How to Design Folder Structures for Dynamics 365 and SharePoint
Table of Contents
Why Folder Structure Matters in Dynamics 365 and SharePoint
Folder structure is the foundation of effective document management in any Dynamics 365–SharePoint integration. While Dynamics 365 can automatically create SharePoint folders for records, structure alone does not guarantee usability, governance, or scalability.
As document volumes grow, poorly designed folder structures lead to:
- Difficulty locating files
- Inconsistent naming conventions
- Manual workarounds by users
- Increased risk of oversharing or broken permissions
This happens because static or ad-hoc folder designs do not scale with changing records, users, and business processes.
A well-designed folder structure ensures that documents are:
- Predictable in location
- Consistent across records
- Easy to navigate for users
- Governable for administrators
Folder structure is not just about organization; it directly impacts searchability, security, compliance, and user adoption.
How Dynamics 365 and SharePoint Handle Folder Structures Natively
Out of the box, Dynamics 365 integrates with SharePoint by creating a document location for each enabled entity and record. This typically results in:
- An entity-level folder (for example, Accounts or Opportunities)
- A record-level folder within that entity
While this approach works for basic scenarios, it has important limitations.
Native Folder Creation Characteristics
- Folder creation is triggered when the first document is added
- Naming is system-generated and often rigid
- Structure is flat and uniform across all records
- No conditional or data-driven logic is applied
This means every record follows the same folder pattern, regardless of:
- Business process
- Record type or category
- Data values or status
- Compliance or regional requirements
Native folder structures are simple by design, but simplicity becomes a constraint as scale and complexity increase.
Common Folder Structure Challenges in CRM–SharePoint Setups Native SharePoint Integration Native SharePoint Integration
When organizations rely solely on native folder creation, several challenges emerge over time.
Typical Issues Include
- Flat folder hierarchies that become unmanageable
- Inconsistent naming caused by manual intervention
- Duplicate or misplaced documents
- Folder sprawl across multiple libraries
- Broken inheritance due to ad-hoc permission changes
These challenges are not caused by poor usage. They occur because static folder models are applied to dynamic CRM data and business processes.
A folder structure that works for 100 records often fails at 10,000.
Folder Structure vs Metadata: What’s the Right Balance?
Modern SharePoint guidance often emphasizes metadata over folders. While metadata is powerful, folders still play a critical role in many enterprise CRM scenarios.
When Folder Structures Make Sense
- Users rely on hierarchical navigation
- Documents are reviewed or audited by non-technical users
- Folder-level security or lifecycle policies are required
When Metadata Works Better
- Advanced search and filtering are primary
- Documents span multiple processes or categories
- Flat libraries are preferred
In practice, most organizations adopt a hybrid approach, because folders and metadata solve different problems:
- Folders provide structure and predictability
- Metadata enables classification, filtering, and search
The goal is not to eliminate folders, but to design them intentionally.
What Is a Structured Folder Model?
A structured folder model is a predefined, repeatable folder hierarchy used to organize documents consistently across Dynamics 365 records in SharePoint.
Rather than creating folders on demand, a structured model:
- Follows defined naming conventions
- Aligns with business processes
- Scales across entities and records
- Supports governance and automation
Key Characteristics of a Structured Folder Model
- Predictable layout for all records
- Minimal manual folder creation
- Clear separation of document types
- Alignment with security and retention policies
This model becomes critical when folder structures need to be automated or conditionally applied, rather than created manually.
See examples of structured folder models in practice
Core Principles for Designing Scalable Folder Structures
Before implementing any folder hierarchy, it’s important to establish design principles that support long-term scale.
Key Design Principles
- Consistency over customization
Every record of the same type should follow the same base structure. - Predictability for users
Users should intuitively know where documents belong without training. - Minimal depth
Deeply nested folders increase navigation friction and complicate automation. - Process alignment
Folder names should reflect business stages or document types, not individuals. - Automation-ready design
Folder structures should be predefined, not created manually.
A scalable folder structure is designed once and reused thousands of times.
Automating Folder Creation in SharePoint
Manual folder creation introduces inconsistency and user dependency. Automation ensures that folder structures are created correctly, every time.
What Automation Typically Handles
- Creating folders at record creation or lifecycle stages
- Applying predefined folder templates
- Enforcing naming conventions
- Reducing user intervention
Automation becomes essential when:
- Large volumes of records are created
- Multiple users interact with the same libraries
- Governance standards must be enforced consistently
Automation turns folder structure from a habit into a system. This is why many organizations use solutions such as SharePoint Security Sync to create custom folder structures automatically when records are created or updated.
Refer to this video for the setup steps for automated folder creation.
Folder Structure and Security: What You Need to Consider
Folder structure and security are closely related, even when permissions are managed separately.
Key Security Considerations
- Avoid unnecessary folder-level permission breaks
- Align folder hierarchy with access models
- Prevent overexposure of sensitive documents
- Support least-privilege access principles
A poorly designed structure increases risk because it often forces:
- Excessive permission customization
- Higher administrative overhead
- Manual audits and cleanups
When folder structure aligns with CRM access logic, security governance becomes easier and more sustainable.
When Native Folder Structures Are Not Enough
Native Dynamics 365–SharePoint integration works well for basic use cases. However, limitations become apparent as complexity grows.
Signs You’ve Outgrown Native Folder Structures
- Different records require different folder layouts
- Folder creation needs to be conditional
- Business logic must determine structure
- Consistency is difficult to enforce at scale
At this stage, organizations typically look for:
- Template-based folder structures
- Conditional, data-driven logic
- Centralized management
- CRM-driven control over SharePoint
The goal isn’t complexity, it’s control and consistency.
FAQs
How does Dynamics 365 create folder structures in SharePoint by default?
Dynamics 365 creates a basic folder structure when document management is enabled. This usually includes an entity-level folder and a record-level folder created when the first document is uploaded. The structure is uniform and does not adapt to record data or business logic.
Can folder structures be customized based on CRM data?
Not natively. Dynamics 365 does not support conditional or data-driven folder structures out of the box. Custom layouts based on fields, record types, or status require automation beyond native capabilities.
Is it better to use folders or metadata for CRM documents?
Neither alone is sufficient. Folders provide structure and familiarity, while metadata enables search and filtering. Most organizations use a hybrid approach to balance usability and governance.
When should folder structures be created?
Folder structures can be created at record creation, during lifecycle changes, or when documents are first added. The timing depends on the business process and governance requirements.
Do folder structures affect document security?
Folder structures do not control security directly, but poor design can force excessive permission breaks or accidental exposure. Structures should align with the organization’s access model to reduce risk.
Can folder structures be automated for Dynamics 365 records?
Yes. Folder creation can be automated using predefined templates and CRM-driven logic, ensuring consistency and scalability.
What are the limitations of native folder structures?
Native structures are static, uniform, and lack conditional logic. They cannot adapt to different processes or compliance needs without additional configuration.
How deep should a CRM folder structure be?
Folder structures should remain shallow typically no more than two or three levels—to reduce navigation friction and avoid automation or permission issues.
How do folder structures support governance and compliance?
Well-designed structures enforce naming standards, improve traceability, simplify audits, and align with retention and access policies.
Reach out to us today to know more!
