What’s the best way to handle a Microsoft tenant carve-out?

Treat this like a divestiture and keep the target environment as close to the existing setup as possible. Microsoft 365 and Azure are generally manageable with enough planning and people, but every application change, device-management change, or move from Active Directory and Group Policy to cloud-only management adds risk. Only change what is necessary during the separation.

We’re currently going through a carve-out after being sold off from a larger group. The core users and Microsoft 365 workloads have been relatively straightforward, and we expect to finish with some time left. Azure has been much harder to coordinate and migrate, while Dynamics has been the biggest problem by far. We gave both areas dedicated projects, and I would bring in experienced specialists as early as possible.

Be very cautious with Microsoft 365 multi-tenant organization configurations. Teams may be supported, but many other Microsoft 365 workloads have limitations or are effectively best-effort. Test the exact user and application scenarios thoroughly before relying on that model. In many cases, moving users and workloads fully into the new tenant is more reliable.

Azure is usually manageable, but it can take a long time if the organization lacks enough staff to inventory dependencies, rebuild resources, and coordinate ownership changes. For Dynamics 365, contract a partner with proven carve-out experience rather than treating it like a standard tenant migration. Microsoft 365 is relatively simple until Teams, SharePoint Online, and cross-tenant application dependencies become part of the scope.