VMWare Licensing Basics - Understanding the VPP, EPP and ELA Agreements

VMware’s menu of license agreements is relatively straightforward, as it only has 3 major licensing agreements: VPP, EPP and ELA. Below is a brief overview of all three, starting from the bottom with little customer spend/seats, and ending with the complex, enterprise-caliber agreement.

The Volume Purchasing Program offers entry-level customers significant, incremental discounts for purchasing a minimum of $25K in eligible VMware products. Customers enroll in VPP, accumulate points with each purchase, and receive rewards.

VPP Policies and Discounts – VMware has established four discount levels that range from 4-12% for qualifying orders, based on the end customer’s accumulated VPP point total. The discounts may be applied to License purchases, and do not apply for Service and Support.

VPP KEY FEATURES:

• For most products, 1 VPP point = ~$100
• The point value of a given product is the same across all geographies
• The point dollar ratio may vary over time by SKU
• Points are valid for up to 2 years, after which they roll-off

BENEFITS OF VPP:

• Budget Predictability – VPP offers customers the ability to better plan their budgets since discounts are guaranteed for at least 2 years
• No Commitments – VPP members have no obligation after making the initial qualifying purchase
• Rewards for Customer Loyalty – VPP rewards customer loyalty by allowing points from purchases to accumulate over time
• Account Visibility – VPP tools provide visibility through easy-to-use online account management tools
• Simplified Program Rules – VPP offers parity through simplified program rules and common global entry thresholds and discounts
• “Family-Friendly” Rules – “Family-Friendly” program rules allow related subsidiaries/legal entities to pool purchases and earn higher family discounts

The Enterprise Purchasing Program is a token-based program that provides customers with an alternative beyond the VPP.

EPP is designed for mid-level customers, offering both better discounts and greater flexibility, without the complexity of more robust agreements. It accomplishes this by being a token-based licensing program, meaning customers purchase “tokens” to allocate towards usage of VMWare products, rather than obtaining points after the purchase as in VPP. Additionally, it grants access to future upgrades, ensuring customers can obtain the “latest and greatest” VMware products. Yet, EPP is restricted to region-based customers, not global customers.

EPP KEY FEATURES:

• Minimum purchase order of 2,500 tokens ($250K, 1 token = $100)
• Tokens can be redeemed any time for additional License purchases or Services and Support
• Upon token redemption, license keys are immediately delivered to customer
• Customers can add a minimum of $50K in tokens (500 tokens) to an active contract at any time
• Tokens can be distributed to different departments for added flexibility
• Tokens expire after 3 years

BENEFITS OF EPP:

1. Cost efficiency through buying tokens as a way to purchase VMWare products
2. Budget predictability as tokens purchased in advance, prices are set at time of purchase
3. Wide variety of programs to choose from, whether that is transactional or strategic purchases
4. Simplified deployment with flexible, single value license keys
5. Account Visibility through the easy-to-use online account management that VMWare provides
6. Eligibility to VPP for any EPP customer at L4, during the entire duration of the EPP deal

VPP vs EPP Comparison Chart:

The Enterprise License Agreement is the ideal contractual agreement designed specifically for global customers. It offers attractive financial and operational benefits unavailable in the per-product, transactional agreements between VPP and EPP. ELA lets customers obtain VMware product licenses over a fixed period of time with a fixed price through its lifecycle, as well as a fixed renewal fee.

ELA is the best route to mitigating global license compliance issues AS VMware uses a dedicated auditing team to research their customer’s license compliance.

Unlike the VPP and EPP, the terms of the ELA are entirely dependent on the needs of the customer. Recently dropped from a minimum of $650K, minimum enrollment in the ELA now starts at $250K but can be negotiated with a dedicated partner at as low as $150K. But again – ELA is more dependent on a needs-basis rather than a minimum purchase order.

KEY FEATURES OF ELA:

• Although minimum enrollment starts at $150K, new license revenue should be $175,000 or higher in order to receive significant discounting
• Because VMWare is using such a dedicated auditing team, customers are more prone to incur additional payments through support services
• Upfront investment is required, as customers usually pay for the deal terms, which typically involves at least three years, in advance

BENEFITS OF ELA:

1. Continuous support in form of discounted licenses and training throughout the ELA term
2. Simplified deployment through single volume license keys
3. Fixed pricing and renewal fee with pre-defined cost on future maintenance
4. No true-up due at the end of the term that may impact renewal pricing
5. Eligibility to VPP for all customers upon request for the entire term of the ELA deal
6. Global Consolidation of Multiple Enterprise Agreements for ease of management as well as global deployment rights

VPP, EPP and ELA have distinctive benefits, yet finding a solution that fits your business can be challenging. Deciding which VMWare license agreement model to choose can be difficult to determine. Although VMWare tried facilitating the decision by providing limited choices, implementing one is a high-risk, long-term investment, hence caution is advised. To speak with a SoftwareONE licensing expert regarding your best VMware license agreement strategy click the banner below!