Before You Connect AI to Microsoft 365: 4 Things to Sort First

AI tools that plug in to Microsoft 365 are brilliant at finding documents. Microsoft 365 Copilot does it from inside Microsoft’s own apps, and Claude can do something similar through its Microsoft 365 connector. You could ask one to pull together everything about a client, or to draft a reply based on some old thread from ages ago, and off it goes, digging through your emails, files and Teams chats until it has an answer.

This is great, until you think about what it’s digging through. These tools work on behalf of whoever’s asking, so they can only find what that person can already open. Microsoft says that about Copilot, Anthropic says the same about Claude’s connector, and most other tools that connect to Microsoft 365 work in a similar way (though it’s worth checking for whatever you use). The trouble is how much your staff can open without anyone knowing about it. Years of “share with everyone” links, old project sites no one remembers, files saved in the wrong folder because it was a Friday afternoon, it all adds up. Before AI, nobody came across those things because nobody could search everything at the click of a button. But an AI tool will look every time someone asks it a question, and it’s very thorough about it.

This is Part 2 of our AI for Small Business series. Part 1 was about what goes into AI tools, and this one’s about what’s already sitting in your Microsoft 365 and who can get at it. Here are four things to sort before you connect anything.

1) Tidy Up Sharing

Start with what your permissions allow in practice. Microsoft’s own guidance says SharePoint’s default sharing settings are the least restrictive option, which goes a fair way towards explaining why there’s usually more access floating around than anyone meant to hand out.

The usual places to look are:

• Files and folders shared with “everyone”, or with open links that work for anyone who has them
• Old Teams and SharePoint sites that nobody owns any more
• Accounts for leavers that are still active

A quick way to get a feel for it is to sign in as an ordinary member of staff, or ask one, and search for things like “salary”, “password” or “redundancy”. If something comes back that you’d rather not have everyone reading, an AI tool will find it too. Microsoft suggests this kind of test, using different roles, before you roll Copilot out, and it works for any tool. If you’ve not tried this before, it can be an eye-opening experience.

If you’re using Copilot (and depending on your licensing) SharePoint can also hide sensitive sites from Copilot and organisation-wide search without changing who has access. Handy while you’re sorting out the permissions underneath, since that bit can take a while.

2) Use What You Already Pay For

If you’re on Microsoft 365 Business Premium, sensitivity labels and data loss prevention (DLP) are already included, and most small businesses haven’t switched them on. Bit like the gym membership you keep meaning to use.

In plain English:

• Sensitivity labels are tags you put on files and emails to mark how sensitive they are. A label can also add protection, such as encryption, so the file stays locked down even if it’s sent outside the business.
• DLP is a set of rules that spot sensitive information, like bank details or National Insurance numbers, and warn people or block them when they try to share it.

Both are worth having in place before any AI tool turns up. What you get depends on your plan, and some of the fancier stuff, like automatic labelling, needs a higher-tier licence than Business Premium.

3) Keep Labels Simple

It’s tempting to build a big labelling scheme with a dozen categories, all very thorough. Staff won’t use it though, and a label nobody applies doesn’t protect anything.

Two or three labels is plenty for most small businesses:

• Public: fine to share with anyone
• Internal: for staff only
• Confidential: need-to-know, such as HR, finance and client contracts

You can always add more later, once people have got used to them.

4) Clear Out Old Data

AI tools use whatever they can find, and that includes the price list from two years ago and the policy that got replaced last spring. If it’s sitting there, it’ll end up in an answer at some point, whether you’re asking Copilot, Claude or anything else.

So archive or delete what you don’t need. The answers get more reliable, and holding on to personal data for longer than you need to can cause UK GDPR headaches of its own anyway.

Devices Matter Too

Who gets in depends on more than permissions, too. The device matters, and our Bring Your Own Chaos Part 3 post covers how device compliance decides who gets access. Worth a read if you haven’t already.

Coming Up Next

Part 3 is about the controls around AI tools, starting with which ones are allowed to connect to your Microsoft 365 at all. Some, like Claude’s connector, need a Microsoft administrator to approve them before anybody can connect. We’ll also look at giving staff an approved option and dealing with personal AI accounts without stopping everyone from working.

Not Sure What an AI Tool Could See in Your Business?

If you’re not sure who can get at what, or which security features you’re paying for and not using, that’s a good place to start. Our Free M365 Assessment reviews how your Microsoft 365 is set up, so you know where you stand before you plug an AI tool in.

Next in AI for Small Business: The Safe Way to Start, Part 3: locking down AI without blocking everyone.

Sources: Microsoft Learn: SharePoint and Copilot best practices, Microsoft Learn: protecting Copilot data and the Claude Microsoft 365 connector documentation.