Contact Us

Microsoft 365 in the Cloud: What Works, What’s Allowed, What’s Not

by | Jun 3, 2025

Flexibility is key in today’s world of hybrid work. Employees want to access their productivity tools from anywhere and on any device. At the same time, organizations need to provide that flexibility without falling into the traps of non-compliance or overspending. That’s where Microsoft 365 Apps for Enterprise comes in: it offers a user-friendly licensing model that lets you install the software on up to five devices per user, whether they’re using PCs, Macs, smartphones, or tablets.

However, there’s a bit of a twist—not all platforms are created equal when it comes to virtual environments and cloud-hosted services. Understanding where and how to deploy Microsoft 365 is crucial to avoid expensive licensing errors.

Let’s discuss Shared Access and Virtual Desktops

Microsoft 365 Apps for Enterprise has a handy feature called Shared Computer Activation (SCA). This allows users to access applications in Remote Desktop Services (RDS) or Virtual Desktop Infrastructure (VDI) environments. Essentially, it enables temporary app activation during logins, making it perfect for shared workstations or remote access scenarios.

That said, it’s important to understand Microsoft’s licensing policies, which clearly differentiate between cloud infrastructure providers. SCA is fully supported on Microsoft Azure and Authorized Outsourcers, but it has some restrictions on Listed Providers—specifically, Amazon Web Services (AWS), Google Cloud Platform (GCP), and Alibaba.

Introducing the Flexible Virtualization Benefit

Back in October 2022, Microsoft rolled out some exciting new deployment options with the Flexible Virtualization Benefit. This update lets organizations with active subscriptions or Software Assurance deploy Microsoft software on shared servers that are managed by Authorized Outsourcers—though it’s important to note that this doesn’t apply to Listed Providers.

This benefit paves the way for cost-effective and secure virtualization, but it’s crucial to partner with the right hosting provider. If your organization is working with Listed Providers, you’ll need to stick with dedicated infrastructure and per-user licensing models to stay compliant.

AWS and Microsoft 365: A Special Case

As of August 1, 2023, Microsoft and AWS have made a notable exception. You can now use Microsoft 365 Apps for Enterprise on Amazon WorkSpaces, but there are a few conditions to keep in mind. The supported licenses include:

– Microsoft 365 E3/E5

– Microsoft 365 A3/A5

– Microsoft 365 Business Premium

With these licenses, you can run Office apps like Word, Excel, and Outlook on dedicated WorkSpaces instances, whether using Windows Server or a BYOL Windows Desktop. Plus, even multi-region failover scenarios are supported! Just remember, this doesn’t apply to Amazon AppStream or the broader AWS infrastructure.

What About Office LTSC?

Office LTSC (Long-Term Servicing Channel) is a per-device license that’s all about providing stability over time. It’s perfect for those specialized or locked-down environments where updates don’t happen often. However, it doesn’t quite offer the modern flexibility and cloud capabilities that you get with Microsoft 365 Apps.

Office Online Server and Third-Party Hosting

If you’re using Microsoft 365 Apps for Enterprise, you can set up Office Online Server on several internal servers. Just a heads-up, though—if you’re considering outsourcing this service, ensure the third-party provider is an Authorized Outsourcer. Also, Listed Providers can only get involved if the environment is dedicated solely to your organization.

Quick Licensing Q&A:

  • Can I use Microsoft 365 Apps for Enterprise on GCP? No—GCP is a Listed Provider, and it has some pretty limited shared hosting options.
  • Can Office Professional be used on AWS or GCP? Absolutely, but only through certain programs. AWS has it covered right now, and GCP will support it through SPLA, though we expect some licensing changes in 2025.
  • Does Windows come with M365 E3/E5 licenses for cloud desktops? Not quite—if you’re using non-Windows Pro devices or cloud desktops, you’ll still need Windows VDA E3/E5 per-user licenses.

Don’t Go It Alone

Navigating cloud licensing can feel like hitting a moving target, especially when juggling multiple providers. Grasping Microsoft’s intricate rules is essential to avoiding unexpected audit risks and license gaps. At The IT Strategists, we’re here to help organizations untangle licensing complexities, evaluate risk exposure, and ensure that every deployment is both optimized and compliant.

#Microsoft365 #CloudLicensing #FinOps #MicrosoftLicensing #VirtualDesktops #AWS #Azure #OfficeLTSC #CloudCompliance #BYOL #HybridWork #VDI #CloudStrategy #TheITStrategists

References: