Replacing SharePoint in Microsoft Teams: When sensitive data belongs in a data room

Microsoft Teams is the central platform for communication and collaboration in many companies. Employees chat, organize meetings, coordinate tasks and work on documents together. However, once files are shared through Teams, collaboration is no longer the only consideration – storage locations, access rights and data sovereignty also become important.

Files are not simply stored “in Teams.” Teams is primarily the working interface, while SharePoint and OneDrive handle file storage and management in the background. We explain these connections in more detail in our article “Using Microsoft Teams while protecting sensitive data: Why file storage matters.” 

This raises a crucial question for companies: Should sensitive and business-critical files be part of the Microsoft 365 ecosystem – or would they be better protected in a secure and sovereign data room environment? For sensitive files, controlled external data exchange and high data sovereignty requirements, a specialized data room is generally the better storage solution.

SharePoint and OneDrive: The file storage behind Microsoft Teams

Microsoft Teams brings various Microsoft 365 services together in a single interface. This technical structure is barely visible to users. They upload a file to a channel or chat and then access it directly through Teams. However, the actual storage location depends on where the file is shared:

• Files shared in Teams channels are stored in SharePoint.

• Files shared in individual and group chats are generally stored in the sender’s OneDrive for Business.

• Depending on the feature and configuration, other content may be connected to additional Microsoft 365 services.

This distinction is relevant because channel files and chat files follow different storage, ownership and permission models. As the number of teams, channels, chats and sharing permissions grows, it becomes increasingly difficult for companies to maintain a complete overview of sensitive files and existing access rights.

What is SharePoint?

SharePoint is the document management and collaboration platform within Microsoft 365. Companies use it for team sites, document libraries and collaborative document editing, among other purposes.

Within Microsoft Teams, SharePoint primarily serves as the storage location for channel files. When a team is created, Microsoft automatically creates a connected SharePoint site in the background. Users access documents through Teams, while storage and administration are handled through SharePoint.

What is OneDrive?

OneDrive for Business is a user’s personal cloud storage within Microsoft 365. In Teams, OneDrive is primarily used for files shared in individual or group chats.

When an employee uploads a file to a chat, it is generally stored in their personal OneDrive area and shared with the other participants. To the user, it appears as though the file is stored directly in the Teams chat. In reality, however, it is located in the personal storage area of an individual user.

For sensitive company data, this raises important questions:

• Which user owns the underlying storage area?

• Who currently has access?

• How long will the sharing permission remain active?

• Has the document been shared in other chats?

• What happens when an employee changes departments or leaves the company?

• How are access rights removed once a project has been completed?

Limitations of SharePoint and OneDrive for sensitive data

SharePoint and OneDrive make it easy to provide files through Microsoft Teams and work on them collaboratively. However, companies can quickly lose control over sensitive information. This is particularly critical in highly confidential projects, such as M&A transactions and due diligence reviews, or when working with intellectual property. Yet even seemingly routine documents may contain business-critical information about customers, employees, pricing, contracts, products or strategic decisions.

Companies therefore need to assess more than whether a document can be shared. They must also be able to control where the file is stored, who can access it, which actions are permitted, whether downloads or forwarding are allowed, how external participants are involved, which activities have taken place and how access rights are revoked. SharePoint and OneDrive offer extensive security and administration features. However, secure use requires consistent configuration and governance. As adoption increases, so does complexity: teams, SharePoint sites, personal OneDrive areas, users and sharing permissions must all be managed continuously.

A secure virtual data room takes a different approach: security, access control and traceability are not additional features of a general collaboration platform. They are at the core of the solution.

Data residency: Where does Microsoft store customer data?

In addition to access rights, the storage location also plays an important role when sensitive data is involved. Depending on the service used, the location of the Microsoft 365 tenant and the options purchased, Microsoft stores customer data in defined regions around the world. Microsoft refers to this geographical storage location for data at rest as data residency.

For European customers, the EU Data Boundary is particularly relevant. Microsoft describes it as a geographically defined boundary within which customer data and personal data for numerous enterprise online services are intended to be stored and processed.

 Regional storage within Europe is an important step, particularly as data protection and compliance requirements continue to become more stringent. However, data residency is not the same as data sovereignty. The storage location alone does not automatically answer who controls the infrastructure, which legal framework applies to the provider or how dependent a company becomes on the provider’s cloud ecosystem.

Companies should therefore also consider the following questions:

• Which legal framework governs the provider?

• Who controls the infrastructure and data processing?

• Should sensitive data deliberately be stored outside this cloud ecosystem?

Data sovereignty and the CLOUD Act

Data sovereignty means retaining the greatest possible control over a company’s own business-critical data and the systems used to process it. In addition to technical safeguards, the legal jurisdiction of the provider is also relevant.

As a US-based company, Microsoft is subject to US law, including the CLOUD Act. Under certain conditions, the CLOUD Act allows US authorities to request electronic information from US-based providers – even when the data is stored outside the United States. Storing data in a European data center, as Microsoft describes, therefore does not automatically resolve every question regarding data sovereignty. Companies handling personal, confidential or business-critical information must make a conscious decision:

Should this data be stored within the Microsoft 365 ecosystem – or would it be better protected in an independent data room solution?

For sensitive data, a German data room is a sovereign storage alternative outside Microsoft’s infrastructure.

Expert recommendation: A secure data room as a SharePoint alternative

In practice, companies do not need to make a fundamental decision against Microsoft. Doing so would often be counterproductive: Teams is established, employees are familiar with the interface, external partners are accustomed to it and many processes are built around the platform.

The better approach is clear: Teams remains the platform for communication and collaboration. A secure data room becomes the storage location for sensitive files and replaces SharePoint wherever greater control, traceability and data sovereignty are required.

SharePoint is suitable for:

• general team documents,

• non-confidential or less sensitive project documents,

• working materials without elevated protection requirements,

• and content that is intentionally stored within the Microsoft 365 ecosystem.

A secure data room is the better storage solution for:

• confidential documents,

• external collaboration with elevated protection requirements,

• contractual and audit documents,

• personal or business-critical data,

• structured data rooms,

• controlled sharing,

• differentiated access management,

• and traceable data exchange.

A secure data room is the ideal environment for confidential data, controlled exchange and data sovereignty. For companies that take a comprehensive and consistent approach to digital data sovereignty, the data room can even become the central repository for all company information.

Verified security for confidential data exchange

When selecting a data room, companies should not rely solely on general security claims. Independent certifications and audit reports help determine whether a provider meets recognized requirements for information security, availability and internal control mechanisms.

Important standards and audits include:

• ISO/IEC 27001: confirms that an information security management system meets an internationally recognized standard.

• ISO 22301: confirms a business continuity management system for handling disruptions and emergencies.

• SOC 2 Type II: assesses over a defined period whether security and control mechanisms have been implemented effectively.

• BSI C5: defines requirements for the security of cloud services and is particularly relevant in the German and European markets.

A data room is most effective when it has been developed specifically for confidential data exchange, differentiated access rights and traceable activities.

netfiles data rooms meet precisely these requirements. They are independently audited and hold relevant certifications and audit reports, including ISO/IEC 27001, ISO 22301, BSI C5 and SOC 2. netfiles combines verified security with a clear specialization in confidential data exchange, collaboration and data sovereignty.

Security must not become an isolated solution

A growing number of solutions now provide the technical and organizational security required for confidential data. However, experience shows that secure solutions only work when they are used consistently in everyday business.When secure tools are too complicated or unfamiliar, employees frequently turn to more accessible alternatives. This creates storage locations and shadow processes that are difficult to control – commonly referred to as shadow IT.

Security must therefore not become an isolated solution. Companies need to take responsibility and make secure storage locations easy to access. For a SharePoint alternative, this means that the secure data room must be available exactly where communication and collaboration take place: In Microsoft Teams.

netfiles for Microsoft Teams: The secure data room directly in Teams

With netfiles for Microsoft Teams, users can access their netfiles Data Room directly from the Teams interface – without storing sensitive files in SharePoint or OneDrive and without leaving the Teams app.

The files remain stored in netfiles and are protected by the data room permission system. Companies continue to use Microsoft Teams as their central working interface, while sensitive files remain in netfiles Data Room.

This provides:

• secure storage for confidential files,

• online editing outside Microsoft’s infrastructure,

• secure data exchange and business filesharing,

• granular access management and traceability,

• and controlled external collaboration.

The key advantage is that files and folders remain accessible through a native app or tab within Microsoft Teams. Only the storage and editing of sensitive files are moved to the netfiles data room. Companies therefore do not need to choose between convenience and security: Teams remains the interface. netfiles protects the data.

Conclusion: Use Microsoft Teams and protect sensitive data in netfiles

Files shared through Microsoft Teams are stored in SharePoint or OneDrive in the background. This does not provide sufficient control for sensitive and business-critical information. For companies that prioritize data sovereignty, controlled access and secure external collaboration, a specialized data room is therefore the more consistent storage solution.

With netfiles for Microsoft Teams, Teams remains the familiar working interface. At the same time, sensitive files are stored in an independently audited data room environment that is developed and hosted in Germany.This allows companies to combine efficient collaboration with control and data sovereignty: Microsoft Teams for collaboration. netfiles for secure files.

Learn more: Discover netfiles for Microsoft Teams or contact us for more information.