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Why This Matters |
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As part of our ongoing SAM service, we’re constantly reviewing software licensing to uncover opportunities to reduce costs. Recently, we’ve identified a common issue among organisations using Veeam Data Cloud for Microsoft 365: many are still running two separate licences — one for Microsoft 365 backup and another for Microsoft Entra ID — despite the availability of a newer, bundled option that combines both at a significantly lower cost. This isn’t just a marginal saving. In one real‑world example, a client with 280 Microsoft 365 E5 licences is looking at a potential saving of around £6,000 per year. Of course, the exact figure will depend on your reseller pricing and contract terms, but the opportunity to optimise costs is clear. |
Who should read this: This advisory is relevant to any organisation currently using Veeam Data Cloud for Microsoft 365, particularly those who are approaching a subscription renewal in the next 3–6 months.
1. What Has Changed?
In April 2025, Veeam launched the Veeam Data Cloud Flex Bundle — a new SKU (V-VDCMFE) that combines Microsoft 365 backup and Microsoft Entra ID backup into a single licence. Previously, these were sold as two entirely separate products requiring separate purchases and separate management.
The Flex Bundle simplifies licensing to a single per‑M365-user price, with Entra ID protection included within the bundled price under Veeam’s 3x Fair Use Policy (rather than being a separate charge).
For most organisations, this results in similar protection coverage at a lower overall cost.
Affected SKUs
- Old M365 SKU: V-VDCFLX (Veeam Data Cloud for Microsoft 365 — backup only)
- Old Entra ID SKU: V-VDCEID (Veeam Data Cloud for Entra ID — purchased separately)
- New Bundle SKU: V-VDCMFE (Veeam Data Cloud for Microsoft 365 Flex Bundle including Entra ID)
2. What Does the Flex Bundle Cover?
| Old Approach (Separate SKUs) | New Flex Bundle (V-VDCMFE) | |
| SKUs required | Two: M365 + Entra ID separately | One: bundled SKU |
| M365 Backup | Yes (V-VDCFLX) | Yes (included) |
| Entra ID Backup | Yes (V-VDCEID) — licensed separately per Entra ID user count | Yes (included) — licensed per M365 user count only |
| Licensing basis | M365 users + separate Entra ID user count | M365 users only (3x fair use covers Entra ID) |
| Management | Separate per product | Single unified Veeam portal |
| Typical cost | Higher — two separate licence costs | Lower — bundled discount |
The Flex Bundle protects the full range of Microsoft cloud workloads in a single licence:
- Microsoft Exchange Online — mailboxes, calendars, contacts
- Microsoft SharePoint Online — sites and document libraries
- Microsoft OneDrive for Business — files and folders
- Microsoft Teams — channels, chats, files
- Microsoft Entra ID — key objects such as users, groups and policies (coverage varies by object type and service limits)
For most typical use cases, the level of protection remains functionally equivalent, although exact coverage and limits should always be validated.
3. The Cost Case: An Illustrative Example
The table below shows an illustrative cost comparison based on a client with 280 Microsoft 365 users. These figures are based on quotes we have seen in the market and are provided for illustration — your actual renewal price will depend on your reseller and volume tier.
| Users | Annual Cost (excl. VAT) | ||
| Old SKU: M365 backup (V-VDCFLX) | 280 | £7,230 | |
| Old SKU: Entra ID standalone (V-VDCEID) | 840 | £8,954 | |
| Old approach total | — | £16,184 | |
| New Flex Bundle (V-VDCMFE) | 280 M365 / up to 840 Entra ID covered under 3x Fair Use | ~£10,354 | |
| Illustrative saving | Same coverage | ~£5,830 | per year |
These figures are indicative only and will vary by reseller, discount level and contract terms
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Real-World Saving One of our SAM Club clients with 280 Microsoft 365 E5 licences is looking at a potential annual saving of approximately £6,000 at their next Veeam renewal — simply by switching from the two-SKU approach to the Flex Bundle. The level of protection remains identical; only the licence structure changes. |
4. The Entra ID Fair Use Policy — What You Need to Know
The 3x Fair Use Policy is the mechanism that makes the Flex Bundle work for most clients. Understanding it correctly is essential before switching.
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Veeam 3x Fair Use Policy Under the Flex Bundle:
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⚠ Check Before You Switch If your Entra ID enabled member user count exceeds 3x your M365 user count, the Flex Bundle alone will not provide full coverage. Always verify your actual counts in the Veeam portal before renewing on the new SKU. |
Quick decision rule:
- If Entra ID users ≤ 3 × M365 users → Flex Bundle likely cost-effective
- If Entra ID users > 3 × M365 users → Review carefully before switching
5. When the Flex Bundle May NOT Be Cheaper
While the Flex Bundle is often more cost-effective, there are exceptions:
· Entra ID user count exceeds the 3x threshold
· Existing discounted or legacy contracts
· Very low Entra ID usage relative to M365 users
· Special reseller pricing arrangements
Including this validation step ensures decisions are based on actual usage, not assumptions.
6. The M365 Licence Optimisation Opportunity
Because Veeam pricing is driven by M365 user count, optimising your Microsoft licensing reduces both costs.
Every unnecessary M365 licence can increase cost twice — across both Microsoft and Veeam.
Indicative impact: A 10% reduction in M365 licences can typically deliver a combined saving across Microsoft and Veeam of 15–25%, depending on licence mix.
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The Double Saving Opportunity Every unused or incorrectly assigned M365 licence is costing you money twice — once on your Microsoft bill and once on your Veeam renewal. Cleaning up your M365 position before renewing Veeam is one of the most effective cost reduction steps available. |
Common M365 Licence Issues and Their Impact
| Scenario | Impact on Veeam Licence | Recommended Action |
| Unassigned M365 licences | Overpaying for both M365 and Veeam | Reclaim unused licences — reduces both M365 and Veeam costs simultaneously |
| Users on E3/E5 who only need F1/F3 | Overpaying on M365 tier; no Veeam impact | Downgrade where appropriate to reduce M365 cost without affecting Veeam coverage |
| Shared mailboxes with M365 licences | Unnecessary M365 and Veeam licence consumption | Remove M365 licence from shared mailboxes where Veeam permits |
| Stale/disabled accounts with active M365 licences | Overpaying on Veeam per-user count; disabled accounts excluded from Entra ID count but may hold M365 licences | Disable accounts in Entra ID and reclaim M365 licences |
| Active Entra ID users without M365 licences | Potential data protection gap — these users may not be in scope for M365 backup | Investigate whether these users have data in M365 workloads that should be protected |
| Guest/external Entra ID users | Guest accounts excluded from Veeam Entra ID count | Confirm guests are not incorrectly consuming M365 licences |
The Under-Licencing Risk
The less obvious risk is where users are active in Entra ID but do not hold an M365 licence. These users’ data in Exchange, SharePoint or OneDrive may not be within the Veeam backup scope — creating a silent data protection gap.
7. Switching to the Flex Bundle — What to Expect
Because Veeam Data Cloud is a SaaS platform, switching from two separate SKUs to the Flex Bundle does not require infrastructure changes. The transition is an administrative licensing change, and existing backups should not be affected, subject to correct licence reassignment and reseller execution
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How The SAM Club Can Help We can manage this entire process on your behalf — from checking your current licence and usage counts in the Veeam portal, to requesting and comparing renewal quotes from your preferred resellers. If your Veeam renewal is approaching, contact us and we will carry out the assessment at no additional cost as part of your SAM service. |
Pre-Migration Checklist
- Check the Veeam portal: confirm your current M365 and Entra ID enabled member user counts.
- Verify the 3x threshold: confirm your Entra ID count does not exceed 3x your M365 user count.
- Complete an M365 true-up: reclaim any unused licences before the renewal to maximise savings on both bills.
- Request quotes: obtain renewal quotes from your preferred resellers for both the old two-SKU approach and the Flex Bundle for direct comparison.
- Confirm with your reseller that data, policies and retention will be preserved.
- Align dates: ensure the new SKU start date aligns with your existing renewal to avoid any gap in coverage.
What Happens During the Transition
- Veeam reissues licences under the new SKU — this is an administrative change at the portal level, not a technical migration.
- Existing backup jobs, data and retention policies are held at the tenant level and are not affected by the SKU change.
- If Entra ID was previously a standalone product, confirm any Entra ID backup policies are correctly associated under the new unified licence.
Post-Migration Validation
- Confirm all M365 workloads (Exchange, SharePoint, OneDrive, Teams) are showing as protected in the portal.
- Confirm Entra ID backup jobs are active and the object count is within the licensed threshold.
- Run a test restore to verify recoverability.
- Check the licence dashboard for any compliance warnings.
8. Next Steps
We recommend reviewing your position ahead of renewal.
The SAM Club can:
- Analyse your current licensing
- Identify optimisation opportunities
- Validate whether the Flex Bundle delivers savings
- Support renewal negotiations with resellers
Most resellers do not proactively highlight licence reductions that decrease volume.
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Contact The SAM Club This review is included as part of your SAM Club service at no additional cost. Contact us directly — particularly if your Veeam renewal is due in the next 3–6 months. |
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References Veeam Press Release — VeeamON April 22, 2025: Veeam Data Cloud for Microsoft Entra ID launch Veeam Data Cloud Fair Use Policy: veeam.com/legal/veeam-data-cloud-fair-use.html Veeam Data Cloud Licensing — Entra ID: helpcenter.veeam.com/docs/vdc/userguide/entra_id_licensing.html Veeam Data Cloud for Microsoft 365 Plans: helpcenter.veeam.com/docs/vdcm365/userguide/plans.html Cost figures shown are illustrative and based on market quotes observed in April/May 2026. Actual renewal pricing will vary by reseller, volume tier and exchange rate. Always request a current quote from your preferred reseller. This advisory is provided as part of The SAM Club service. |