Hanso Group

Microsoft 365 Governance Best Practices

• Julian Lindner • 15 minutes read

As organisations increasingly rely on Microsoft 365 for their digital workplace, the challenge of managing and governing this complex ecosystem becomes more significant. Without robust governance, organisations risk security vulnerabilities, compliance issues, and reduced productivity from inconsistent user experiences. In this article, we’ll explore governance best practices for Microsoft 365 at scale, drawing on our experience implementing governance frameworks for enterprises with thousands of users.

The Governance Challenge

Microsoft 365 is no longer just a collection of productivity applications—it’s a comprehensive platform encompassing communication, collaboration, security, automation, and business process tools. The breadth of this platform creates governance challenges:

  • Multiple services with overlapping capabilities (Teams, SharePoint, OneDrive, Yammer)
  • Rapid introduction of new features and services
  • Granular permissions and settings distributed across admin centers
  • Variable adoption rates and usage patterns across the organisation
  • Complex data lifecycle and retention requirements
  • Integration with legacy systems and third-party applications

Effective governance is about balancing innovation and control—enabling users to leverage the platform’s capabilities while maintaining necessary boundaries for security, compliance, and manageability.

Building a Governance Framework

A comprehensive governance framework for Microsoft 365 should address six key dimensions:

1. Tenant Configuration Management

At the foundation of Microsoft 365 governance is consistent tenant configuration. This involves:

Baseline Security Settings

Establish baseline security configurations for your Microsoft 365 tenant, including:

  • Identity and access management policies
  • Multi-factor authentication requirements
  • Conditional access policies
  • External sharing settings
  • Guest access controls

Configuration Documentation

Document all tenant-wide settings with justifications, approval dates, and review schedules. This documentation should be treated as a living document, updated whenever changes are made.

Change Management Process

Implement a formal change management process for tenant-level configuration changes:

1. Change Request → 2. Impact Assessment → 3. Approval Workflow →
4. Testing → 5. Implementation → 6. Documentation → 7. Validation

Configuration Monitoring

Use tools like Microsoft 365 DSC (Desired State Configuration) to monitor tenant settings for drift from your documented baseline. Example PowerShell to export current configuration:

Install-Module -Name Microsoft365DSC -Force
Export-M365DSCConfiguration -Path "C:\M365Baseline" -ComponentsToExtract @("EXOMailboxPlan", "SPOSite", "TeamsTeam")
2. Information Architecture

An effective information architecture ensures content is organized, findable, and appropriately secured:

Site and Team Provisioning

Develop standardized provisioning processes for SharePoint sites and Teams. This typically involves:

  • Self-service provisioning with appropriate guardrails
  • Template-based creation for common scenarios
  • Approval workflows for certain site/team types
  • Automated application of baseline settings
  • Integration with governance tools or custom solutions

Here’s an example Teams provisioning flow implemented with Power Automate:

  1. User submits request via form, specifying purpose, membership, and sensitivity
  2. Workflow routes for approval based on sensitivity level
  3. Upon approval, team is created with appropriate settings
  4. Team is registered in governance tracking system
  5. Owners receive guidance on usage and responsibilities

Metadata Strategy

Implement a consistent metadata framework across content:

  • Define content types and metadata fields
  • Configure site columns and content types in SharePoint
  • Set up managed metadata (term stores) for consistent tagging
  • Configure default column values in document libraries
  • Establish naming conventions for sites, teams, and content

Information Lifecycle Management

Define processes for the full content lifecycle:

  • Creation guidelines and templates
  • Active use and collaboration period
  • Records management and retention
  • Archival process
  • Secure disposal
3. Security and Compliance

Microsoft 365 provides robust security and compliance capabilities that need careful configuration:

Data Classification Framework

Develop a data classification framework that categorizes information based on sensitivity:

Classification Description Example Controls
Public Information approved for public consumption Marketing materials No restrictions
Internal Business information for employee use Meeting notes Restricted to authenticated users
Confidential Sensitive business information Financial forecasts Limited sharing, encryption
Restricted Highly regulated or sensitive data Personal data, trade secrets Strict controls, DLP enforcement, encryption

Compliance Policies

Configure appropriate compliance policies based on your regulatory environment:

  • Retention policies and labels
  • Data Loss Prevention (DLP) policies
  • Communication compliance monitoring
  • Information barriers where needed
  • eDiscovery and legal hold processes

Security Monitoring

Implement security monitoring specifically for Microsoft 365:

  • Configure alerts for suspicious activities
  • Enable audit logging for all services
  • Deploy Cloud App Security for advanced monitoring
  • Implement Just-in-Time access for admin roles
  • Regular security posture assessments
4. User Access and Lifecycle Management

Managing user access across the Microsoft 365 suite is essential for security and cost optimization:

Access Provisioning and Deprovisioning

Implement automated processes for:

  • New employee onboarding
  • Role changes and transfers
  • Extended leave handling
  • Contractor/temporary access management
  • Offboarding and access removal

License Management

Develop processes for:

  • License assignment based on user roles
  • Monitoring of license utilization
  • Reclamation of unused licenses
  • Regular license audit and optimization

Privileged Access Management

Implement least-privilege principles for admin access:

  • Role-based access control with granular admin roles
  • Just-in-time privileged access
  • Regular access reviews for admin privileges
  • Separation of duties for critical admin functions
5. Adoption and Training

Governance cannot succeed without addressing the human aspects of the platform:

Capability Rollout Strategy

Develop a structured approach to rolling out Microsoft 365 capabilities:

  • Service prioritization based on business needs
  • Phased implementation with pilot groups
  • Success metrics for each rollout
  • Feedback loops for continuous improvement

Training Framework

Create a comprehensive training framework:

  • Role-based training paths
  • Just-in-time learning resources
  • Champions network for peer support
  • Regular “what’s new” communication

Usage Monitoring

Implement monitoring to understand adoption and usage patterns:

  • Microsoft 365 usage analytics
  • Power BI dashboards for usage visualization
  • Regular assessment of user sentiment
  • Identification of adoption blockers
6. Operational Management

Day-to-day operations require clear processes and responsibilities:

Support Model

Define a tiered support model for Microsoft 365:

  1. Tier 0: Self-service resources and knowledge base
  2. Tier 1: First-line support for common issues
  3. Tier 2: Specialized support for complex issues
  4. Tier 3: Escalation to Microsoft or partners

Monitoring and Management

Implement operational monitoring:

  • Service health and incident management
  • Performance monitoring
  • Capacity planning
  • Integration point validation

Continuous Improvement

Establish processes for ongoing optimization:

  • Regular governance committee meetings
  • Process for evaluating new features
  • Feedback mechanisms for end users
  • Periodic review of policies and standards

Implementing Governance at Scale

For large enterprises, implementing governance across thousands of users and teams requires specialized approaches:

Automation and Tooling

Manual processes don’t scale. Leverage automation for governance:

Microsoft 365 Native Tools

Utilize built-in governance capabilities:

  • Microsoft Purview compliance portal
  • SharePoint admin center site lifecycle management
  • Teams admin center policies
  • Power Platform admin center data loss prevention
  • Microsoft 365 admin center reports

Custom Solutions

For large organizations, custom governance solutions are often necessary:

  • PowerShell scripts for bulk operations and reporting
  • Power Automate flows for approval processes
  • Power Apps for governance request interfaces
  • Azure Functions for scheduled governance checks
  • Custom SharePoint sites for governance dashboards

Here’s an example PowerShell script for auditing Teams with external access:

Connect-MgGraph -Scopes "Group.Read.All", "User.Read.All"

$teams = Get-MgGroup -Filter "resourceProvisioningOptions/any(x:x eq 'Team')" -All

$teamsWithExternalAccess = @()

foreach ($team in $teams) {
    $settings = Get-MgTeam -TeamId $team.Id

    if ($settings.GuestSettings.AllowGuestsToAccessFiles -eq $true -or
        $settings.GuestSettings.AllowGuestsToCreateUpdateChannels -eq $true) {

        $guests = Get-MgGroupMember -GroupId $team.Id |
                   Where-Object { (Get-MgUser -UserId $_.Id).UserType -eq "Guest" }

        $teamsWithExternalAccess += [PSCustomObject]@{
            TeamName = $team.DisplayName
            TeamId = $team.Id
            GuestCount = $guests.Count
            AllowGuestsToAccessFiles = $settings.GuestSettings.AllowGuestsToAccessFiles
            AllowGuestsToCreateChannels = $settings.GuestSettings.AllowGuestsToCreateUpdateChannels
            Owners = (Get-MgGroupOwner -GroupId $team.Id | ForEach-Object { Get-MgUser -UserId $_.Id }).UserPrincipalName -join ", "
        }
    }
}

$teamsWithExternalAccess | Export-Csv -Path "TeamsWithExternalAccess.csv" -NoTypeInformation
Governance Roles and Responsibilities

Clear ownership is essential for effective governance:

Governance Committee

Establish a cross-functional governance committee:

  • IT representatives
  • Security and compliance teams
  • Business unit representatives
  • Legal/regulatory stakeholders
  • Executive sponsor

Distributed Governance Model

For large organizations, consider a distributed governance model:

  • Central governance team for policies and standards
  • Divisional or regional governance leads
  • Local champions network
  • Clear escalation paths for governance issues

RACI Matrix

Develop a detailed RACI (Responsible, Accountable, Consulted, Informed) matrix for all governance activities:

Activity Central IT Security Team Business Unit Site Owners End Users
Tenant Security Config A/R C I I I
Site Provisioning A C R I I
Content Classification I A C R R
Access Reviews A R C R I
Retention Policy A R C I I
Scaling Governance with Delegation

Effective governance at scale requires appropriate delegation:

Site Governance

Implement a site/team governance model that balances control and autonomy:

  • Clear ownership requirements for all sites/teams
  • Owner responsibilities documentation
  • Regular access reviews
  • Automated lifecycle notifications
  • Site usage monitoring

Self-Service with Guardrails

Configure self-service capabilities with appropriate controls:

  • SharePoint site provisioning with approval workflows
  • Teams creation with mandatory classification
  • Power Apps and Power Automate with environment-based controls
  • OneDrive sharing with appropriate restrictions
Measurement and Reporting

Governance effectiveness requires ongoing measurement:

Key Governance Metrics

Define and track key governance metrics:

  • Policy compliance rates
  • Access review completion rates
  • External sharing audit results
  • Retention policy coverage
  • Inactive site/team counts
  • DLP policy match reports

Executive Dashboards

Create executive-level dashboards for governance status:

  • Overall compliance score
  • Risk indicators
  • Trend analysis
  • Remediation status
  • License utilization

Real-World Governance Patterns

Based on our implementation experience, here are three governance patterns that have proven effective for different organizational contexts:

Pattern 1: Centralized Governance

Suitable for: Organizations with strong central IT, regulated industries

Key Characteristics:

  • Strict provisioning controls
  • Centralized policy management
  • Limited delegation
  • Comprehensive monitoring
  • Formal change management

Implementation Approach:

  • Disable self-service creation for Teams and Groups
  • Implement approval workflows for all new workspaces
  • Deploy consistent policies via tenant-wide settings
  • Regular compliance auditing
  • Structured governance committee with IT majority
Pattern 2: Balanced Governance

Suitable for: Most mid-large enterprises

Key Characteristics:

  • Controlled self-service
  • Business-aligned policies
  • Delegated administration
  • Risk-based controls
  • Periodic reviews

Implementation Approach:

  • Enable self-service with naming policies and classification
  • Department-specific SharePoint hub sites with local admins
  • Tiered access controls based on data sensitivity
  • Automated lifecycle management
  • Cross-functional governance committee
Pattern 3: Federated Governance

Suitable for: Decentralized organizations, holding companies

Key Characteristics:

  • Local governance autonomy
  • Baseline security standards
  • Division-specific policies
  • Minimum viable governance
  • Centre of excellence model

Implementation Approach:

  • Multi-tenant or segregated single tenant approach
  • Central identity management
  • Division-level admin delegation
  • Common security baseline
  • Division-specific information architecture
  • Governance community of practice

Conclusion

Effective Microsoft 365 governance balances control and empowerment—providing sufficient structure to manage risk while enabling users to leverage the platform’s capabilities for innovation and productivity. The key to success is recognizing that governance is not a one-time project but an ongoing program that must evolve as both your organization and the Microsoft 365 platform change.

For large enterprises, governance at scale requires:

  1. Clear principles and policies that align with business needs
  2. Automation and delegation to distribute governance responsibilities
  3. Appropriate tools and monitoring to ensure compliance
  4. Continuous improvement processes to adapt to changing requirements

By taking a structured approach to Microsoft 365 governance that addresses all six dimensions—tenant configuration, information architecture, security and compliance, user lifecycle, adoption, and operations—organizations can maximize the value of their Microsoft 365 investment while managing risk appropriately.

References

  1. Microsoft. (2023). Microsoft 365 Governance Plan. https://docs.microsoft.com/en-us/microsoft-365/community/microsoft365-governance-plan

  2. Allen, S., & Horine, R. (2021). Microsoft 365 Administration: Inside Out. Microsoft Press.

  3. Redmond, T. (2023). Office 365 for IT Pros (7th Edition). https://office365itpros.com/

  4. Microsoft. (2023). Microsoft Purview compliance portal documentation. https://docs.microsoft.com/en-us/microsoft-365/compliance/

  5. McKinsey & Company. (2021). Cloud’s trillion-dollar prize is up for grabs. https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/clouds-trillion-dollar-prize-is-up-for-grabs

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