Choosing the wrong group type in Microsoft 365 is comparable to a foundation error when building a house: You only notice it when the walls are standing and cracking. What starts as a quick fix for “We need an email address” often ends up in redundant objects, unclear permission structures, and an administrative nightmare.
A clean identity architecture makes a strict distinction between communication (distributors), collaboration (M365 groups) and authorization (security groups). Anyone who blurs these boundaries builds up technical debt.
Microsoft 365 Groups
Microsoft 365 Groups are technically not a single entity, but a container object. When you create an M365 group, the backend automatically provisions an entire infrastructure:
- An Exchange mailbox (for mail and calendar).
- A SharePoint Team site (for files).
- A OneNote notebook.
- (Optional) A Microsoft team.
Why you use it: This is the standard for any form of teamwork. Instead of maintaining permissions for SharePoint, Exchange and Planner individually, membership in the group controls access to all these resources synchronously.
Architect Note: M365 groups support dynamic memberships via Entra ID (formerly Azure AD). This means you can define rules (e.g. user.department -eq “Sales”), which automatically gives users access to all team resources during onboarding. This eliminates manual tickets.
Distribution Lists
Distribution lists (DLs) are flat objects without their own data storage. They are used exclusively for email routing to a defined number of recipients.
Why you use it: When no shared file storage or chat history is needed. A classic scenario is external announcements or newsletters. A key advantage over M365 groups is nesting: You can include distribution lists in other distribution lists to map granular hierarchies (e.g. “All employees” contains “All salespeople”). M365 groups do not support nesting.
Mail-enabled security groups
This type tries to combine two worlds: access control (like a security group) and accessibility by mail (like a DL).
Why you (rarely) use it: In cloud-only environments, this type often seems like a relic. It is useful when a group of people needs access to a system and at the same time needs to be informed about changes to this system (e.g. “IT admins” who have access to servers and receive alerts).
Disadvantage: They typically don’t support dynamic memberships in Entra ID at the same level as security-only groups or M365 groups.
Dynamic distribution lists
In contrast to static distribution lists, membership is only calculated at the moment of sending the mail.
Why you use it: For organization-wide communication (“All employees in Berlin”). Since the query happens at runtime, the list is always up-to-date without an admin having to intervene.
Difference to dynamic M365 groups: The logic here is in Exchange Online, not in Entra ID. They are therefore only relevant for email and cannot be used for Teams access.
Security Groups
Security groups are the backbone of your Zero Trust strategy. They have no email functionality and no calendar. Its sole purpose is to bundle identities (users or devices) to assign permissions to resources.
Why you use it: You use it to control access to SharePoint pages, Intune configurations, or Azure resources.
A common architectural flaw is the use of M365 groups for pure authorization purposes. This is inefficient. If you only want to control who can use a particular PowerApp, don’t create overhead with an unused SharePoint site and mailbox. Use a security group.
Special case Intune: Only security groups can contain devices. If you want to roll out policies to all Windows laptops, this is the only way.
Shared mailboxes
Technically, this is a disabled user with a mailbox that other users access via “Full Control” or “Send As”.
Why you use it: For central input channels such as info@, support@ or buchhaltung@.
A massive advantage over M365 groups is the folder structure. In a shared mailbox, users can create subfolders, move and categorize mails. In an M365 group, all mails end up flat in a single folder.
In addition, shared mailboxes (up to 50 GB) do not consume a license.
Decision Matrix: What Type?
As an admin, you make the decision based on the requirement, not personal preference!
| Feature | M365 Group | Distribution list | Security Group | Mail Sec Group | Shared Mailbox |
| Collaboration (Teams/Files) | ✅ Yes (Core) | ❌ Yes | ❌ Yes | ❌ Yes | ❌ Yes |
| E-mail receipt | ✅ Yes | ✅ Yes | ❌ Yes | ✅ Yes | ✅ Yes |
| Permissions (Azure/Intune) | ⚠️ Possible | ❌ Yes | ✅ Yes (Core) | ✅ Yes | ❌ Yes |
| Subfolders in Mailbox | ❌ Yes | N/A | N/A | N/A | ✅ Yes |
| Dynamic Members (Entra) | ✅ Yes | ❌ Yes | ✅ Yes | ❌ Yes | ❌ Yes |
| Nesting | ❌ Yes | ✅ Yes | ✅ Yes | ✅ Yes | ❌ Yes |
Where do you create what? (Provisioning)
The distribution of creation tools has grown historically and is often confusing. Here’s the efficient path:
- Microsoft 365 admin center: The generalist. Good for M365 groups and shared mailboxes.
- Exchange Admin Center: The must-have point of contact for everything that concerns deep email routing (distribution lists, dynamic distribution lists).
- Microsoft Entra admin center: This is where you belong when you build security groups or dynamic policies . Only here do you have access to the attribute logic (Rule Builder).
Result
The choice of group type determines the scalability of your environment.
Use Microsoft 365 Groups for everything where people work together (“Project Alpha”). Use security groups strictly for permissions (“Access-Finance-ReadOnly”). And use shared mailboxes when mails have to be processed (“invoice receipt”), as the lack of folder structure in M365 groups is often a workflow killer here.
Avoid “abusing” distribution lists for Teams purposes or manually maintaining security groups, where dynamic rules could save work. A clean separation today saves you the migration tomorrow.
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