VMware’s menu of license agreements is relatively straightforward. Below is a brief overview of VMware’s 3 key license agreements, starting from the bottom with little customer spend/seats, and ending with the complex, enterprise-caliber agreement.
Volume Purchasing Program
The Volume Purchasing Program (VPP) 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.
- 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
- 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
Enterprise Purchasing Program
The Enterprise Purchasing Program (EPP) is a token-based program that provides customers with an alternative beyond the Volume Purchasing Program (VPP).
EPP is designed for mid-level customers, offering both better discounts and greater flexibility, without the complexity of more robust agreements. EPP is restricted to region-based customers, not global customers. EPP grants access to future upgrades, ensuring customers can obtain the “latest and greatest” VMware products.
EPP is a token-based licensing program, meaning customers purchase “tokens” to allocate toward usage of a VMware product. EPP token details include:
- 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
VPP vs EPP Comparison Chart:
Enterprise License Agreements
The Enterprise License Agreement (ELA) 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; 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.
Benefits of ELA:
- Discounted licenses, support, and training throughout the ELA term
- Single volume license keys to simplify deployment
- Fixed pricing and renewal fee with pre-defined cost on future maintenance
- No true-up due at the end of the term that may impact renewal pricing
- Global Deployment Rights
- Global Consolidation of Multiple Enterprise Agreements for ease of management
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