Microsoft Business Licences in 2026 – What’s Changing for SME Security

By now, most of us are familiar with Microsoft’s rapid release cycle, with new features landing almost weekly. And as we move into 2026 that’s not slowing down, Microsoft 365 continues to strengthen the security baseline for businesses – not through radical platform shifts, but by consolidating identity, device, and collaboration protection directly into core licences.

For SMEs, this means that built-in security features are becoming more comprehensive across Business Premium, E3, and E5 plans. However, the practical benefits still rely on how organisations configure policies, monitor alerts, and respond to incidents. Understanding these updates early is key to maintaining a robust security posture and ensuring your business is protected against evolving threats.

Microsoft’s 2026 Direction – Fewer Add-Ons, More Built-In Security

Microsoft’s strategic focus this year is clear: simplify licensing, embed Zero Trust principles, and make advanced security more accessible to smaller organisations.

So, what does this actually mean in practice? Below, we break down how core Microsoft 365 security features will evolve across business licences in 2026.

What this means by licence tier:

Key takeaway for 2026: Many features that were previously available as add-ons are now included in standard licences, which raises the default security baseline for SMEs. Some advanced capabilities, however, unsurprisingly remain exclusive to E5 licences.

Security Features in Practice: What Actually Protects Your Business

Let’s take a closer look at the core Microsoft 365 security features and how they translate into practical protection for SMEs.

1. Email and Collaboration Protection

Across Business Premium, E3, and E5, Microsoft is expanding Defender for Office 365 capabilities:

• Broader inclusion of Plan 1 features
• Improved Safe Links and Safe Attachments coverage
• Enhanced post-delivery visibility

Impact for SMEs: These updates reduce exposure to phishing attacks, malware, and credential harvesting. Businesses that configure their policies appropriately and actively monitor alerts can see significant improvement in email and collaboration security.

Operational note: Default policies are conservative, so SMEs need to tune policies, manage alerts, and train staff to maximise protection.

Caption: “How Defender for Office 365 protects SMEs from phishing and malicious attachments.”
Source: Microsoft Learn – Safe Links “malicious link warning” page
Reference: Microsoft Defender for Office 365 documentation

2. Identity Security and Conditional Access Improvements

Microsoft has introduced further enhancements within Entra ID (formerly Azure AD) to improve identity protection and enable more practical Zero Trust adoption for SMEs:

• Expanded identity protection signals and risk-based access controls
• More flexible Conditional Access policies
• Better visibility into risky sign-ins and account behaviour

Impact for SMEs: These changes ultimately allow businesses to protect user accounts more effectively and to adopt Zero Trust principles in a realistic way.

Operational note: Misconfigured Conditional Access policies remain a common failure point. SMEs should review policies regularly to ensure they provide security without disrupting workflows.

Caption: “Visibility into risky sign-ins and Conditional Access enforcement with Entra ID.”
Source: Microsoft Learn – Configure Conditional Access in Microsoft Defender for Endpoint documentation (sign-in required)
Reference: Microsoft Entra ID Conditional Access

3. Endpoint and Device Security via Intune

Intune and Defender for Endpoint have been further aligned, with the aim to provide SMEs with improved device and endpoint management, this includes:

• Advanced device analytics and reporting
• Remote Help and support tooling
• Stronger baseline enforcement

Impact for SMEs: These capabilities provide better control over hybrid and remote devices and improve audit and compliance posture.

Operational note: Policies should reflect how employees actually work. Overly rigid settings may create friction and reduce productivity.

Caption: “Device compliance and endpoint security insights provided by Intune and Defender for Endpoint.”
Source: Microsoft Learn – Monitor results of your device compliance policies in Microsoft Intune

4. Advanced Detection, Investigation, and Response

Defender XDR (available primarily to E5 licences) unifies alerts across email, identity, and endpoints, giving SOC teams faster detection and response.

Microsoft is strengthening Defender XDR in 2026 with deeper AI-driven detection, expanded advanced hunting capabilities, and new always-on threat-detection agents. Early updates include faster advanced hunting, richer behavioural analytics, and enhanced UEBA-driven insights that help correlate identity and endpoint activity more quickly. Security Copilot is also being integrated more tightly, providing autonomous threat-hunting, dynamic detection, and AI-generated threat intelligence briefings – all designed to reduce investigation time and make SOC teams more efficient.

These improvements help SMEs detect complex, low-and-slow attacks faster, giving security teams actionable signals without overwhelming them with siloed alerts. Automation supports human oversight rather than replacing it, allowing internal teams to focus on decisions and response while the platform handles repetitive investigation tasks. This is where a managed SOC can really add value to your existing E5 investment.