How should teams govern Microsoft 365 access across users and service identities?

Why Microsoft 365 Governance Has to Cover Users and Service Identities

Microsoft 365 is not just a productivity suite. It is an identity plane where users, delegated administrators, service accounts, app registrations, and API-connected workloads can all reach mail, files, chat, and tenant settings. That makes governance a lifecycle problem, not a one-time access review. NHI Mgmt Group’s Ultimate Guide to NHIs notes that 80% of identity breaches involved compromised non-human identities such as service accounts and API keys, which is why Microsoft 365 access needs the same discipline applied to privileged systems. The control goal is to prove every identity has an owner, a purpose, and a revocation path.

Teams often get this wrong by treating service identities as background plumbing while focusing governance only on human sign-ins. In reality, a stale app permission, over-scoped mailbox delegation, or forgotten automation account can become a durable path into the tenant. The NIST Cybersecurity Framework 2.0 emphasizes asset, access, and change governance as continuous functions, which aligns well with Microsoft 365 administration. In practice, many security teams encounter excessive access only after a service identity has already been used for mailbox access, data exfiltration, or tenant-wide privilege escalation.

How to Govern Microsoft 365 Access in Practice

Effective Microsoft 365 governance starts by separating identity classes and then applying different controls to each. Human users should be governed through joiner-mover-leaver workflows, role-based access, and periodic certification. Service identities need an explicit business owner, a technical owner, and a documented lifecycle trigger such as deployment, system retirement, or vendor offboarding. Where possible, use least privilege, short-lived credentials, and app permissions that are narrowly scoped to the workload.

For service identities and API-connected access, the practical question is not “does it work?” but “is it still necessary, and can it be revoked quickly?” That means reviewing:

• Delegated admin relationships and tenant-wide roles
• App registrations, OAuth consent grants, and mailbox delegation
• Legacy service accounts with static credentials
• Automation jobs that access Exchange, SharePoint, Teams, or Graph API
• Offboarding steps for vendors, scripts, and retired integrations

The OWASP Non-Human Identity Top 10 is useful here because Microsoft 365 often inherits the same NHI failure modes seen elsewhere: excessive permissions, weak rotation, and poor ownership. NHI Mgmt Group’s Lifecycle Processes for Managing NHIs research reinforces that governance must include creation, rotation, monitoring, and offboarding, not just initial provisioning. A strong operating model also logs who approved access, what condition makes it valid, and what event forces removal. These controls tend to break down in large Microsoft 365 tenants with decentralized app ownership because permissions proliferate faster than review teams can trace accountable owners.

Common Exceptions, Tradeoffs, and Audit Gaps

Tighter Microsoft 365 access governance often increases administrative overhead, so teams have to balance speed against assurance. That tradeoff is especially visible when business units rely on shared mailboxes, break-glass accounts, or third-party integrations that cannot tolerate frequent disruption. Current guidance suggests treating these exceptions as temporary and documented, but there is no universal standard for exactly how often every service identity must be recertified.

Edge cases matter. A mailbox used by a help desk team may look like a simple shared resource, but if it has broad delegation, it behaves like a privileged identity. Likewise, an application that only reads calendar data can still become high risk if its token scope allows tenant-wide consent or lateral movement into other Microsoft 365 services. The best practice is evolving toward continuous review of effective permissions rather than static entitlement lists. NHI Mgmt Group’s Regulatory and Audit Perspectives and Top 10 NHI Issues both point to the same operational gap: many organisations cannot fully show who owns a service identity, why it exists, or whether its access is still justified. Audit teams should therefore look for evidence of recertification, offboarding, and token or secret rotation, not just policy language.

Related resources from NHI Mgmt Group

• How should security teams govern access when users move across devices and cloud apps?
• How should security teams govern non-human identities that have persistent access?
• How should security teams govern access requests through IT service management tools?
• How should teams govern asset lifecycle workflows across users and devices?