The Audit Email
Subject: Azure Hybrid Benefit Compliance Review
Our reaction: "We're compliant. We have SA licenses."
Microsoft's finding: "Your documentation doesn't prove it."
The bill: $78,000 back-payment + penalties.
What Is Azure Hybrid Benefit?
Use existing Windows Server or SQL Server licenses in Azure. Saves 40-55% on VM costs.
The catch: Microsoft audits it. You must prove compliance.
What We Did Wrong
Mistake #1: No License Inventory
We knew we had Software Assurance (SA). We didn't know:
- How many licenses
- Which SKUs
- When SA expires
- Which VMs were using them
Mistake #2: Assumed Core Mapping
We thought: 1 license = 1 Azure VM
Reality: License cores must match Azure VM cores. A 16-core Azure VM needs 16 Windows Server core licenses.
Mistake #3: No Documentation
Applied AHB in portal. Didn't document:
- Which on-prem license covered which Azure VM
- SA renewal dates
- Core count calculations
The Audit Process
Day 1: Microsoft requests license documentation
Day 3: We scramble to find Volume License agreements
Week 2: Discover 40% of AHB-enabled VMs lack proper coverage
Week 4: $78K bill arrives
How to Do It Right
Step 1: License Inventory
Before enabling AHB:
- Count on-prem Windows Server licenses with active SA
- Verify SA expiration dates
- Calculate available Azure core count
Step 2: Core Math
Formula: On-prem license cores ÷ 2 = Azure cores covered
Example:
- 100 Windows Server licenses (2-core each) = 200 cores
- 200 ÷ 2 = 100 Azure cores covered
- Can apply AHB to VMs totaling 100 cores
Step 3: Documentation
Track in spreadsheet:
- Azure VM name
- VM core count
- On-prem license ID covering it
- SA expiration date
Step 4: Ongoing Monitoring
- Monthly AHB usage report
- SA renewal tracking
- New VM AHB approval process
The 8-Question Checklist
Before enabling AHB on ANY VM:
- Do you have Windows Server or SQL Server licenses with active SA?
- Are those licenses assigned to on-prem servers?
- Can you shut down those on-prem servers? (Can't use same license twice)
- Do you have enough license cores for the Azure VM size?
- Is SA expiration > 6 months away?
- Is this documented in your tracking spreadsheet?
- Who approved this AHB usage?
- Can you produce documentation for a Microsoft audit?
If any answer is "no" or "I'm not sure" → Don't enable AHB
When AHB Makes Sense
✅ Good use case:
- Migrating 100 on-prem VMs to Azure
- Those VMs have SA licenses
- Shutting down on-prem datacenter
- Clear license mapping
❌ Bad use case:
- Dev/test VMs (use Dev/Test pricing instead)
- "We think we have SA somewhere"
- Can't find license documentation
- On-prem servers staying active
Full Guide
Complete AHB compliance checklist, core calculation templates, and documentation requirements:
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