If VMM will process a very large volume of updates, consider installing the WSUS server on a separate computer from the VMM management server.
In System Center 2012 – Virtual Machine Manager, if you do not install WSUS server on the same computer as the VMM management server, you must install a WSUS Administrator Console on the VMM management server. If you use a highly available VMM management server, you must install a WSUS Administrator Console on each node.
If you use WSUS 3.0 SP2 to enable updates for Windows Server 2012 hosts, then you must apply KB2734608. Make sure that you carefully read the Known Issues for this update as they apply to VMM.
In System Center 2012 R2 Virtual Machine Manager, the operating system requirement for the server on which WSUS is running is Windows Server 2008 R2 Service Pack 1 or later.
There must be full trust between the WSUS management server and the VMM management server domains.