By an SMB Owner Who Learned the Hard Way
When I first launched my business, Security Defaults in Entra ID felt like a gift. One toggle, instant MFA, legacy auth blocked, and baseline protection without extra licensing. For a growing SMB with limited time and budget, it seemed perfect.
But here’s the truth I learned quickly, and I see the same pattern with my clients today:
Security Defaults don’t scale with your business.
They’re a great starting point, but they quickly become a bottleneck once your environment gets a bit more complex.
Let me break down why SMBs outgrow them faster than they expect.
1. Your Team Grows, and “One-Size-Fits-All” Stops Working
Security Defaults treat every user the same. (Configure Security Defaults for Microsoft Entra ID, 2024) That sounds fair until you hire:
- A contractor who only needs access to one app
- A manager who travels internationally
- A technician who needs elevated privileges
- A remote employee working from a high‑risk region
Suddenly, “everyone gets the same policy” becomes a liability. As an SMB owner, I needed flexibility, not friction. That’s where Security Defaults reached their limit.
2. You Need Exceptions (and Security Defaults Don’t Allow Them)The moment you introduce:
- A break‑glass account
- A service account
- A legacy application
- A third‑party integration
At that point, Security Defaults become a brick wall.You can’t exclude accounts.
You can’t tune MFA behavior.
You can’t create safe exceptions. (Configure Security Defaults for Microsoft Entra ID, 2024)
I learned this the hard way when a critical integration broke because Security Defaults didn’t allow the nuance we needed.
3. Compliance Requirements Don’t Wait for You to “Grow Up”
Even small businesses are now facing:
- Cyber insurance questionnaires
- Vendor security assessments
- SOC 2 or ISO 27001 requirements
- Client‑driven security audits
Security Defaults don’t satisfy most of these.
Conditional Access does. (Plan Your Microsoft Entra Conditional Access Deployment, 2025)As an SMB owner, I realized that compliance isn’t just for large companies anymore. It’s now a cost of doing business.
4. Remote and Hybrid Work Demand More Control
Security Defaults were built for a world where everyone worked in the same office. (Automatic Conditional Access policies in Microsoft Entra streamline identity protection, 2023)But today?
- Employees work from home
- Contractors log in from anywhere
- Devices vary wildly
- Networks are unpredictable
I needed policies that adapt to context, like location, device compliance, and risk level, not a single rule that treats every login the same.
5. Cyber Insurance Is Quietly Forcing the Upgrade
If you’ve renewed cyber insurance recently, you’ve seen the shift:
- MFA everywhere
- Conditional Access
- Device compliance
- Geo‑blocking
- Privileged access controls
Security Defaults check maybe one of those boxes. (Microsoft Entra ID: The Complete Guide to Conditional Access Policies, 2024)
Insurers want proof that you have layered identity security, so you need to go beyond the basics.
6. The Cost of an Incident Is Higher Than the Cost of P1 Licensing
This was the turning point for me. A single compromised account can cost:
- Downtime
- Lost revenue
- Reputational damage
- Forensic investigations
- Insurance deductibles
Entra ID P1 licensing is a fraction of that cost. (Microsoft Entra ID P1 - Pricing & Discounts, 2024)As an SMB owner, I realized:
Security Defaults help you save money at first, but they can end up costing you much more in the long run.
7. Conditional Access Isn’t “Enterprise Only” Anymore
This is the biggest misconception I see. Conditional Access used to seem like something only big businesses needed.
Today, it’s the backbone of modern identity security—even for 10‑person companies. (Iddya, 2019)
With Conditional Access, SMBs get:
- Granular MFA
- Risk‑based access
- Device‑based controls
- App‑specific policies
- Safe exceptions
- Better user experience
- Stronger compliance posture
It’s not overkill.
It’s the new baseline.
The bottom line is that Security Defaults are just a starting point, not a full security strategy.
As an SMB owner, I’m grateful that Security Defaults were available because they protected us in the beginning. But as soon as we grew, hired new people, added new tools, or had to meet compliance requirements, they started to hold us back.
SMBs don’t outgrow Security Defaults as they grow.
They outgrow them because they get serious.
If you want to protect your business, your clients, and your reputation, Conditional Access isn’t optional. It’s the natural next step.
References
(2024). Configure Security Defaults for Microsoft Entra ID. Microsoft Entra | Microsoft Learn. https://learn.microsoft.com/en-us/azure/active-directory/fundamentals/security-defaults?authentication-methods=
(2024). Configure Security Defaults for Microsoft Entra ID. Microsoft Entra | Microsoft Learn. https://learn.microsoft.com/en-us/azure/active-directory/fundamentals/concept-fundamentals-security-defaults
(2025). Plan Your Microsoft Entra Conditional Access Deployment. Microsoft Learn. https://learn.microsoft.com/en-us/azure/architecture/guide/security/conditional-access-zero-trust
(November 5, 2023). Automatic Conditional Access policies in Microsoft Entra streamline identity protection. Microsoft Security Blog. https://www.microsoft.com/en-us/security/blog/2023/11/06/automatic-conditional-access-policies-in-microsoft-entra-streamline-identity-protection/
(2024). Microsoft Entra ID: The Complete Guide to Conditional Access Policies. Security Boulevard. https://securityboulevard.com/2024/03/microsoft-entra-id-the-complete-guide-to-conditional-access-policies-2/
(2024). Microsoft Entra ID P1 - Pricing & Discounts. Microsoft License Cost Calculator. https://media.trustradius.com/product-downloadables/SL/R1/WQZ599N73SUP.pdf
Iddya, A. (June 11, 2019). Conditional Access is now part of Microsoft 365 Business!. Microsoft Community Hub. https://techcommunity.microsoft.com/blog/microsoft365businessblog/conditional-access-is-now-part-of-microsoft-365-business/684063
Jaspreet Singh — Author @ MSPinsights.ca | Founder & CEO, Accelerate IT Services Inc.