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If you’ve been managing a Microsoft 365 tenant, you’ve probably run into the question: should we enable Security Defaults or build out Conditional Access policies? It sounds like a feature decision. It’s actually a licensing decision — and the answer reveals whether your organization is set up for real, scalable protection or just minimum viable security.
This post breaks down what each option does, what separates them at the licensing level, and why we recommend M365 Business Premium as the minimum license for any business serious about protecting its users and data.
What Security Defaults Actually Do
Security Defaults are Microsoft’s free, one-switch security baseline. When enabled, they enforce a consistent set of protections across your entire tenant with zero configuration required:
- MFA for all users — every account must register for and use multi-factor authentication via the Microsoft Authenticator app
- MFA required for administrators — privileged accounts face stricter sign-in requirements on every login
- Legacy authentication blocked — older protocols like IMAP, SMTP AUTH, and POP3 are cut off, eliminating one of the most common credential attack vectors
Security Defaults are available on every M365 plan at no additional cost, and Microsoft now enables them by default on new tenants. For a brand-new organization with no IT staff and no security budget, they provide an immediate, meaningful baseline.
The catch is significant, though: Security Defaults are all-or-nothing. Every policy applies to every user, with no exceptions, no exclusions, and no way to tailor the experience for different roles, locations, or devices. For any business with more than a handful of employees, that rigidity creates friction — and security gaps — fast.
What Conditional Access Adds
Conditional Access is Microsoft’s policy-driven answer to the limitations of Security Defaults. Instead of blanket rules for every user, you define conditions — and the policy only fires when those conditions are met.
That means you can:
- Require MFA only when a user signs in from an unrecognized location or an unmanaged device
- Block access entirely from high-risk geographies or flagged IP ranges
- Apply stricter controls to administrator accounts while keeping the sign-in experience smooth for standard users
- Enforce device compliance via Intune before granting access to sensitive apps
- Use risk-based sign-in policies that automatically challenge or block suspicious sessions in real time
The result is a security framework that scales with your organization — more control, less friction, and the ability to align your policies to how your team actually works.
We’ve covered the mechanics in detail in Conditional Access in M365: What It Actually Does (And Why Your Business Needs It). The short version: it’s the identity security tool that transforms Microsoft 365 into a genuine Zero Trust platform.
The Licensing Difference — And Why It Matters
Here’s where the decision clarifies quickly:
- Security Defaults — free, included in every Microsoft 365 plan
- Conditional Access — requires Microsoft Entra ID P1 or higher
Entra ID P1 is not included in M365 Business Basic (~$6/user/month) or M365 Business Standard (~$12.50/user/month). It is included in M365 Business Premium (~$22/user/month).
So the real question isn’t “which security feature do I want?” It’s “what plan should my entire organization be on?” And once you look at everything Business Premium includes, the answer gets clear fast.
Why M365 Business Premium Should Be Your Minimum License
M365 Business Premium is often dismissed as an expensive upgrade. When you look at what’s actually bundled in, it’s one of the strongest per-user values in the market — especially for small and mid-sized businesses that would otherwise pay for these tools separately.
Here’s what you get beyond the standard Office apps and Exchange:
- Microsoft Entra ID P1 — unlocks Conditional Access, self-service password reset, and advanced identity governance
- Microsoft Defender for Business — enterprise-grade endpoint detection and response (EDR) purpose-built for SMBs, covering every managed device
- Microsoft Intune — full mobile device management and compliance enforcement, which feeds directly into Conditional Access policy decisions
- Defender for Office 365 Plan 1 — anti-phishing protection, safe links, and safe attachment scanning across email and Teams
- Azure Information Protection Plan 1 — data classification and sensitivity labeling to protect your most critical files wherever they travel
When you price out even two or three of these tools separately — particularly Defender for Business and Intune — Business Premium frequently costs less than assembling an equivalent stack from separate vendors.
More importantly, these tools are designed to work together. Intune establishes device compliance. Conditional Access enforces it at every sign-in. Defender for Business monitors endpoints around the clock. Defender for Office 365 protects the inbox. It’s an integrated security architecture, not a collection of disconnected products — and it’s exactly the kind of layered defense described in 5 Security Layers Your MSP Is Likely Missing.
Business Premium also serves as the practical foundation for a Zero Trust security model for small business — where verified identity and device compliance are the gatekeepers to every resource, not just the perimeter.
So When Does Security Defaults Make Sense?
There are legitimate scenarios where Security Defaults are the right choice — at least temporarily:
- Brand-new tenants with no IT support — they provide an immediate baseline with zero configuration
- A transitional step — while your organization evaluates or budgets for a move to Business Premium
- Very small organizations with no compliance requirements — where the all-or-nothing approach doesn’t create meaningful friction
What Security Defaults are not is a long-term strategy. If your business handles client data, operates under any compliance framework, or has employees with different roles and access needs, the inflexibility will create real problems — in security gaps, in user experience, or both. Treating Security Defaults as a permanent solution instead of a starting point is one of the most common cybersecurity mistakes small companies make.
One important operational note: Security Defaults and Conditional Access are not designed to run simultaneously. Once you build out Conditional Access policies, Security Defaults should be disabled — they serve overlapping functions and can conflict in ways that are difficult to troubleshoot.
Making the Call: A Simple Decision Framework
If you’re trying to decide where your organization stands today, here’s a quick way to think it through:
| Your Situation | Recommended Approach |
|---|---|
| New tenant, no IT staff, Basic license | Enable Security Defaults now — plan the move to Business Premium |
| Growing business on Business Standard | Upgrade to Business Premium — you’re one step away from a full security stack |
| Any compliance requirement (HIPAA, PCI, SOC 2) | Business Premium minimum; evaluate E3/E5 depending on scope |
| Remote or hybrid workforce | Business Premium — device compliance and location-based policies are essential |
| Already on Business Premium | Disable Security Defaults, build out Conditional Access policies |
The licensing math almost always points the same direction: if you’re on Basic or Standard today, Business Premium is the upgrade conversation worth having — not because it’s the most expensive option, but because it’s the one where the security tools stop being add-ons and start being a system.
Get an M365 Security Assessment from eMDTec
Knowing the right answer on paper is one thing. Knowing exactly which licenses your team is on today, where the configuration gaps are, and how to build Conditional Access policies that fit your actual workflow is another.
eMDTec’s M365 Security Assessment gives you a clear picture of your current Microsoft 365 security posture — including licensing gaps, policy misconfigurations, and a prioritized roadmap to close them.
Contact eMDTec today to schedule your M365 Security Assessment.