Understanding Microsoft’s New Flexible Virtualisation Benefit

William Nelson
Version 1
Published in
6 min readNov 15, 2022


Photo by Vishnu Mohanan on Unsplash

October’s Microsoft Monthly update was a busy month for announcements with the license changes for Windows Server (https://www.microsoft.com/licensing/terms/product/ForallSoftware) and the new Flexible Virtualisation Benefit. My colleague, Principal Microsoft License Consultant Karl O’Doherty and I will focus on the Flexible Virtualisation Benefit in this post and video chat below:

This benefit will have a material impact on the way that customers can bring their own licenses to certain 3rd party outsourcers. So, before we delve into the detail, let’s understand who an ‘Authorised Outsourcer’ is, or maybe more simply, who is NOT an ‘Authorised Outsourcer’.

Microsoft Authorised Outsourcers — A Recap

An ‘Authorised Outsourcer’ partner is any service provider that is not a ‘Listed Provider’ or a service provider that uses the data centre resources of a ‘Listed Provider’ to resell cloud services, for which applicable software is deployed for the provision of their services.

In short, ‘Listed Providers’ are:

· Microsoft Azure (with some specific exceptions)

· Amazon AWS

· Google Cloud

· Alibaba

It’s important to reiterate that the new Flexible Virtualisation Benefit will not apply to the listed providers above.

Licensing Landscape before 1st October 2022

For context, let’s quickly recap what the license arrangements were before 1st October 2022. Essentially, it was relatively restrictive in terms of the following:

· The types of products you could bring to an ‘Authorised Outsourcer’

· The type of servers you could deploy your licenses on

Historically, when it came to bringing licenses to an ‘Authorised Outsourcer’s’ environment, you were, in the majority of cases, able to do this, however, you had to deploy the software on dedicated hardware.

So, if you were making use of shared servers from an ‘Authorised Outsourcer’ and you wanted to bring your own licenses to that 3rd party host, this would potentially breach Microsoft’s license terms. An exception to this would apply if you had license mobility rights where you have active Software Assurance (SA) on a license and the outsourcer was a License Mobility Partner.

Additionally, if your 3rd party host was qualified by Microsoft as a multi-tenant host (QMTH), they had specific authorisation from Microsoft to host Windows Virtual Desktops and Microsoft 365 apps installed within multi-tenant environments.

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What’s Changed

The key element of change here is the flexibility that is now available to customers when bringing their own licenses to an ‘Authorised Outsourcer’ — a third party that provides both shared and dedicated servers to a customer in a data centre outside of the listed providers.

This includes any license that can be obtained by subscription or as a full-blown license with Software Assurance attached, including:

· Windows


· Windows Desktop operating systems

· System Centre

· Microsoft 365 apps for enterprise

The key difference with this change is the ability to deploy this software on shared services versus dedicated hardware for a specific customer.

Some important points to be aware of:

· These licensing terms take effect from 1st October 2022.

· Active Software Assurance (SA) is a key prerequisite.

· If you are purchasing licenses through a software subscription such as CSP, you will get access to this benefit too, so it’s not specific to just SA customers.

· If you have on-premises licenses that you would like to bring to an ‘Authorised Outsourcer’, they will need to have active SA in place, or you risk falling outside Microsoft’s licensing terms.

Having reviewed these changes, there are some specific areas of potential confusion that we thought were worth further explanation:

Does this change the way the product is licensed when it is brought into an outsourcer? The licensing terms are the same for on-premises as they would be when you bring them to your third-party hosted environment of the ‘Authorised Outsourcer’. For example, if you have specific DR benefits associated with a product, those benefits will transfer across to that ’Authorised Outsourcer’s’ environment.

License Compliance responsibility. If you are bringing your license to an ’Authorised Outsourcer’s’ environment, you are responsible for those licenses (unless you have a managed service with a 3rd party) however be aware, you are still the licensee and in an audit scenario, responsibility will fall to you. Apply how you manage those licenses with the same due diligence as on-premises licenses.

This is potentially an area that Microsoft will increase their audit activity on. Microsoft has opened up the market to allow greater competition across Authorised Outsourcers; however, at the same time, are perfectly within their rights to protect their assets and make sure customers are still abiding by their license policies and managing their license compliance accordingly, thus, the potential is there for a rise in the number of audit requests Microsoft may issue.

We have said this before and will say it again — do not assume ‘cloud = license compliance.’

When negotiating contracts with 3rd parties, which includes a managed service, check to ensure whether there is a software asset management component to that managed service and importantly, who has responsibility for compliance. If this is not absolutely clear at the beginning of the contract, this can very quickly become a real issue when faced with an audit and potential noncompliance fines.

License Mobility. The Flexible Virtualisation Benefit is similar to License Mobility through SA in that it permits deployments to the cloud — the difference is that the Flexible Virtualisation Benefit applies to many products that are NOT covered by License Mobility through SA.

Additionally, it’s also now available to more customers. License Mobility through SA requires customers to use ‘Authorised Mobility Partners’ — another layer of complexity to handle. However, when you deploy under the Flexible Virtualisation Benefit, you will generally have the same rights as you would have on-premises.

It’s important to clarify that you are still going to have a need for License Mobility in certain scenarios particularly around ‘Listed Providers’, for example. If you are using AWS, License Mobility exists in shared tenancy or on dedicated hosts, so you still have an avenue to bring your own license in a constructive and cost-effective way to those ‘Listed Providers’.

It remains to be seen whether Microsoft will eventually open up the playing field and creates the same flexibility for those ‘Listed Providers’ as they have for the ‘Authorised Outsourcer’ community or increase the number of providers on the ‘Listed Provider’ list.

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More Information

If you are considering moving your on-premises licenses to a 3rd party hosting provider, it is worthwhile talking to license experts such as Version 1 to consider all the license opportunities, impacts, pitfalls and benefits available to you before moving to the cloud.

Bring your own licenses (BYOL) can be a minefield to navigate. As Microsoft license experts, we can provide you with the best and recommended advice for the correct configuration of Microsoft licenses, underpinned by clearly defined and documented processes, to deliver a compliant, cost-optimised and feature-maximised return on your software investment.

If you have any questions on how Version 1 can help, go to our website page, or contact us. Additionally, for all future Version 1 Microsoft License Updates, follow me on LinkedIn.

About the Author:
William Nelson is a Microsoft SAM Sales Specialist here at Version 1.



William Nelson
Version 1

I’ve been successfully selling IT solutions and services for 20 years and now focus on my area of expertise: Microsoft Licensing and Software Asset Management.