Citrix Vendor Update: The Time to Negotiate is Now

Dealing with Citrix used to straight forward: the vendor provided a matrix for discounting based on deal size. However, as the company moves its licensing model to the cloud, we have seen Citrix deals become complex and confusing, lacking in both transparency on pricing and flexibility on terms. This is putting clients at risk of getting locked into deals with high rates and no price protection on future purchases.

Citrix is one of ClearEdge’s top 30 vendors – this year alone our Citrix case count grew by 27%. On average, our clients spend $3M per deal with Citrix. Citrix’s main products are the Virtual Apps and Desktops (VAD) subscriptions, which provide remote and secure access to Windows and Linux apps and desktops, and Application Delivery Controllers (ADC), which assist with load balancing on delivery networks. Citrix is a leader in the VAD space, with a 64% market share.

How It Used to Be

Historically, Citrix sold licenses through a perpetual licensing model and offered two purchase program options. The first was the Easy License Program; we saw less than 10% of customers purchasing through this program, as it was typically reserved for transactional, as-needed purchases totaling less than $150K at list. Under this program, all customers paid list price for their purchase. The second program was the Enterprise License (ELA) Program, which most clients utilized. This required an upfront commitment of at least $150K at list and locked in a discount for a 3-year term. For example, if a customer purchased product valued at $1.5M at list, they would be designated an ELA 6 program customer, meaning they would receive a 45% discount on their initial purchase and any additional purchases made during the 3-year period. To maintain an ELA discount, a qualified renewal order (which does not include a support renewal) had to be placed during the final year of the term. This locked in the discount for an additional 2-year term.

Citrix Enterprise License Agreement

Licensing Model Change

On June 8th, 2020, Citrix began offering their solutions as a cloud subscription. The vendor continues to use their ELA program as a naming convention, but it has not released a cloud ELA program discount matrix. While it is clear that deal size continues to impact the discounts customers receive, there is no transparency on how discounts are formulated. On top of this, we discovered that list pricing is dependent on whether a client is an existing perpetual customer or a new Citrix customer. For example, we have seen the same VAD license list for $660/year in a net new deal, and list at $340/year where a client was converting their perpetual licenses to the cloud.

After September 30th, 2020, perpetual licenses were no longer available from Citrix. Customers can continue to renew their perpetual support deals, but if any more VAD licenses are needed, they must be purchased in the cloud. This means the last perpetual ELA program deals will expire in September 2023, because most ELA program deals are 3-years in length. While customers are able to continue renewing support for their perpetual ELA purchases, due to the way the ELA program deals are set up, clients typically do not have renewal pricing protections after the ELA ends. This means we are seeing perpetual support run rates skyrocket. For example, one ClearEdge client who is a long-term customer of Citrix with no pricing protections in their deal was proposed a run rate 233% higher than last year’s spend.