Tag: IT

Broadcom’s Acquisition of VMware Sparks Unprecedented Chaos in the Virtualization World | Blog

Broadcom’s staggering US$61 billion acquisition of VMware in January marked one of the largest technology deals ever. Broadcom’s reputation for radical cost-cutting and focus on short-term shareholder value following acquisitions has raised concerns about VMware’s future direction. Read on for recommendations for enterprises, service providers, and competitors to deal with the aftermath of the acquisition of VMware.

Connect with us to discuss this acquisition further.

Broadcom’s acquisition of VMware has ignited worries that Broadcom’s aggressive cost-slashing and financial optimization measures will harm VMware’s reputation as a trusted partner and hinder its ability to innovate.

Let’s look at Broadcom’s troubling past track record of taking over companies and then selling off non-core assets:

  • Broadcom acquires CA Technologies: After Broadcom bought CA Technologies for US$18.9 billion in 2018, it sold the software company’s Veracode platform the following year for US $950 million and intermittently laid off CA Technologies employees. Moreover, CA Technologies’ mainframe business customers regularly expressed dissatisfaction post-acquisition, citing a lack of client focus, with many looking for a way out. Everest Group followed the acquisition of CA Technologies in detail in our blog, Broadcom, CA Technologies, and the Infrastructure Stack Collapse
  • Broadcom buys Symantec’s enterprise software business: Following its purchase of Symantec’s enterprise software business for US$10.7 billion in 2019, Broadcom sold Symantec’s cybersecurity services business to Accenture and the enterprise consulting group to HCL Technologies in 2020

Broadcom might be treading a similar path with VMware. As its acquisition history suggests, Broadcom’s actions will likely be drastic and swift. Within only a month, Broadcom has already created worrying disruptions, posing serious concerns for VMware clients and partners as outlined below:

VMWare blog

A brief history of VMware and Broadcom

Founded in 1998, VMware pioneered virtualization technology, allowing multiple virtual machines to run on a single server, eventually creating the multi-billion cloud market. Over the years, VMware grew its product offerings, such as vSphere, ESXi, and Workstation, to become a dominant cloud and infrastructure player. VMware created multiple software solutions for data center management, networking, security, and the digital workplace. The company has maintained a reputation for innovation, working closely with its service partners and creating a positive client experience.

Established in 1991, Broadcom initially specialized in developing semiconductors,  focusing on communication and networking chips. The company expanded over the years into many other areas, including security, infrastructure storage and management, and industrial solutions. In recent years, Broadcom consolidated its portfolio and now reports revenue in two areas – semiconductor solutions and infrastructure software. Broadcom is known for its aggressive acquisition strategy and focus on financial returns, often raising concerns about its commitment to product innovation and long-term support.

VMware and Broadcom merger leaves enterprise CIOs flummoxed

Since its launch over a decade ago, VMware has held massive dominance in cloud computing, with nearly all enterprises licensing its virtualization technology. Its slowdown started when the giant hyperscalers, such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform, developed public cloud offerings with multiple advantages beyond VMware’s in private cloud settings.

However, most enterprises eventually realized that both public and private clouds had their advantages and drawbacks and settled for a hybrid environment to leverage the strengths of each cloud type.

  1. Enterprise recommendations

CIOs who had settled on hybrid cloud strategies have been left with pressing questions by Broadcom’s acquisition of VMware. They must decide whether to stay with VMware, immediately look for alternatives, or wait and watch what peers do. This also allows organizations to reevaluate service providers’ innovative problem-solving abilities or rebalance hybrid cloud portfolios.

While the answers to these critical questions will depend on their specific situations, all enterprises should take the following steps:

    • Reexamine the hybrid cloud portfolio mix – Most enterprises today have an ineffective blend of workloads on public and private clouds, leading to low-value realization. Enterprises should first reevaluate workloads and create a strategic migration and modernization plan
    • Assess the Virtual Desktop Infrastructure (VDI) needVMware and Citrix have been the leading VDI vendors despite the technology’s performance challenges. Fortunately, managing the VMware disruption in the VDI space should be relatively straightforward given the low penetration of VDIs among employees and a flurry of VDI-as-a-service offerings from BigTechs such as Azure Virtual Desktop, AWS WorkSpaces, Citrix DaaS, and specialist players like Anunta, Dizzion, and Parallels
    • Evaluate the implications of staying with or leaving VMware While each organization should undertake a thorough cost-benefit-impact analysis, they should consider the following factors:
      • Expect an increase in total cost of ownership (TOC): Broadcom’s move from perpetual licenses to membership-based pricing will likely result in higher TOC
      • Consider the impact on customers engaged with Dell: Organizations engaged with Dell as the VMware reseller will see an even higher price impact since Broadcom eliminated Dell’s preferred pricing with VMware
      • Recognize the cost of change: Most enterprises have been using VMware software for a long time. Shifting away will require a significant transformation with upfront investment, talent management, and business continuity planning
    • Engage actively with service provider partners – Most enterprises have adopted VMware solutions through third-party service providers. Clients should accept their help to understand the alternatives, advantages, limitations, and integration risks and engage them to create innovative options.
  1. Service provider recommendations

Service providers play a critical role as the conduit between technology providers and enterprises in helping provide guidance and the next steps to navigate this uncertainty.

While service provider partners are also grappling with sudden, unexpected terminations of partner agreements with VMware, they must act quickly to determine the best step for their enterprise customers. Delaying and watching is not an option, and we recommend the following actions:

    • Understand and evaluate all alternatives – A thorough understanding of all available alternatives to VMware is the first step to retaining credibility with enterprises. Nutanix, Microsoft, Citrix, Scale Computing, and ComputerVault are options for virtualization, while Microsoft Azure virtual desktop, Amazon workspaces, and Citrix workspace are contenders for VDI. Not to be forgotten, hyperscalers, including AWS, Azure, GCP, Oracle, and IBM, also offer virtual private cloud and full-stack solutions
    • Refine and accelerate hybrid cloud go-to-market – Every cloud has a silver lining, and the VMware uncertainty has created an opportunity to add new energy to a stabilized cloud go-to-market and messaging. Many enterprises claim a lack of service provider cloud innovation over the last two or three years, and this is an opportunity to start new conversations and deepen relationships
    • Push Desktop-as-a-Service (DaaS) offerings – DaaS or VDI-as-a-service offerings have been available from vendors, including hyperscalers, BigTechs, service providers, and specialists, but haven’t taken off. Despite the many DaaS benefits, enterprises have shown interest spikes but lacked an external stimulus to kickstart large-scale transition. The VMware frenzy could be a catalyst for the transition to DaaS
    • Collaborate with Broadcom without biases – The sudden and shocking actions by Broadcom have led to many preconceived negative perceptions. However, service providers should be open to what Broadcom will offer as it aims to set a level playing field for VMware’s partners. Keeping an open mind will allow providers to leap ahead of their peers on VMware partner status. VMware’s huge client base cannot be ignored despite the current upheaval
  1. Competitor recommendations

Since VMware has shown its belly to competition, it’s now a mad rush. VMware’s competitors have a rare opportunity to grab its clients, potentially giving them considerable future revenue. Competitors understand this and have launched a scathing attack on VMware through email and social media campaigns, as well as direct outreach. While the desire to capture a larger market share is understandable, competitors should take a more balanced and pointed approach for higher conversion rates. We recommend the following strategies:

    • Create a structured attacker strategy – Going after as many clients as possible might sound attractive but is most likely inefficient. Identify a long list of accounts to target, prioritize them based on relevance, and create dedicated teams with established Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs)
    • Build deeper account intelligence to win more clients – Winning new clients requires a more nuanced approach beyond the marketing tactics to connect with distressed clients initially. Understanding the specific context of each potential client, including pain points, decision-making stakeholders, existing software, integration challenges, etc., can significantly increase deal conversion rates
    • Maximize channel partner leverage – Develop joint attacker strategies in collaboration with service providers who often understand clients’ needs better. Aggressively expand partnerships with service providers

We will continue to follow this space and watch how Broadcom’s acquisition of VMware unfolds. If you would like to discuss this further, reach out to [email protected] or [email protected].

Catch our upcoming webinar, Engineering Services in 2024: The Market Outlook and Commercial Trends, for insights into the pricing outlook, commercial dynamics, market attractiveness, and evolving buyer expectations for engineering services.

Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists | Webinar

ON-DEMAND WEBINAR

Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists

As we enter 2024, enterprises are under immense pressure to optimize their budgets and uncover potential cost savings. Over the past three years, businesses across the globe have struggled to stay within their budgets. In 2021 and 2022, we saw a sharp increase in pricing, and then budgets were slashed in 2023.

We face a strong likelihood of an economic slowdown in 2024 and an uphill battle to deliver savings. Watch this webinar to learn current pricing trends and how enterprises can find greater value and lower costs in their outsourcing, cloud, and SaaS contracts in the new year.

What questions did the webinar answer for the participants?

  • Where is outsourced deal pricing headed in 2024 amid an economic slowdown?
  • How can enterprises drive more savings from their outsourcing contracts?
  • How can enterprises realize better value from their Cloud and SaaS contracts?

Who should attend? 

  • Global enterprises
  • CIOs, CTOs
  • Supplier and vendor managers
  • Technology directors, IT managers
  • ITS/BPS strategy heads
  • Service providers
  • Technology providers
Rahul Gehani
Partner
Abhishek Sharma
Partner
Shitika Ujjain
Practice Director
Kunal Verma
Vice President

Application Transformation Services PEAK Matrix® Assessment 2024 – North America

Application Transformation Services

Recognizing the increasing demands of customers and business imperatives for meeting productivity mandates, enterprises are increasingly acknowledging the significance of application transformation. To unlock the full potential of emerging technologies, businesses are accelerating their application transformation journeys and migrating away from legacy estates. However, rising macroeconomic uncertainty and cost pressures have led to increased scrutiny of the business value realized from these transformation initiatives.

In response to these evolving expectations, providers are enhancing their offerings through strategic collaborations with technology and platform providers. Additionally, they are actively developing in-house solutions to not only enhance their service capabilities but also to address enterprises’ concerns on value realization. Notably, providers are investing  in strengthening their transformation service portfolio by leveraging next-generation technology themes such as low-code/no-code and generative AI. These initiatives collectively enhance the efficiency and innovation potential of businesses to ensure sustainable growth and competitive positioning in their respective industries.

Application Transformation Services

What is in this PEAK Matrix® Report

In this report, we examine the dynamics of the North American application transformation service provider landscape and assess 28 application transformation service providers featured on Everest Group’s Application Transformation Services PEAK Matrix® – North America. The study will enable buyers to choose the best-fit provider based on their sourcing considerations, while providers will be able to benchmark their performance against each other.
 

In this report, we examine:

  • Everest Group’s services PEAK Matrix® evaluation of 28 application transformation service providers
  • The characteristics of Leaders, Major Contenders, and Aspirants in the provider landscape
  • Providers’ key strengths and limitations 

Scope

  • All industries
  • Geography: North America
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading application transformation service providers, client reference checks, and an ongoing analysis of the application transformation services market

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Three Digital Laws Drive Investments and Change Management | Blog

Fundamentally, investing in digital technologies is the start of an unending journey with continuous change on not just the tech stack but also on business operations. Companies navigate the tech stack part of this journey through an ongoing series of sprints or projects. However, the business operations portion is often less well orchestrated; this slows progress, creates unnecessary friction, and reduces the progress toward the objectives and key results (OKRs) that the transformation aims to achieve.

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