Microsoft to enhance Dataverse MCP server with 'major capabilities'

Microsoft’s Model Context Protocol (MCP) architecture for Dataverse remains in preview, but the team has announced more new features coming this month to expand flexibility and tooling.

A Dataverse MCP server serves as the interface between an MCP client that works as part of an AI toolset like Copilot Studio or Claude Desktop and Dataverse itself. Dataverse is typically busy managing the data storage, delivery, security, and other management responsibilities for enterprise systems like Power Apps or Dynamics 365 apps. 

“When Microsoft Dataverse acts as an MCP server, it enables intelligent, secure, and standardized access to your data—tables, records, and more—across a variety of MCP clients,” wrote Julie Koesmarno, Microsoft principal group product manager for Dataverse in a new blog post. 

Koesmarno explained how Dataverse MCP clients in Copilot Studio, Claud Desktop, and GitHub Copilot in VS Code can interact with a Dataverse MCP server to invoke tools, run queries, and use those results in the AI platforms to create dashboards, provide conversational inputs, or do other things.

And by the end of July, Microsoft will roll out private previews of “two major capabilities,” according to Koesmarno. Support for remote Dataverse MCP servers will simplify agent setup. And new operations are coming to Dataverse MCP server like create_table, update_table, and delete_table. 

In his latest Copilot Chronicles webcast, Microsoft MVP Will Hawkins told an MSDW webcast audience that Microsoft has been making improvements to security management in its MCP servers, but that there remains room to improve. In comparison to REST APIs, he still rates security of MCP servers as less robust. Hawkins explained: 

[Security and guardrail have] been the one point of contention with MCP servers … that emerged when it first came out and part of why it hasn't been considered an industry standard when it came from open source. I do think that that's come a long way because I know, especially with what you'll see with the MCP servers [available in] Copilot Studio, you've got different authentication types that are all supported by a security model that Microsoft backs.”

Copilot Studio’s MCP client capabilities for Dataverse as well as Dynamics 365 apps include support for authentication via delegated users, service principal, or at the connector level, Hawkins noted.