Running an RFP for Competitive Leverage Against Broadcom
Introduction – Why RFPs Are a Critical Tool Against Broadcom
Negotiating with Broadcom (now home to VMware, Symantec, CA, and many other companies) can feel one-sided. The vendor often assumes customers are locked in and will accept steep price increases or rigid terms.
Running a competitive Request for Proposal (RFP) turns the tables on you. By inviting multiple vendors to bid (Broadcom vs others), you force Broadcom to compete for your business rather than treating it as a captive renewal.
This leverage often leads to better pricing and terms. An RFP-backed negotiation arms you with benchmark data from competitors and dispels Broadcom’s “take it or leave it” stance.
In short, an RFP makes Broadcom justify its prices and sharpen its pencil, giving your enterprise the upper hand in negotiations.
Read our guide to Leveraging Third-Party Support & Alternatives: Gaining Negotiation Leverage Against Broadcom.
When to Use an RFP in Broadcom Negotiations
Not every purchase merits a full RFP, but high-stakes deals with Broadcom do. Consider an RFP in scenarios like:
- Major Renewals: Large VMware infrastructure renewals, Symantec Endpoint Security Suite renewals, or CA Mainframe Tool contracts. Any major Broadcom software renewal presents an opportunity to invite competition. Broadcom’s default renewal quotes are often high, assuming you won’t look elsewhere. An RFP signals that you will.
- New Purchases with Alternatives: If you’re considering Broadcom for a new solution (e.g., a security product or cloud management tool), run an RFP since viable alternatives exist. For instance, if evaluating VMware’s cloud management, also solicit bids from other cloud or virtualization providers. Broadcom performs better when they know alternatives are on the table.
- Large Multi-Year Deals: If Broadcom is pushing a multi-year enterprise agreement, an RFP is crucial. Broadcom tends to assume you won’t consider switching for such broad deals. Opening the field to competitors for a multi-year contract (spanning various products) creates competitive tension. This is especially useful when Broadcom’s proposal bundles multiple products—an RFP ensures each component’s value is tested against the market.
In essence, use an RFP whenever Broadcom assumes you have no choice. It’s a reality check for them and a leverage builder for you. The effort of an RFP is justified when the spend is significant and switching costs, while not trivial, are outweighed by potential savings.
Structuring the RFP – Requirements, Vendors, and Criteria
A well-structured RFP maximizes your leverage. Clarity and fairness are key:
- Define Clear Requirements: Outline your business and technical needs in detail. For a VMware renewal RFP, specify performance, scalability, support, and integration requirements for your virtualization environment. For security or mainframe tools, list required features, compliance needs, and service levels. Clear requirements ensure each vendor knows exactly what they must deliver, preventing Broadcom from dismissing competitors as “not meeting needs.”
- Invite Broadcom + Competitors: Include Broadcom and at least two credible competitors. If the RFP is for VMware software, invite alternative virtualization providers (e.g., Microsoft Hyper-V, maybe even cloud vendors if relevant). For Symantec security, invite other security suite vendors. Having multiple bids (with a minimum of three vendors in total) guarantees that Broadcom cannot win by default. It also gives you multiple data points on pricing and terms.
- Transparent Scoring Criteria: Clearly communicate the key decision factors to vendors. Typical criteria include pricing (total cost of ownership), solution functionality fit, support quality, and contract flexibility. Weigh these factors clearly if possible. For example, if cost and contract terms weigh heavily, Broadcom will realize that simply relying on being incumbent isn’t enough—they must compete on price and flexibility. Transparency here puts pressure on Broadcom to address all areas, not just product features.
- Make Competition Obvious: Without being hostile, make it evident that competition is real. In the RFP document or communications, casually mention that multiple vendors are being considered for evaluation. You don’t need to name them (unless asked), but phrases like “as part of our competitive selection process” send a clear message. Broadcom’s team will understand they are in a live contest, not an automatic renewal. This psychological factor alone often yields a better initial quote from them.
By structuring the RFP with clear requirements and open competition, you create a level playing field. Broadcom can no longer rely on confusion or your lack of options—they must put forth their best offer to win or retain your business.
Communicating the RFP Process to Broadcom
How you inform Broadcom about the RFP sets the tone. The goal is to be professional and matter-of-fact, not threatening.
Position it as standard procedure:
- “As per our procurement policy, we’re running an RFP with multiple vendors, including Broadcom.” This example language indicates that an RFP is a standard business practice for your organization in large deals. It removes emotion and implies that even if you value Broadcom, you have guidelines to follow.
- “We’ll select based on cost competitiveness and contract flexibility.” This reinforces that price and terms are crucial to your decision. It subtly invites Broadcom to sharpen its pricing and be more flexible contractually if it wants to win.
When communicating, maintain a courteous and straightforward tone. You are not “threatening” to leave Broadcom; you are following a process to ensure the best outcome. Ensure that Broadcom’s account team understands this is a genuine evaluation. You might mention timelines (“RFP responses due by X date”) and that Broadcom is welcome to participate fully.
By framing it professionally, you reduce any antagonism. Broadcom is less likely to become defensive and more likely to engage constructively. They realize they need to compete like any other vendor, but they won’t feel publicly cornered or embarrassed. Often, Broadcom will respond by assigning higher-level account managers or special pricing teams once they are aware that an important customer has initiated an RFP.
Key tip: Avoid boasting about other vendors or issuing ultimatums at this stage. Simply communicate the process and criteria.
Let Broadcom infer the stakes on their own. This maintains a respectful relationship while still making your point.
How to reduce risks, Mitigating Risks When Using Alternatives to Broadcom.
How Broadcom Typically Responds (Discounts, Bundling, and Risks)
Once Broadcom is aware of a competitive RFP, expect them to adjust their approach.
Typically, Broadcom’s response will include aggressive discounts or bundle offers, but these can come with strings attached:
- Immediate Discounting: Broadcom will likely drop its price from the initial quote when it knows a bid is competitive. Double-digit percentage discounts that were “impossible” before may suddenly appear. They might also offer more value in the package (extra licenses or added support) at the same price. This is a good sign—the RFP pressure is having an effect. However, scrutinize the details behind a big discount.
- Bundling Temptations: Broadcom might propose a bundle deal to appear more competitive. For example, if your RFP concerns VMware licensing, they could offer to include some Symantec security licenses or additional tools at a “discounted” rate. The pitch will be that the combined value beats standalone competitor quotes. Be cautious: bundling can hide costs for products you don’t actually need, leading to shelfware (unused software) later. Only accept bundles if they are truly aligned with your requirements, and insist on line-item clarity to ensure you’re not paying for unwanted extras.
- Longer Commitments and Lock-In: In exchange for a better price, Broadcom often requests a longer contract term or more stringent conditions. For instance, they might require a 3- or 5-year commitment with no opt-out option, or remove flexibility, such as the ability to reduce licenses over time. These are traps to watch for. A lower price is beneficial, but only if it doesn’t bind your organization to unfavorable terms. During the RFP evaluation, compare Broadcom’s contractual terms with competitors’. An offer that appears financially attractive may carry risk in the fine print (e.g., strict renewal terms, no termination for convenience, etc.).
- Justification of Value: Broadcom sales teams may also respond with a flurry of justification for their higher price – touting superior features, integration benefits (especially if you use other Broadcom products), or risks of switching. While these may be valid points, remember that the RFP process provides you with objective data. You can weigh Broadcom’s value claims against competitor capabilities. Often, the mere fact that a competitor meets, say, 90% of the requirements at a much lower cost will prompt Broadcom to either match the price or add guarantees (such as better support levels or future roadmap commitments) to justify staying with them.
In summary, Broadcom’s typical response to a competitive bid is to come to the table with a better deal, but you must read the fine print. Embrace the discounts, yet remain skeptical of any new conditions.
Use the presence of alternatives to keep Broadcom’s concessions meaningful and not exchange one problem (high price) for another (inflexible contract).
Using RFP Results in Negotiation – Language & Leverage
Once you have the RFP responses in hand, leverage them directly in your final negotiation with Broadcom. This is where you convert competitive data into tangible savings and better terms.
Some tactics:
- Cite Specific Comparisons: It’s powerful to quote competitor offers. For example, “Your competitor X offered a 20% lower total cost of ownership for a similar scope. Can Broadcom meet or beat that?” This kind of statement puts Broadcom on the spot to justify its pricing or narrow the gap between its pricing and that of its competitors. Be factual and calm when citing numbers – it shows you’re making a business decision, not playing games.
- Press for Matching Terms: Pricing isn’t the only leverage point. If a competitor’s proposal included favorable terms (e.g., price locks, the right to scale down usage annually, more flexible payment terms), bring these up. “Vendor Y is willing to cap price increases at 0% for three years – Broadcom, can you provide similar protection?” Often, Broadcom will concede on terms when they know the alternative is losing the deal. Use the best features of each competitor’s bid as a wish-list for Broadcom. Their desire to keep you can translate into them matching the most attractive terms.
- Combine New Business for Discounts: If you have multiple pending deals, use them as leverage to negotiate discounts. For instance, maybe you also need to purchase a new security solution or additional software unrelated to the current renewal. Tell Broadcom that the RFP results will influence where you consolidate your spend. Bundle your renewal with new purchases in negotiation discussions: “If Broadcom can significantly improve the offer, we are inclined to award not just the renewal but also our upcoming project to you. Otherwise, we might move that project to Vendor Z, who came in very competitively.” This signals that Broadcom stands to gain more business if it makes it worthwhile for you. It maximizes your leverage by offering a reward (in the form of additional revenue) for a better deal.
- Maintain Competitive Tension: Even while negotiating final terms, sustain the subtle pressure that an alternative is viable. For example, you might say, “We prefer to stay on VMware if the terms are right, but the board is asking why we wouldn’t choose the cheaper option from Competitor X. Help me justify sticking with Broadcom.” This invites Broadcom to tip the scales (through price or extras) so you can defend the decision to stay with them. You’re essentially letting Broadcom “win” the business, but only by equaling or surpassing what the RFP uncovered elsewhere.
By using direct language grounded in RFP data, you shift the negotiation from Broadcom’s terms to yours.
You have evidence to back every request. Broadcom’s negotiators are trained to handle tough questions, but when faced with actual competitive offers, they know they must act or risk losing revenue.
Every concession you extract – be it a lower price, a contract protection, or an extra service – is a victory driven by the competitive leverage you created.
Risks and Mitigations of Running an RFP
Running an RFP against an incumbent like Broadcom has numerous benefits, but it also carries risks. Be aware of these and plan to mitigate them:
- Perception of Posturing: Broadcom might suspect that your RFP is a bluff – a tactic just to scare them. If they believe you never truly intend to leave, they might call your bluff by offering only minor concessions. Mitigation: Genuinely engage with the competitors. Take their demos, ask detailed questions, and consider running a small pilot or proof of concept. Make it visible (to Broadcom) that your organization is seriously examining other solutions. This genuine effort not only informs you better, but signals to Broadcom that an actual switch could happen if they don’t improve their offer.
- Vendor Pushback or Retaliation: If Broadcom feels the RFP is just a charade or feels affronted, they could become less cooperative. For instance, they might delay support responses or become stingier in negotiation, assuming you won’t actually switch. In worst cases (rare), a vendor might threaten to enforce the contract’s strict terms strictly if they think you’re acting in bad faith. Mitigation: Balance credibility with pragmatism. Maintain a professional tone and keep the relationship business-focused (as noted earlier). Don’t use the RFP to publicly bad-mouth Broadcom; simply use it to gather options. Also, be realistic: if Broadcom truly is the only viable choice for a particular product (e.g., due to technical dependencies), consider whether a full formal RFP is the right approach or if a more informal benchmarking would serve better. You can still reference competitive options in negotiation without an official RFP if switching is practically impossible. The key is not to overplay a weak hand. Only posture as far as your organization is willing to go.
- Resource and Time Investment: An RFP process takes time and effort from your team. In a complex IT environment, evaluating multiple platforms (say, replacing VMware with Hyper-V or another cloud solution) is non-trivial. Mitigation: Ensure that the potential reward (significantly better pricing or terms) justifies the effort. Often, for deals involving millions of dollars, it does. To streamline the process, you can issue a focused RFP that targets core requirements, making responses easier to compare. Also set internal deadlines and responsibilities to keep the process efficient. Broadcom may attempt to drag out their response or stall (“we need more time to get approvals on our bid”), but keep the process moving on your timeline.
In summary, mitigate risks by being earnest and organized in your RFP. A credible RFP that honestly considers alternatives will always put you in a stronger position.
Broadcom might test your resolve, but a well-run process shows them you mean business without burning bridges.
Case Example – Competitive Bid Leading to Savings
Consider a hypothetical enterprise (let’s call it GlobalTech Inc.) that used an RFP to drive savings on a VMware renewal:
GlobalTech was nearing the end of a VMware Enterprise License Agreement for its data centers. Broadcom’s initial renewal quote came in shockingly high, assuming GlobalTech would simply renew to avoid any disruption. Instead, the CIO and procurement team launched a full RFP for virtualization platforms. They invited Broadcom (VMware) to bid and also invited Microsoft and another cloud vendor to propose solutions (Microsoft’s Hyper-V and a cloud IaaS option for some workloads).
Microsoft, eager to expand its footprint, offered Hyper-V and related tools at near-zero licensing cost – essentially bundling it as part of a larger strategic deal. This meant GlobalTech could potentially shift to Hyper-V with minimal software expense (though with some migration effort). The cloud vendor offered credits and aggressive pricing to encourage the migration of a portion of workloads from VMware. For the first time, Broadcom saw that this customer had a credible path off VMware.
Faced with the prospect of losing a multi-million dollar account, Broadcom responded decisively. They returned with a significantly improved VMware offer: a double-digit percentage discount off the previous cost, plus guarantees like three years of price lock and inclusion of a few add-on VMware products at no extra charge. This was a far better deal than their initial stance.
GlobalTech weighed its options. Microsoft’s proposal was enticing financially, but it would involve retraining staff and migrating critical systems—a project the company wasn’t ready to commit to yet. In the end, GlobalTech chose to stay with VMware under Broadcom, but on dramatically better terms.
Thanks to the RFP, the enterprise saved millions of dollars, avoided a forced migration, and secured contract flexibility that Broadcom initially refused (such as the right to reduce some license counts in year 2 if needed).
Outcome: The CIO reported to the board that by running a competitive bid, they achieved the best of both worlds: keeping the preferred platform and getting a market-validated low price.
Broadcom, for its part, retained the customer but at a price point reflective of true market competition. The RFP had proven its worth as a negotiation lever.
(Note: The above example is illustrative, but it mirrors real scenarios where even the threat of migration to alternatives like Hyper-V or cloud causes Broadcom to significantly soften its stance.)
Checklist – How to Run a Broadcom RFP Step-by-Step
Use this quick checklist to ensure you cover all bases when running an RFP against Broadcom:
- Define Your Requirements: Document exactly what you need in terms of functionality, volume, support, and outcomes. (e.g., “Virtualize 500 servers with high availability and X features,” or “Protect 5,000 endpoints with advanced threat detection.”) Clear requirements guide vendor proposals and prevent ambiguity.
- Identify Viable Alternatives: Research and shortlist at least two other vendors that could meet those requirements. Ensure they are credible (industry leaders or strong niche players) so Broadcom faces real competition. If needed, engage analysts or peer insights to find who can replace or complement Broadcom’s product.
- Invite Broadcom and Competitors: Issue a formal RFP invitation to Broadcom and your alternative vendors simultaneously. Provide the same information and timeline to all. This includes RFP documents, Q&A windows, and submission deadlines. Equal footing is crucial for a fair comparison.
- Evaluate Fairly and Document Results: Assess each vendor’s proposal objectively against your criteria. Use a scoring sheet to evaluate functionality, cost, support, and other relevant factors. Document the strengths and weaknesses of Broadcom’s bid versus others. Keep evidence of competitor pricing and terms (you’ll use this in negotiations). Involving both technical teams and financial stakeholders in the evaluation will provide a comprehensive view.
- Leverage Results in Final Negotiation: Go back to Broadcom with the RFP findings. Pinpoint where their offer lags (in terms of price, terms, or features) and request improvements. Share that you have documented offers from other vendors. Use the exact numbers or terms from competitors as negotiating ammunition. Don’t finalize anything with Broadcom until they address the gaps exposed by the RFP. The goal is a final agreement that matches the best elements of the competition, providing you with the optimal mix of value and continuity.
By following this checklist, you ensure the RFP process is thorough and your negotiation stance with Broadcom is well-supported by data.
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