Is Copilot in Business Central secure? What SMBs need to know (and what they don’t need to fear)

AI has quickly moved from “interesting” to “inevitable” for many small and mid-sized businesses. Leaders see the promise: faster work, better insights, and less manual effort across finance, operations, and customer management. At the same time, excitement about AI is often paired with anxiety, especially when that AI lives inside an ERP system. 

For SMBs running Microsoft Dynamics 365 Business Central (BC), the question comes up early and often: Is Copilot secure? 

It’s a fair concern. Business Central contains some of the most sensitive data in your organization: financials, customer records, vendor details, pricing, and operational history. The idea of AI interacting with that data can feel risky if it’s not clearly understood. 

This article separates myth from reality and explains why Copilot in Business Central is actually one of the safest and most controlled ways for SMBs to begin using AI—when implemented correctly. 

AI excitement meets security anxiety 

In conversations with SMB leaders, one theme consistently comes up before features, productivity, or ROI: data security and data privacy. 

Many organizations want to take advantage of AI, but worry about: 

• Who can see their data 
• Where that data goes 
• Whether AI might act without oversight 
• Whether new tools introduce hidden risk 

These fears are often amplified by headlines about public AI tools, data leaks, or shadow IT. As a result, some businesses hesitate (or avoid AI altogether), because they assume the risk outweighs the reward. Copilot in Business Central challenges that assumption. 

Myth #1: “AI might expose confidential ERP data to the wrong people.” 

Reality: Copilot respects all existing BC permissions. 

Copilot does not bypass Business Central’s security model. Instead, it inherits the same role-based access controls that already govern your ERP. That means: 

• Users can only see data they already have permission to view 
• Copilot cannot surface restricted financials, customers, or transactions to unauthorized users 
• There is no expanded access simply because AI is involved 

In practice, Copilot is often safer than employees manually exporting data to spreadsheets or emailing reports internally because it stays inside the system and consistently enforces permissions. 

The real risk isn’t Copilot itself; it’s poorly maintained permissions. If a user shouldn’t see certain data, Copilot won’t either, but only if roles and access are configured correctly. 

Myth #2: “Copilot sends my ERP data to the public internet.” 

Reality: Copilot stays inside Microsoft’s secure cloud boundary. 

Copilot in Business Central operates within Microsoft’s enterprise cloud environment. Your data: 

• Does not get sent to the open internet 
• Is not shared across tenants 
• Is not used to train public AI models 

Microsoft applies the same security, privacy, and compliance controls to Copilot that govern the rest of Dynamics 365 and the Microsoft Cloud. These controls include: 

• Encryption in transit and at rest 
• Tenant isolation (your data stays your data) 
• Compliance with global standards such as GDPR, SOC, ISO, and more 

This is a critical distinction between Copilot and many third-party AI tools that rely on external large language models outside your ERP’s security boundary. 

Myth #3: “Using Copilot is no safer than pasting ERP data into ChatGPT.” 

Reality: These two things are not equivalent. 

Pasting ERP data into a public or external AI tool removes that data from your controlled environment. Once it leaves your ERP, you lose permission enforcement, auditability, and compliance guarantees. 

Copilot, by contrast, operates inside the Microsoft ecosystem and honors your existing governance model. 

A simple way to think about it: Copilot is not ChatGPT for your ERP. It is your ERP, with copiloting. That distinction matters. 

Myth #4: “AI tools are unpredictable. They may act without oversight.” 

Reality: Copilot in Business Central is intentionally supervised AI. 

Copilot is designed to assist, not autonomously execute business decisions. In Business Central: 

• Copilot provides suggestions, summaries, or guided steps 
• Users review and confirm actions before anything is finalized 
• Even advanced, agent-like workflows require human approval 

For example, Copilot might help draft a purchase invoice or guide a user through an order entry process, but it does not independently post transactions or change records without user validation. 

This human-in-the-loop design is intentional and essential for SMBs operating in regulated, financial, or compliance-sensitive environments. 

Myth #5: “If Microsoft keeps changing AI tools, it’s impossible to stay secure.” 

Reality: AI updates improve security, and partners help manage the pace. 

Microsoft’s AI roadmap emphasizes responsible AI, governance, and control, not unchecked automation. New frameworks and standards are being introduced to increase visibility and security, not reduce it. 

At the same time, SMBs don’t have to navigate these changes alone. Sikich helps organizations: 

• Understand what’s changing and why 
• Adopt Copilot at a pace that fits their risk tolerance 
• Put guardrails in place before scaling AI usage 

A structured “crawl, walk, run” approach ensures Copilot is adopted intentionally, not rushed. 

How Microsoft protects your BC data when using Copilot 

Understanding how Copilot interacts with your Business Central data is essential to evaluating its security. 

Built on an established security foundation 

Copilot in Business Central does not introduce a separate or experimental security model. It operates entirely within the existing protections that govern Business Central, Dynamics 365, and the broader Microsoft Cloud.  

This means that organizations are not adopting an external AI tool, but enabling additional functionality within a platform that already meets rigorous security and compliance standards. 

Permissions & identity remain fully enforced 

Copilot inherits BC’s role-based access controls and relies on Microsoft Entra ID (formerly Azure Active Directory) to authenticate users and enforce permissions. Users can only access data they are already authorized to view, and Copilot does not expand or bypass those permissions.  

Existing security measures, such as multi-factor authentication and conditional access, continue to apply, ensuring consistent enforcement across all interactions. 

Data remains within Microsoft’s secure cloud boundary 

All data accessed by Copilot stays within Microsoft’s secure cloud. It’s encrypted in transit and at rest, and tenant isolation prevents cross-organization access. BC data isn’t shared externally or used to train public AI models, ensuring full control over sensitive information. 

Designed for compliance & responsible use 

Copilot aligns with Microsoft’s Responsible AI principles and supports compliance with global standards such as GDPR, SOC, ISO, and other industry requirements. It provides recommendations and guided assistance, but users remain in control of final actions. 

This supervised approach allows organizations to benefit from AI-driven insights while maintaining governance, oversight, and accountability. 

What businesses should be thinking about Copilot in BC 

While Copilot in BC is designed with strong security controls, responsible adoption still requires thoughtful preparation. AI does not introduce new risks on its own, but it can amplify existing ones if foundational elements are not in place. 

One of the most important considerations is internal governance. Organizations should be clear about who can use Copilot features, in which areas of the business, and for what purposes. Establishing basic usage guidelines early helps ensure AI is applied consistently and appropriately across roles and departments. 

Change management is equally critical. Users need to understand how Copilot works, what it can help with, and where human judgment is still required. Clear communication and training help build trust in the tool while preventing misuse or overreliance on AI-generated output. 

Businesses should also pay close attention to third-party tools. Public AI platforms or unapproved applications that sit outside the ERP can introduce shadow AI risks, bypassing the controls and governance that protect Business Central. Keeping AI usage within approved, secure platforms helps maintain visibility and compliance. 

Finally, data hygiene plays a central role in AI effectiveness. Copilot reflects the quality of the data it accesses. Clean, well-structured data leads to meaningful insights, while outdated or inconsistent data can produce misleading results. AI is most valuable when it is built on a strong data foundation. 

Practical first steps to deploy Copilot securely in BC 

For SMBs exploring Copilot in BC, a measured and intentional approach delivers the strongest results. Rather than deploying AI broadly from day one, organizations benefit from taking a few focused steps that establish a secure and sustainable foundation: 

1. Start with native Copilot features: Enable built-in BC Copilot capabilities that operate within existing permissions and security controls. 
2. Validate roles and access: Confirm user roles align with job responsibilities to ensure Copilot surfaces only appropriate data. 
3. Set clear usage expectations: Educate users on how Copilot should be used, when human review is required, and what decisions remain manual. 
4. Focus on one high-value workflow: Apply Copilot where it can deliver immediate, visible benefit before expanding more broadly. 
5. Engage experienced advisors: Partner with experts who understand both Business Central and AI governance to guide secure, scalable adoption. 

Align AI, governance, and business outcomes with Sikich 

Copilot in Business Central offers a balance that’s difficult to achieve with external AI tools. By integrating AI directly into the ERP, it operates within existing permissions, governance, and human oversight, supported by enterprise-grade security without adding unnecessary complexity. 

For SMBs, the takeaway is this: Adopting AI doesn’t have to mean sacrificing security or control.  

With the right guardrails, Copilot enables organizations to leverage AI’s benefits while maintaining confidence in how their data is accessed and protected. And with proper preparation and expert guidance, they can implement AI securely, responsibly, and at a pace that aligns with their business goals. 

Sikich can help your organization do just that—aligning technology, governance, and business outcomes so AI becomes a trusted, practical advantage. Contact Sikich today to get started.