Integrating On-Premises Data with Copilot in Hybrid Environments

Overview

Many government agencies operate hybrid environments with critical data residing on-premises. This video explores how to securely integrate on-premises data sources with M365 Copilot, enabling AI to access legacy systems while maintaining security boundaries.

Essential for enterprise architects, IT leaders, and security engineers planning Copilot deployments in hybrid government environments.

What You’ll Learn

• Hybrid Patterns: Architecture options for on-premises data integration
• Data Gateways: Configuring secure connections to on-premises systems
• Graph Connectors: Making on-premises content searchable by Copilot
• Security Controls: Authentication, authorization, and data protection
• Performance Optimization: Reducing latency and improving user experience

Transcript

[00:00 - Introduction]

Hey everyone, Michael Chen here with Sarah Johnson. Today we’re tackling a challenge many government agencies face: most of your M365 environment is in the cloud, but critical data still lives on-premises. How do you let Copilot access that data securely? Let’s walk through the architecture and implementation.

[01:00 - Understanding the Challenge]

Copilot runs entirely in your GCC or GCC High tenant in the cloud. But your case management system, financial database, or legacy document repositories might be on-premises behind your agency firewall.

The challenge: Copilot needs to query that on-premises data to provide useful responses, but you can’t simply open your firewall or move sensitive data to the cloud without authorization.

[02:30 - Hybrid Architecture Patterns]

There are three primary patterns for hybrid integration:

Pattern 1: On-Premises Data Gateway - A bridge service that securely connects cloud services to on-premises data sources without requiring inbound firewall rules.

Pattern 2: Microsoft Graph Connectors - Index on-premises content and make it searchable via Microsoft Graph, which Copilot can then access.

Pattern 3: API-Based Integration - Build custom APIs that expose on-premises data with appropriate security controls, then connect those APIs to Copilot via plugins.

The right pattern depends on your data type, volume, security requirements, and existing architecture.

[04:30 - On-Premises Data Gateway]

The On-Premises Data Gateway is a Microsoft service that creates an outbound-only encrypted connection from your on-premises environment to Azure.

Installation: Deploy the gateway software on a server in your datacenter with access to your data sources. The gateway establishes an outbound HTTPS connection to Azure Service Bus—no inbound firewall rules required.

Configuration: Register the gateway with your Azure tenant, configure data source connections (SQL Server, SharePoint on-premises, file shares), and define access permissions.

Once configured, Power Platform services and custom applications can query your on-premises data through the gateway. Copilot Studio copilots can leverage this for on-premises integrations.

[07:00 - Microsoft Graph Connectors]

If your goal is making on-premises documents searchable by Copilot, Graph connectors are the answer. Graph connectors crawl your on-premises content repositories—file servers, SharePoint on-premises, enterprise content management systems—and create a searchable index in Microsoft Graph.

Setup: Deploy a Graph connector for your data source. Microsoft provides prebuilt connectors for common systems. For custom systems, you can build a connector using the Microsoft Graph SDK.

The connector respects your on-premises permissions. When Copilot searches indexed content, it only returns results the user has access to based on their on-premises permissions synced to Azure AD.

[09:30 - Security Controls]

Critical security considerations for hybrid integration:

Authentication: Use Azure AD integrated authentication so on-premises access checks are based on the same identity as cloud access. Authorization: Implement least-privilege access—the gateway or connector should only access data sources required for Copilot scenarios. Encryption: All data in transit uses TLS 1.2 or higher. Audit logging: Log all cross-boundary data access for security monitoring and compliance.

[11:15 - Performance Considerations]

Hybrid integration introduces latency. A Copilot query that accesses on-premises data will be slower than cloud-only queries. Optimize by:

Caching: Use Azure caching services to store frequently-accessed on-premises data closer to Copilot. Incremental indexing: For Graph connectors, schedule incremental updates rather than full re-indexing. Query optimization: Ensure on-premises databases have appropriate indexes and performant queries. Network bandwidth: Verify sufficient bandwidth between your datacenter and Azure.

[12:45 - Example: Financial System Integration]

Let’s walk through a concrete example. Your agency uses an on-premises financial system that Copilot needs to access for budget queries.

Deploy the On-Premises Data Gateway on a server with database access. Configure a data source connection to your financial system database using SQL Server authentication or integrated Windows auth. Build a custom Copilot Studio plugin that queries the financial system via the gateway. Publish the plugin as an M365 Copilot extension.

Now users can ask Copilot “What is the current budget status for Project X?” and Copilot retrieves data from your on-premises system in real-time.

[13:50 - Conclusion]

Hybrid environments don’t prevent Copilot adoption—they just require architectural planning. Using data gateways, Graph connectors, and custom APIs, you can securely bridge on-premises and cloud data for AI access. Download our Hybrid Architecture Guide linked below for detailed implementation patterns and security controls.