90% of VMware Customers Want Out: CFOs Face the Great Software Replacement

By Amara Osei

Ninety percent of IT leaders at VMware customers are hunting for alternatives, and 86% of IT decision-makers at large North American companies say they are actively shrinking their VMware footprint. Yet just 2% have moved three-quarters of their environments away. That gap between intent and exit defines what analysts now call the great software replacement — and it lands squarely on the CFO's desk.

Three forces drive the shift: climbing licence costs, end of vendor support, and AI-powered coding tools that make building software in-house cheaper. VMware, SAP's ECC and S/4HANA suites, and Oracle's Java top the replacement list. Representatives of all three vendors did not respond to requests for comment.

The numbers stack up quickly:

• Broadcom raised prices sharply after buying VMware nearly three years ago.
• SAP ends mainstream maintenance for perpetually licensed ECC in 2027, pushing customers toward subscription-based S/4HANA.
• Oracle switched Java to per-employee pricing in 2023, so subscribers now pay for staff who have never opened a Java app.
• About 22% of IT leaders are actively reconsidering core systems such as ERP and CRM, per Gartner; more than nine in 10 expect market disruption.

Speculation that AI-coded software could replace SaaS suites fueled the so-called SaaSpocalypse, a sharp slide in SaaS vendor share prices earlier this year. Actual replacement has stayed largely theoretical, though a few IT leaders have begun experimenting.

What does the buy-versus-build shift mean for budgets?

Patrick Connaughton, chief of research at Gartner, sees the change coming in stages. "IT leaders aren't planning wholesale replacements of core systems yet," he said, though he expects that to change in coming years as AI agents replace expensive UIs and seat-based pricing.

"Most IT leaders expect their current software models to be upended as customer fatigue with vendor lock-in, bloated suites, and diminishing returns drives a shift away from point solutions," Connaughton said. "A fundamental buy-versus-build inversion is under way as rapid adoption of agentic coding tools enables organizations to build custom alternatives faster and at lower cost."

Still, institutional trust, regulatory moats and data lock-in will keep most CIOs from major replacements for three to six years, he added.

Why do finance departments pay twice?

John Burns, senior director of finance systems and transformation at Herc Rentals, frames the problem bluntly: finance departments often pay twice, once in licence fees and again in workarounds. "Price increases and end-of-support drive the decision," he said. "AI agents aren't replacing ERP yet. An agent needs a clean general ledger to read from and write to. The ERP underneath stayed."

Burns has surrounded his ERP with best-of-breed tools so the company can unplug it on its own timeline. Before any switch, he advises, the CIO should ask the CFO how many business disruptions the business will tolerate. If the answer is zero, reconsider. "On every ERP and enterprise performance management migration I've run, the licence was the smallest line item," he said.

Kevin M. Coles, founder of Coles Technical Group, put the same point in licence terms. "The licensing change turned a quiet line item into a board-level number," he said of VMware. "Customers stay even when they say they'll leave because the licence is rarely the real cost of switching. The real costs are the integrations nobody documented, the reports finance depends on, the staff who only know one console, and the year of running two systems side by side. Most surveys measure frustration, not switching cost."

His counsel: run the exit-cost exercise before the renewal notice arrives. "Even if you stay, a credible exit plan is the best leverage you'll ever have in the negotiation," Coles said.

How long does an exit actually take?

Brad LaPorte, strategic advisor at Lionfish Tech Advisors, compared vendor switches to moving house. "Java is a studio apartment — pack a few boxes and you're out," he said. "VMware is the house you've lived in for 15 years, with wiring from half your business running through the walls. SAP is the house where the most likely next address is SAP's newer building, on SAP's schedule."

Untangling from a suite like VMware can take up to four years, and for two to four of them a company runs two estates: two patch cycles, two sets of privileged accounts, two attack surfaces — with the old house the one that gets broken into. "Nobody moves out of a 15-year house in a weekend," LaPorte said. "Inventory before you price."

Pino Soro, chief business transformation officer at Quickbase, sees consolidation pressure too: teams paying for three or four tools to manage a single workflow. The takeaway for finance chiefs is plain: the licence is the smallest line item on any exit plan.