Guest blog courtesy of Augmentt.
When Microsoft launched Microsoft 365 Lighthouse, it represented a meaningful step toward acknowledging the multi-tenant reality that MSPs operate in every day. A native, no-cost tool for managing multiple client environments is genuinely useful, and for some MSPs, it's a reasonable starting point.
But for MSPs looking to build a scalable, profitable Microsoft 365 practice, Lighthouse has significant limitations that become apparent quickly. Understanding those limitations isn't a knock on Microsoft; it's essential context for making good tooling decisions.
What Lighthouse does well
To be fair, Lighthouse offers real value. It provides a consolidated view of client tenant health, surfaces basic security alerts, and gives MSPs visibility into issues like inactive accounts, unprotected devices, and risky users. For smaller MSPs just starting to build their M365 practice, it's a useful dashboard.
The baselines Microsoft provides are also a reasonable starting point for security configuration; they reflect Microsoft's own security recommendations and align broadly with good practice. And because it's native, there are no additional licensing costs for the tool itself.
The licensing problem
The most immediately limiting issue with Lighthouse is its licensing requirements. To take advantage of most Lighthouse capabilities, client tenants need Microsoft 365 Business Premium, E3, or E5 licensing. Many SMB clients (a large portion of most MSPs' books) are on Business Basic or Business Standard, and they're locked out of meaningful Lighthouse functionality as a result.
This creates a two-tier service problem. Clients with premium licensing get the multi-tenant management benefits; everyone else gets a patchwork of manual processes. For MSPs trying to deliver consistent security standards across their entire client base, this is a serious constraint.
Limited automation and remediation depth
Lighthouse is effective at surfacing problems. It's significantly less effective at resolving them. The platform surfaces alerts and provides recommendations, but the path from 'identified issue' to 'fixed issue' frequently requires manual steps across multiple Microsoft admin portals.
For an MSP dealing with a high volume of tenants and alerts, this gap is operationally significant. A tool that tells you something is wrong but requires you to log into Entra ID, then Exchange Admin Center, then the Intune portal to fix it isn't saving much time. The value of multi-tenant management comes from the ability to act on insights, not just see them.
Third-party MSP platforms close this gap with one-click and automated remediation workflows. When a configuration drifts from the baseline, the platform can correct it automatically — or surface a single-action fix rather than a multi-portal journey.
No branded reporting
Client-facing reporting is one of the most visible ways MSPs demonstrate value. A well-designed security report that arrives in a client's inbox monthly, branded with your logo and framed in business terms, builds trust and justifies recurring fees.
Lighthouse has no native support for automated, branded client reports. MSPs using Lighthouse as their primary tool either build reporting manually — an expensive, time-consuming process — or they leave clients without meaningful visibility into their security posture. Neither is a good outcome.
What MSPs actually need
The gaps in Lighthouse aren't unique to Microsoft; they reflect the fundamental difference between a tool built for enterprise IT administrators and a tool built for managed service providers. Enterprise tools assume you're managing one organization with a consistent licensing profile. MSP tools assume you're managing many organizations with varied licensing, diverse security requirements, and a business model built on operational efficiency.
Purpose-built MSP platforms like Augmentt are designed around that reality. They work across all M365 license tiers, offer deep automation for both configuration management and user lifecycle tasks, and include automated branded reporting that integrates with client communication workflows. They also connect to PSA and RMM tools, so alerts create tickets and billing reflects actual service delivery.
The practical recommendation for most MSPs isn't to abandon Lighthouse; it's to understand what it can and can't do. Use it as a supplementary visibility layer if it's helpful in your environment, but don't build your M365 practice around its limitations. The MSPs scaling most efficiently are the ones who've invested in tooling that matches the complexity of their business model.
