Services Australia’s expenditure on VMware licensing and support has surged to $94 million.
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Quick Read
- Services Australia extends VMware licensing and support contracts for approximately $94 million spanning a three-year period.
- The updated agreement shows a 20% rise in expenses relative to earlier contracts.
- Broadcom’s purchase of VMware has resulted in higher licensing costs.
- Services Australia is conducting a comprehensive architecture assessment to enhance its systems.
The Expenses for VMware Licensing and Support for Services Australia Increase Substantially
Services Australia has revealed the extension of its long-term licensing and support contracts with VMware, resulting in a significant outlay of nearly $94 million for the upcoming three years. This latest agreement marks a 20% rise in costs relative to the former contracts, which collectively amounted to $78 million.
The New Agreement
The new agreement that was recently signed takes the place of two individual three-year contracts that Services Australia previously held with VMware for the licensing period from 2021 to 2024, as well as for maintenance and support. Services Australia stated that this contract guarantees the ongoing provision of essential software, support, and associated services for the agency’s key service delivery programs, such as Centrelink and Medicare. Additionally, it merges several expiring contracts into a more efficient arrangement.
Effects of Broadcom’s Purchase
The notable rise in VMware licensing expenses is linked to Broadcom’s purchase of VMware, a transaction worth US$61 billion (AUD$86 billion) in 2022. This acquisition has apparently caused a surge in license renewal fees for VMware, mainly because customers are being transitioned to a new per-core subscription model. VMware has recognized “pricing challenges” for some of their long-standing customers, further increasing the financial strain on organizations like Services Australia.
A Long-standing Relationship
Since at least 2009, Services Australia, formerly the Department of Human Services, has upheld a software licensing enterprise agreement with VMware. Over time, several licensing agreements have been established under this ongoing arrangement, with the latest one amounting to an impressive $44 million, covering both hardware and software solutions.
Upcoming Initiatives: Comprehensive Evaluation of System Architecture
Considering these financial factors, Services Australia is planning to initiate a comprehensive end-to-end architecture review this year. Chief Information and Digital Officer Charles McHardie stated that the review would concentrate on assessing each significant system within the agency. The aim is to gain a clearer understanding of which systems are new and which have become outdated over the years, thereby guiding future investments and technology enhancements.
Summary
Services Australia is poised to invest nearly $94 million to renew their VMware licensing and support agreements over the next three years, representing a substantial 20% increase compared to past contracts. This cost escalation is primarily driven by Broadcom’s purchase of VMware and the resulting increase in licence fees. To meet future requirements and refine their system architecture, Services Australia intends to conduct a comprehensive review of its major systems.
Why has the price of VMware licensing and support gone up for Services Australia?
A:
The cost has risen as a result of Broadcom’s acquisition of VMware, which has introduced higher license fees under a new per-core subscription model.
What is the monetary worth of the new contract between Services Australia and VMware?
A:
The new contract is worth nearly $94 million over three years.
Which programs will gain advantages from this updated agreement?
A:
The updated agreement will facilitate key service delivery initiatives like Centrelink and Medicare.
Q: For how many years has Services Australia maintained a licensing contract with VMware?
A:
Since at least 2009, Services Australia has maintained a licensing agreement with VMware.
Q: What is the objective of Services Australia’s comprehensive architecture assessment?
A:
The purpose of the review is to assess each key system within the organization to identify potential future investments and technology enhancements.
What was the aggregate value of the prior contracts for VMware licenses and support?
A:
The earlier agreements had a total value of $78 million.
Who is Charles McHardie?
A:
Charles McHardie holds the position of Chief Information and Digital Officer at Services Australia.
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