Services Australia's VMware licensing and support hits $94m

Services Australia will spend almost $94 million to renew longstanding licensing and support agreements with VMware for another three years.

The new agreement replaces two three-year contracts signed by Services Australia for VMware’s licenses between 2021 and 2024, and for maintenance and support. 

Together the two deals amounted to $78 million, meaning that Services Australia is now paying 20 percent more than previously.

In a statement about the renewal agreement, Services Australia said the new contract "continues software, support and related services for the agency’s service delivery programs such as Centrelink and Medicare and consolidates expiring contracts.”

iTnews has asked Services Australia to what extent the higher costs reflect increased usage or exposure to price increases following VMware’s recent acquisition by Broadcom.

In 2022, Broadcom announced its plan to acquire VMware for US$61 billion ($86 billion).

Since then, reports have abounded of the chipmaker hiking licence fees for VMware renewals as customers are switched to a new per-core subscription model.

VMware has recently confirmed "pricing challenges" exist for some long-term customers.

Services Australia – then known as the Department of Human Services – has had a software licensing enterprise agreement with VMware since at least 2009.

Under this standing offer, Services Australia signed a number of licensing deals with VMware, with the most recent reaching $44 million for both hardware and software.

Last month in senate estimates, Services Australia chief information and digital officer Charles McHardie said the agency planned to kick off an end-to-end architecture review this year.

“This year we’re undertaking an end-to-end architecture review, primarily focused on each of our major systems,” he said at the time.

“We have some brand-new systems, and we have some systems that have been around for some time, and the results of that architecture will drive some of that future investment.”