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Understanding Microsoft’s ‘Dedicated Hosted Cloud Services’

Nov 3, 2022

Lucy Baker – Certero ITAM Consultant & Microsoft Licensing Expert

Microsoft have provided some further clarity on their ‘Dedicated Hosted Cloud Services’ with an update to the terms, most notably in relation to the ‘Outsourcing Software Management’ Clause. The changes to which can, as ever, be found within Microsoft’s Universal License Terms. Within the ‘Outsourcing Software Management Clause there are three primary sections which we will delve into, all with one central component in common; the ‘Authorized Outsourcer’. 

What is a Microsoft Authorised Outsourcer?

Microsoft have provided the following definition of what an ‘Authorized Outsourcer’ is: any third-party Service Provider that is NOT a ‘Listed Provider’ and is not using a ‘Listed Provider’ as a ‘Datacentre Provider’ as part of the outsourcing service. Please note that currently ‘Listed Providers’ include Alibaba, Amazon, Google and Microsoft themselves. 

What is included in the Outsourcing Software Management Clause? 

The first section of the Outsourcing Software Management Clause covers ‘Outsourcing on Dedicated Devices’; The term dictates that a customer may use licensed copies of the software on devices that are under the ‘day-to-day management and control’ of an Authorised Outsourcer. This is on the proviso that all such devices are and will remain fully dedicated to the customer’s use.  

The second section covers ‘Flexible Virtualisation Benefit’; This term addresses customers with subscription licenses and licenses with active software assurance (including Client Access Licenses often abbreviated to CALs), and confirms that they may use licensed copies of the software on devices, including shard servers. These again must be under the day-to-day management and control of Authorised Outsourcers and definitions of what constitutes a License, a CAL (Client Access License) and a Server, are defined within the Universal License Terms also. 

The third and final section covered, addresses Outsourcing on Cloud Solution Provider – Hosters; This again looked at customers with active subscription licenses and licenses with active software assurance (including CALs). These customers may access their licensed copies of software that is provided by a Cloud Solution Provider – Hoster and installed on that partner’s devices.  

One of the key words in the above is ACTIVE software assurance. If a customer has a perpetual license but has allowed the software assurance to lapse, then they will not qualify for the above Flexible Virtualisation Benefit nor the Outsourcing on Cloud Solution Provider-Hosters. Customers need to ensure that their software assurance is active prior to pressing ahead with licensing with either of these solutions.  

Also, critically, as with the entire Outsourcing Software Management Clause, is the provision of the ‘Authorized Outsourcer’ and ensuring that the chosen partner fits the required criteria. Microsoft made it explicitly clear within the terms that the customer is responsible for the licensing and adhering to the product licensing terms by stating Customer is responsible for all of the obligations under its volume licensing agreement regardless of the physical location of the hardware upon which the software is used’ 

For help with your Microsoft Licensing or any other Software Asset Management challenges, news, updates to optimize your software costs, contact Certero today. 

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