Running the numbers on VMware Cloud Foundation: How one midsize enterprise is making it work

VMware Cloud Foundation (VCF) combines compute, storage and network virtualization into a single platform that’s priced on a subscription basis. This is a departure from the past, when customers were able to buy individual pieces of the product under perpetual licenses instead of subscriptions. The new approach is often considered to be a better fit for VMware’s largest customers, at the expense of smaller clients. But one firm says it’s making it work – and saving money while doing it.

Grinnell Mutual is a 116-year-old insurance company based in the small town of Grinnell, Iowa. It has 750 employees and an IT staff of 17 people. A year ago, the company’s IT infrastructure was a mixture of technologies from different vendors, and some of these technologies were coming up for renewals, including SQL software from Microsoft and server and storage hardware from HPE. In the case of its virtualization software, simply continuing as before wasn’t an option, since VMware’s basic virtualization platform was being replaced by the all-in-one VCF.

For many VMware customers, the switch from perpetual licenses to subscriptions and from a-la-carte to all-in-one has meant substantial price increases, leading some to sue VMware’s new owner, Broadcom, or to look for alternative providers. Members of the association of Cloud Infrastructure Services Providers in Europe reported increases ranging from 800% to 1,500% to the European Commission, for example.

According to a Gartner peer community survey, 74% of VMware customers are “actively looking at alternatives to VMware,” 13% said they were waiting to see how things shake out, and 9% said they weren’t rethinking their relationship (the remaining 4% answered the survey even though they weren’t VMware customers).

“I had followed the acquisition very closely and heard what people had been saying about pricing,” said Jeremy Wright, director of IT infrastructure at Grinnell Mutual. He spoke to the audience at last week’s VMware Explore conference in Las Vegas and shared details about his company’s experience with VCF in an interview with Network World.

Wright could see how some larger companies might benefit from the new structure. But it wasn’t clear how a small company like Grinnell would be affected. When he ran the numbers, Wright discovered that Grinnell would actually come out ahead. Substantially ahead.

Grinnell leases its infrastructure, and one big renewal coming up was that of all of its hardware, which would happen a little over a year after the VMware subscription renewal. “We were all-in on HPE,” said Wright. “It’s a great platform.”

Grinnell was leasing its servers and storage, not buying, in order to get predictable prices and regular hardware upgrades. “It allows our business to understand the ongoing cost and make sure we’re staying up to date, and staying current, without having a debate every four years,” Nicole Chesmore, Grinnell’s assistant vice president for IT security and infrastructure services, told Network World.

“We spend about a million dollars just on hardware, and another 10% to 15% on the support of that hardware,” added Wright.

But while it was using VMware’s core vSphere functionality to manage the servers, the storage was still handled the old-fashioned way. “We had manual processes, with traditional Fiber Channel arrays connecting all of that to our server infrastructure,” Wright said.

What Grinnell ended up doing was to work with the leasing company to move up its HPE renewal. The external storage arrays would be gone. Instead, Grinnell would be using the updated storage included with the servers, and it would manage it using VMware’s vSAN, a virtualized storage product now included as part of the VCF subscription.

Eliminating the external storage meant that Grinnell would save $1 million over the five-year term of that lease.

The company did not disclose its total IT spending, but the $1 million dollars in savings is considerable, said Chesmore. “It’s a substantial amount of our budget.”

Grinnell also used the transition as an opportunity to optimize its SQL Server licensing, reducing it by one-third. “As we continued to modernize applications and streamline processes, we’ve been able to remove quite a few of our older technologies out of our portfolio,” Chesmore explained. “We retired items that should have been retired a while ago.”

Some savings also came from the transition to VCF, Wright added.

A portion of the SQL Server workloads had been used for development. “We are looking to move those workloads to Data Services Manager within VCF, which is no additional cost to us,” said Wright. Data Services Manager, which is included in the VCF 9.0 platform, is a database-as-a-service platform for private clouds.

“VCF allows us to do more with less,” Chesmore said. “It allows us to not increase costs while bringing cloud functionality to the organization, to keep things moving forward.”

The new platform is also dramatically easier to manage, said Wright. “It’s dead simple compared to the storage systems of the past.”

Grinnell also considered moving away from its VMware Horizon VDI virtual desktop infrastructure to Azure Virtual Desktop. “We prefer virtualization because we can support it quicker, do updates quicker,” said Chesmore. But some employees still use traditional machines, she added. “Some of the reps are going to small towns and there’s no connectivity.”

Grinnell did a proof of concept with Azure Virtual Desktop, but discovered that it didn’t match the on-prem solution that the company already had in place. “So it didn’t make sense for us to pursue it,” said Wright.

Another migration option was to shut down Grinnell’s on-prem data centers entirely and move everything to the public cloud. “That is always an ongoing conversation,” said Chesmore. “When you own your own data centers, it’s an expensive resource. You have to continue to do that cost analysis. And there are absolutely scenarios where full cloud makes sense. But we found that we were able to provide all of the same cloud capabilities, and continue to mature, without taking on some of that higher risk.”

Staying on prem means that the company doesn’t have to worry as much about unexpected costs as a result of developer experimentation. “They can spin up a new container without us having to track what it cost to stand that up,” said Wright. “I don’t care. I have the capacity. We own it. They can do it, and it’s secure. And as an administrator, we can see it very easily, so there’s a lot less shadow IT.”

In the end, Wright said, adopting VCF provides opportunities for consolidation and reducing silos within the company.

Editorial disclosure: Network World contributing writer Maria Korolov attended VMware Explore 2025 in person, and her travel costs were paid by Broadcom. The vendor-paid travel does not influence our editorial coverage.

Read more news from VMware Explore 2025:

• Broadcom’s VMware strategy pays off financially, but customers not as keen as Wall Street: To many attendees at this year’s VMware Explore conference, turnout felt smaller, there were fewer sessions than last year, and there were markedly fewer vendors on the exhibit floor. But while the mood among VMware Explore attendees was dour, Broadcom is seeing record gains.
• Broadcom touts AI-native VMware, but gains aren’t revolutionary: Broadcom’s VMware has taken on the AI mantle, declaring that the VMware Cloud Foundation platform is now “AI native.” In the big picture, however, Broadcom didn’t set the world ablaze with its announcements. They were all the obvious next steps for the company and do not move the needle forward on AI technology.
• Broadcom CEO urges cloud-to-on-prem repatriation: “Most of you continue to be weighed down by your infrastructure, and you’re afraid to move forward,” Broadcom CEO Hock Tan said in his conference keynote. “So how do you let go of your IT past so you can build for the future? Well, I can tell you for sure the answer is not to run straight to public cloud, as you did five, ten years ago. If you’re going to do cloud, do it right. Embrace VCF 9.0 and stay on prem.”
• Broadcom tackles agentic AI security challenges: Broadcom announced new security enhancements for its VMware vDefend and VMware Avi products, which are part of the VMware Cloud Foundation Cyber Compliance Advanced Services. Upgrades include more security for agentic workflows, including model context protocol (MCP) servers, and support for post-quantum encryption, among other improvements.
• Broadcom and Canonical expand partnership, promising accelerated innovation: The combination of VMware Cloud Foundation and Ubuntu Pro offers enterprise-grade container-based and AI applications.
• Broadcom launches VMware Tanzu Data Intelligence and Tanzu Platform 10.3 to drive agentic AI:Broadcom is pushing its new data lakehouse platform as the answer to all an enterprise’s data challenges — or almost.
• As VMware Explore kicks off, customers are looking for VCF value: Despite grumbling by customers, as well as legal action against Broadcom on a number of fronts, there’s no indication that Broadcom CEO Hock Tan is wavering the least bit from his strategy. Broadcom’s pitch is that VMware Cloud Foundation (VCF) enables IT organizations to run a modern, virtualized, high-performance, highly automated, AWS-style cloud in an on-prem environment with all of the benefits that accrue.