There are two ways to manage Microsoft 365: with a single tenant or with multiple tenants. Which is better?  

In this article, we assess Gartner’s latest recommendations for Microsoft 365 tenant environments to help you decide which way is better for the day-to-day operations of your organization.  

 This article aims to cover:  

• How to assess your current M365 tenant strategy  ‍
• Single Tenant vs. Multi-Tenant Microsoft 365 environments  ‍
• Native Microsoft 365 Tools to Segment Your Tenant  ‍
• Alternative Way to Manage your M365 Tenants with CoreView 

How to assess your current M365 tenant strategy  

Maintaining a single Microsoft 365 tenant was once seen as an advantage to an organization. However, more and more, organizations are finding that single tenants have severe limitations.  

Before jumping into the single tenant vs. multi-tenant debate, it’s important to assess your current tenant strategy. Start by using this step-by-step below to understand your current tenant strategy and how it impacts business operations: 

Step 1: Audit Your Environment 

• Assess tenant usage, user objects, workloads, and configurations. 
• Evaluate licensing across workloads to identify inefficiencies. 

Step 2: Map Organizational Structures to Tenant Design 

• Identify logical boundaries (e.g., business units, geographies, compliance zones). 
• Determine whether autonomy or unified control takes priority. 

Step 3: Test Scalability Needs 

• Assess user counts, workload demands, and Azure AD thresholds. 
• Verify current performance against anticipated growth. 

Step 4: Evaluate Collaboration Requirements 

• Single tenant supports unified collaboration. 
• Multi-tenant requires cross-tenant Teams and SharePoint configurations, which can hinder user experience. 

Single Tenant vs. Multi-Tenant Environment in Microsoft 365 

In a recent study, Gartner covers into the benefits and challenges of managing and supporting a single tenant in Microsoft 365. Below we’ve outlined these pros and cons, along with commentary from CoreView’s Microsoft MVP Vasil Michev. 

Single Tenant Environment in Microsoft 365 

A single tenant is an ideal tenant strategy for organizations who require a unified environment. It operates with a single uniform directory, making internal communication more seamless which may ultimately benefit productivity.   

However, there are serious limitations for organizations that need data and administrative separation. It is not possible to fully separate users or data at the service level, making it difficult to isolate: 

• Specific regions or compliance zones 
• Business functions in regulated industries 
• Educational institutions with diverse student and faculty operations 

Here’s Michev’s take on the single tenant vs. multi-tenant discussion: 

“There are some limitations in the native tools that can play a role when deciding between a single tenant or multiple tenants. If we limit the discussion to just the M365 admin management aspect, they might be the reason for using multiple tenants.  

“But, of course, it’s way more than just admin effort that drives such decisions. And, when it comes to user experience and collaboration, using a single tenant always offers the best possible solution.” 

Additionally, a single tenant can increase security risks and reduce productivity: 

• Overwhelmed Service Desks: Managing a massive user base can stretch IT resources thin, impacting responsiveness.  ‍
• Security Risks: Every M365 admin in a single tenant has access to all data and settings. If an admin’s credentials are compromised, attackers gain the same level of access — a significant risk for large enterprises. 

Multi-tenant Microsoft 365 Environments: Pros and Cons 

Large Microsoft customers tend to operate using multiple tenants for two main reasons:  

1. To distribute IT management: This allows regional or departmental IT teams to maintain autonomy and reduces administrative complexity in large-scale organizations. 
2. ‍To create clear separation of organization units or business operations: This is often a result of compliance initiatives, like GDPR, which require strict data and operational isolation. 

Multi-tenant environments can enhance scalability and flexibility for organizations managing diverse units, businesses, or mergers and acquisitions. Key benefits include: 

• Clear Operational Boundaries: Easier to isolate teams, workloads, and data for compliance or autonomy.  ‍
• M&A Integration: Simplifies onboarding newly acquired organizations with existing tenants. 

However, multi-tenant environments are more complex to manage. There’s no single cohesive environment, making it harder to maintain consistency across tenants. Not to mention, managing multiple tenants increases IT burden and operational costs. 

 Michev shared this:  

“There are really no pros to managing multiple tenants. Such configurations are usually born out of necessity (I.e. in order to meet compliance or business requirements or to support M&A activities). Having to manage multiple tenants always brings an administrative overhead." 

Native Microsoft 365 Tools to segment your tenant 

If you decide to stick with a single tenant, Microsoft 365 offers native tools to help segment tenants for more granular management.  

Administrative Units (or “AUs”) allow collections of users and groups to be separated, assigned to, and managed by an administrator. 

While AUs can be used to separate users within a tenant, they are not entirely effective. You cannot create hierarchical AUs (e.g., a regional AU under a global AU). Additionally, AUs have a limited Scope. They primarily apply to user and group management and cannot fully segment workloads like Teams or SharePoint. You can read the full list  of AU limitations here. 

Because of these limitations, Gartner recommends using third party solutions, like CoreView, for robust tenant management. That way, you can maintain the benefits of a single M365 tenant without the complexity multiple tenants introduces. 

How to Manage Your Microsoft Tenant with CoreView 

With CoreView Virtual Tenants for Microsoft 365, organizations can essentially “slice” their Microsoft tenant into multiple sections. Those segments may reflect a department, country, region, or even a single location based on company and team requirements. 

Once a tenant is divided, a single administrator can be assigned to own and manage the tenant. Ultimately, this allows you to decentralize management and cut down ticket escalations without sacrificing control of your tenant.  

Take the next step to learn how CoreView Virtual Tenants for M365 work.