Understanding the Case for VMware

Why VMware remains indispensable today, as our SaaS future looms on the horizon.

When I started my first CIO role at Pepperdine, I inherited a troubled PeopleSoft implementation that had been complicated by Oracle’s acquisition. It became clear that Oracle intended to recoup its investment by updating and repricing its licensing models. Pepperdine had overbought PeopleSoft licenses and quickly learned that scaling back drove costs up, as Oracle tied discounts to maintaining the full footprint. That lesson underscored the need for long-term contracts with real flexibility.

Some institutions responded differently, turning to the open-source Kuali project in hopes of escaping Oracle’s control. But the effort consumed millions while never delivering at scale: a strategic misstep of chasing independence rather than maximizing vendor partnerships. Today, Broadcom has stepped into Oracle’s old role, increasing costs for its VMware product suite in ways that feel punishingly familiar.

Yet VMware remains indispensable for institutions running on-premises finance, HR, and student systems. In today’s Dispatch, I want to discuss how today’s VMware problem looks a lot like the challenges higher education faced with Oracle twenty years ago, and how CIOs should approach today’s challenge much, much differently.

The big picture

Broadcom’s VMware pricing strategy has shocked higher education, wiping out academic discounts, ending perpetual licenses, and replacing them with subscription fees that have surged by hundreds to more than a thousand percent. Universities now divert scarce funds just to keep core systems running, and for anyone asking why tuition keeps climbing, this is one of the many hidden pressures driving costs higher.

The response has been angry. CIOs describe the hikes as predatory, citing quotes that jumped from $17,000 to nearly $500,000 and student labs suddenly priced out. Across industry forums and press coverage, Broadcom has become shorthand for distrust, even as technologists admit switching off VMware is as daunting as it is risk-laden.

Beneath the outrage lies a sobering reality. VMware’s technical functions are state-of-the-art and deeply ingrained, making them difficult to abandon. Broadcom is aware of this and recognizes that while alternatives exist, they come with significant risks and costs. What higher education is experiencing is not predatory, but a calculated strategy designed to maximize investment returns from a mature and captive market.

Why VMware Matters

VMware didn’t just modernize data centers; it transformed them. Thirty years ago, universities stacked pizza-box servers by the rack to support web-enabled systems. Most of that hardware sat idle outside of peak periods. VMware’s virtualization flipped the model, allowing dozens or hundreds of virtual machines to run on a single physical server. Costs dropped, uptime improved, and tools like vMotion gave administrators the ability to shift workloads seamlessly during spikes like course registration, without rebooting or disruptions. Over time, VMware became standard practice, bundled with nearly every server purchase, until it was everywhere.

That ubiquity explains why the stakes are so high. In the University System of Georgia, we run more than 2,000 virtual servers to support ERP systems serving 26 institutions, 400,000 students, and 70,000 employees. These servers power payroll, benefits, financials, and student systems from recruiting through graduation. Each requires multiple copies to support production, testing, and development. VMware is the invisible foundation that keeps this enterprise functioning at scale.

The importance of that foundation became clear in late 2024, when a catastrophic storage failure took down dozens of virtual database servers at once. The hardware redundancy failed, and our ERP systems were suddenly dark with payroll looming in just days. VMware was the difference between disaster and recovery. By shifting real-time mirror images to alternate hardware at a secondary site, we restored financials and HCM in under 24 hours and brought student systems back online within a few days. Without VMware and vMotion, we would have been left reinstalling operating systems, reconfiguring databases, and hoping backups could be restored in time. Payroll might have been missed. With VMware, we didn’t just survive; we delivered.

That’s why VMware matters. Alternatives exist, but every option carries the same lock-in risk, plus migration costs and retraining demands. For CIOs running thousands of VMs on-premises, VMware is not just another product. It is essential infrastructure, the foundation of infrastructure resilience, and a reason CIOs sleep better at night.

Why Broadcom Is Acting This Way

It’s easy to say Broadcom is greedy, that it paid too much for VMware, and is forcing customers to bankroll the deal. But there’s another way to see it. Broadcom made a massive investment, $61 billion, in a company whose core market is shrinking. On-premises application hosting is not a growth engine. Like cable TV before streaming, the model is mature, reliable, and still essential for thousands of customers, but its future trajectory is downward. Broadcom is acting rationally in that context.

Broadcom has chosen to invest heavily in VMware’s portfolio. The strategy is to build a full suite of tools that allow organizations to replicate AWS- or Azure-like functionality within their own data centers. Compute, storage, networking, disaster recovery, even Kubernetes orchestration; VMware can now serve as a private-cloud platform for enterprises that can’t or won’t move everything into the public cloud. For institutions like universities, where certain ERP systems and research workloads remain tied to on-premises hardware, this investment is scalable and creates value.

The challenge is that this value is aimed at a shrinking customer base. The future is SaaS: finance, HR, student systems, and even research platforms are shifting to subscription services in the cloud. Broadcom understands that VMware will never again be the Toyota of enterprise software, serving everyone with scale and affordability. Instead, it is repositioning VMware as the Lexus: an expensive, premium product for the very largest enterprises that still need complex on-premises environments. By raising prices, Broadcom is both recapturing its investment and defining VMware as the high-end choice for those who cannot walk away. From its perspective, this is not exploitation but a deliberate move to keep VMware viable as the best on-premises virtualization suite in the world, even as that world is smaller.

What CIOs in Higher Education Should Do

If your institution still runs on-premises applications and servers, VMware remains essential. Nothing else provides the same assurance of business continuity when disaster strikes. Payroll, financials, and student systems are too important to gamble with, and VMware’s virtualization and recovery capabilities are proven in ways that no alternate hypervisor or improvised cloud solution can fully match.

That means the idea of simply switching platforms, whether to Nutanix, Azure, or AWS, does not make the lock-in risk go away. It only trades one massive dependency for another, while layering on the costs of migration and the very real risk of migrating your enterprise in real-time. And if you choose to switch hypervisors but otherwise continue business as usual, you may save money, but you are assuming multiples of operational risk that will remain invisible until the day it surfaces.

The most sustainable long-term strategy is to get out of on-premises hosting, period. That means adopting cloud-native, SaaS applications for your core business functions. The University System of Georgia has selected Workday as its SaaS solution for Finance and HCM, replacing on-premises solutions. We’re considering our options to shift student systems to SaaS later. CIOs who want to escape what everyone now calls “the VMware problem” must recognize that the real problem is the outdated practice of hosting mission-critical software in local data centers. VMware knows this, too; that is why it has positioned itself as the Lexus of on-premises infrastructure, serving those who cannot yet leave, while the rest of the industry moves to SaaS.

The final word

For CEOs, the message is simple: these sudden budget increases do not mean your CIO is failing; they mean your CIO is doing the job right. VMware’s higher costs are not a waste; they are the price of maintaining continuity while your enterprise transitions to the future. This is not about inefficiency; it is about sustaining payroll, student systems, and financial operations until they can be replaced with SaaS platforms. Unless your institution is in the business of selling cloud infrastructure, your future does not lie in running servers; it lies in consuming services.

That means today’s outsized VMware costs are ultimately short-term. They represent the necessary investments your CIO must make to manage current risks while steering the enterprise toward a SaaS future. The destination is clear: core systems for finance, HR, and student management will migrate to cloud-native platforms like Workday and Oracle, where scale, resilience, and continuous innovation are built in. The road may be uneven and the timeline long, but every dollar spent on VMware today is buying continuity and stability while that transition continues.

The real challenge for leadership is to see beyond the pain of this moment and understand it as part of the bridge to what comes next. VMware remains essential as long as you are in the on-premises application business. Your investment in VMWare holds the line until SaaS and cloud-native adoption are complete. And of course, VMware knows this is the future: that is what guides its strategic vision today.