-term costs – while the predictable annual fee can be helpful, be mindful that over, say, 5-7 years, you might pay more than you would have under the old model.
The trade-off is continuous support and avoiding large one-time buys. Strategically, prepare your organization’s leaders for this change in spending patterns.
It may also be wise to explore whether any perpetual-to-subscription conversion credits are available – sometimes Broadcom might offer a discount if you convert a large number of existing licenses to the new model as a one-time concession. If so, capture that in your ELA to facilitate a smooth financial transition.
Support & Maintenance in Broadcom ELAs
Support and maintenance are typically built into a Broadcom ELA, but it’s an aspect you shouldn’t overlook in negotiations:
- Bundled Support: In most Broadcom enterprise agreements, the cost you pay includes the software license right, as well as standard support for those products throughout the term. This means you won’t get separate support renewal bills – it’s all one package. Ensure that the support level included meets your needs. Broadcom’s standard might be “business hours” support or a basic SLA; if your environment is mission-critical, you might require premium support (24/7 coverage, faster response times, named support engineers, etc.). It’s often possible to negotiate a higher support tier as part of the ELA bundle, especially if you’re making a large commitment.
- Unified SLA and Escalation: One advantage of a multi-product ELA is the opportunity to negotiate a unified Service Level Agreement (SLA) for support. Rather than separate SLAs for each product line, push Broadcom to provide a consolidated support agreement that covers all included products to a consistent standard. This makes it easier to manage issues – for example, if a critical system spans both VMware and Symantec components, you want a clear escalation path without finger-pointing between Broadcom support teams. Clarify how support issues will be handled across the portfolio and ensure you have an assigned account manager or technical liaison for your entire account. Broadcom tends to give large ELA customers dedicated attention. Still, you want that formalized if possible (e.g., quarterly service reviews, a named support engineer for your account, etc., written into the contract or support plan).
- Control Future Support Costs: If there are any elements of the deal where support fees could separate (for instance, if you have some older perpetual licenses that will continue with maintenance alongside the ELA), be wary of support rate increases. Broadcom has been known to hike maintenance fees significantly if not contractually capped. In an ELA scenario, if you lock in a total subscription price that includes support, you’re safe during the term. However, at renewal, the new subscription price may increase. It’s wise to include renewal caps, as mentioned, which inherently cap support costs as well. If you plan to drop certain products out of the ELA later and continue them separately, negotiate now what the support percentage or fee would be. For example, “if we choose not to renew product X in the ELA, Broadcom will offer a standalone license with support at Y% of net license cost.” This level of detail can protect you from unpleasant surprises if you decide to break up the bundle in the future.
- SLA Remedies: Check if the contract offers any remedy for major support failures. Often, vendors avoid promising much beyond maybe a support fee credit if they miss response times. However, since you’re a large account in an ELA, you may be able to negotiate custom assurances – for instance, access to engineering in the event of critical bugs, or on-site support for severe outages. While not common, if certain products are absolutely critical (such as mainframe systems or core network components), ensure that Broadcom acknowledges this in the contract with appropriate priority handling.
In summary, treat support as an integral part of the ELA value. You’re paying a lot – you should get top-notch support across all products in return.
Make your expectations clear during negotiations and obtain commitments on support levels and processes in writing. This will pay off when you inevitably need help for an issue – you won’t want to be debating contract terms when systems are down.
Case Example – Negotiating a Broadcom ELA
To illustrate the dynamics of a Broadcom enterprise agreement, consider a hypothetical case:
Company ABC is running a mix of VMware virtualization in its data centers and Symantec (Broadcom) security software for endpoint protection. Previously, ABC had a VMware ELA directly with VMware and separate Symantec licenses acquired via annual renewals. Now those vendors are under Broadcom, and both contracts are up for renewal.
Broadcom proposes a combined ELA for ABC – a single 3-year agreement covering both VMware and Symantec product sets. They pitch several benefits: a 20% overall discount compared to renewing each line separately, one invoice and contract to manage, and flexibility to deploy more Symantec tools (they offer to include additional security modules that ABC doesn’t yet use). Tempted by potential savings and simplification, ABC negotiates and signs the broad ELA.
Initial Outcome: In year 1, ABC indeed enjoys simpler management. They got a decent discount and even started exploring one of the new Symantec tools included (which they hadn’t budgeted for before, but was “free” in the bundle). Broadcom provided a dedicated account team to support ABC, which was a nice touch.
Pitfalls Realized: By year 2, ABC notices they have a lot of shelfware. The ELA included 10 Symantec products, but they actively use only 6. The remaining four are barely piloted or not used at all. Essentially, ABC is paying more than they consume, thereby diminishing the true value of the 20% discount. Come the renewal discussion (which Broadcom initiates early in year 3), Broadcom’s quote for the next term jumps significantly. The initial 20% discount is reduced unless ABC agrees to a larger deal (adding, for example, Broadcom’s CA mainframe tools, which ABC also uses in a different department). Broadcom argues that the first term was a promotional deal, and now prices are aligning to “standard” unless expansion happens.
ABC finds itself in a tough spot: splitting VMware and Symantec back into separate deals would mean losing the discount and facing even higher costs, as well as the hassle of multiple negotiations. Continuing the ELA means paying for those unused products again and potentially incurring additional costs. ABC did not negotiate a renewal cap or the ability to drop unused components, so their leverage is limited.
Lessons Learned: This case exemplifies the need to right-size the scope and secure future protections. ABC should have included only the Symantec products it truly needed, or at least gotten an option to remove some at renewal if they proved unnecessary. Additionally, locking in the discount rate for renewal would have prevented Broadcom from attempting to raise the price so sharply. The case highlights how Broadcom’s bundle approach can yield short-term benefits (simplification, initial savings) but also long-term challenges (shelfware and renewal pressure). Enterprises must go into an ELA with eyes open, careful planning, and contractual safeguards to avoid ABC’s predicament.
Related articles
- Broadcom ELA vs Separate Contracts – Which Model Fits Your Enterprise?
- Broadcom Subscription and Support Terms in Enterprise Agreements – What to Watch For
- VMware Contract Changes Under Broadcom – What’s Different and How to Negotiate
- How to Build Flexibility Into a Broadcom Enterprise License Agreement
- Negotiating a VMware Enterprise Agreement Under Broadcom – Strategies for Buyers
FAQs
Q: Does Broadcom offer one enterprise agreement for all products?
A: Yes. Broadcom’s Portfolio License Agreement (PLA) can cover a wide array of Broadcom software products under one contract. In theory, a single PLA could include infrastructure software (VMware), security software (Symantec), mainframe software (CA), and more – all co-termed. In practice, whether you get “one agreement to rule them all” depends on your needs and negotiating position. Large enterprises often consolidate their agreements into a single contract for simplicity. Smaller customers might still buy products à la carte if an ELA doesn’t make financial sense. But Broadcom’s direction is to encourage broader agreements. If you have significant spend across multiple Broadcom business units, expect them to push an all-encompassing ELA that simplifies your purchasing into one deal (and incidentally increases your lock-in to Broadcom).
Q: How did VMware’s ELA program change under Broadcom?
A: Broadcom has essentially reset VMware’s enterprise licensing approach. Previously, VMware offered its own ELA arrangements and volume purchase discounts, often with flexible terms and the option of perpetual licenses. Under Broadcom, all new VMware deals are subscription-based, and any prior VMware ELA customers must transition to Broadcom’s models when their term is up. Key changes include the shift to core-based licensing (which can require more licenses for the same hardware), the end of VMware-specific discount programs (no more vSphere loyalty credits or multi-year renewal caps that VMware might have given), and stricter standard terms. Broadcom also merged VMware products into fewer bundles, meaning your next VMware ELA will likely look different – you might be buying a package that includes products you previously licensed separately. In short, if you had a VMware ELA before, don’t expect a simple renewal. It will be a renegotiation under new rules, likely with higher costs unless you expand the scope or negotiate expertly.
Q: What discounts are possible in a Broadcom ELA?
A: The discount can vary greatly depending on the size and scope of your deal. Broadcom is known for offering modest discounts on smaller deals (sometimes single-digit or low tens of percent off the list price). However, if you bundle a large portfolio and commit to a significant multi-year spend, larger discounts (20-30% or even more in exceptional cases) are attainable. We’ve seen instances where very large enterprises negotiating an all-in PLA got substantial upfront discounts to entice them. Broadcom might also give extra incentives like a bigger first-year discount or transition credits if you’re bringing a lot of existing licenses into subscription. Important: Whatever discount you do secure, focus on its longevity. A high discount is great, but if it’s not guaranteed for renewals, you may face a significant price increase later. Also, ensure any additional licenses you add during the term get the same discount. As a strategy, benchmark what similar companies are paying if possible – Broadcom’s pricing isn’t transparent, so any data points strengthen your position. Finally, note that Broadcom’s philosophy is value over volume: they would rather do a $10 million deal at a 15% discount than a $5 million deal at a 30% discount.
In other words, they push for bigger bundles, even if it means offering a slightly higher percentage off. Always evaluate the actual dollars spent and software value received, not just the discount number.
5 Actionable Strategies for Broadcom ELA Negotiations
- Never Sign Without Growth & Price Protections: Insist on clauses that allow usage growth (e.g. +10% capacity) without extra cost and cap any price increases. This prevents nasty surprises if your needs expand or when it’s time to renew. Never rely on verbal promises – get those protections in writing.
- Scope the ELA to Real Needs – Avoid Shelfware: Be very selective in what products and quantities you include. Don’t let Broadcom pad the deal with “nice to have” products that your team isn’t committed to using. Every component should have a justified use case; otherwise, you’ll be paying for shelfware and weakening your ROI.
- Cap Support Fees and Uplifts: Ensure the contract fixes support costs (if separate) or the subscription rate for the term. Negotiate a maximum uplift % for renewal. If Broadcom’s initial offer lacks these, introduce your own terms for stability. Controlling these factors keeps long-term costs predictable and guards against Broadcom’s notorious price hikes.
- Align All Licenses to a Single End Date: Co-term all licenses so that they all renew together. This consolidated timeline gives you maximum leverage to negotiate a favorable deal at renewal – you can even threaten to walk away from the entire portfolio if necessary. Staggered expirations only benefit the vendor, as you’ll be forced to renegotiate in pieces.
- Audit Your Legacy Contracts and Preserve Key Terms: Before entering a new Broadcom ELA, review your existing VMware, CA, and Symantec contracts. Identify any favorable terms (discounts, usage rights, etc.) you previously had. Use these as a baseline in negotiations – even if Broadcom won’t match them outright, you can push for transition credits or contract language that approximates those old benefits. Don’t let Broadcom wipe out all legacy protections; at the very least, be aware of what you’re giving up and try to negotiate some form of compensation for it.
By following these strategies, you can approach a Broadcom Enterprise License Agreement or Portfolio License Agreement with a much stronger hand. The key is due diligence and assertiveness: know your needs and usage, demand fair terms, and don’t be afraid to challenge Broadcom’s first offer. With careful negotiation, you can harness the convenience of an ELA/PLA while avoiding the worst pitfalls that often come with these sweeping contracts.
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