What EDR is and what it does

Endpoint detection and response tools operate through an agent installed on a managed device. The agent monitors process execution on a managed endpoint: what runs, what it accesses, what network connections it initiates, what files it modifies. When behavior deviates from known-good patterns or matches known-bad signatures, the agent raises an alert.

EDR is effective at what it covers. A managed Windows or macOS device running an EDR agent has good process-level visibility. The platform can detect malware execution, ransomware file encryption activity, lateral tool transfer and many forms of credential harvesting that operate at the process layer.

The boundary of that coverage is fixed. The agent reports on the device it is installed on. It produces no telemetry for anything that happens outside that device.

What XDR adds

Extended detection and response platforms ingest telemetry from multiple sources beyond the endpoint. In a typical Microsoft 365 environment, that means Entra ID sign-in and audit logs, Exchange Online application events, SharePoint and OneDrive access logs, Azure cloud monitoring data and network detection telemetry from NDR sensors. Each source provides a different layer of visibility into what is happening across the environment.

The correlation layer is where XDR differs from running multiple point tools. A standalone EDR, a standalone SIEM and a standalone identity monitoring tool each see their own slice of the environment. XDR applies detection logic across all telemetry sources simultaneously, which means it can identify attack patterns that span surfaces: a sign-in from an unusual location followed by a bulk SharePoint download followed by a new mailbox forwarding rule is visible as a connected sequence, not three unrelated events on three separate dashboards.

For identity-based detection, this cross-surface correlation is particularly important. Identity attacks frequently begin with a sign-in event and then move laterally through the application layer without touching a managed device at all.

Where the difference matters in practice

Account takeover through valid credentials

An attacker who purchases valid credentials from a breach database and uses them to sign into Microsoft 365 produces an Entra ID sign-in event and nothing else. No process executes on any endpoint. No file is modified on any managed device. EDR sees nothing. An XDR platform ingesting Entra ID telemetry detects the anomalous sign-in, the unusual access location and the session behavior that follows.

Mailbox manipulation

Inbox rules that forward email to external addresses, auto-forwarding configurations and permission changes to shared mailboxes are Exchange Online events. They happen at the application layer inside Microsoft 365. No endpoint agent captures them. XDR platforms ingesting Exchange Online audit logs detect them as part of the event stream.

Cloud storage exfiltration

Bulk download from SharePoint, external sharing link creation and file access through Azure Storage APIs produce Microsoft 365 audit events and Azure Monitor telemetry. An EDR agent on the user's laptop produces no signal unless the attacker opens each file locally. XDR ingesting cloud storage telemetry detects the bulk access pattern directly.

Lateral movement between environments

An attacker who compromises an endpoint and then moves to cloud resources through stolen credentials executes on the endpoint at stage one and then operates entirely in the identity and cloud layer from stage two onwards. Lateral movement between environments of this type is only visible if the detection platform has telemetry from both layers and correlates the sequence.

The MSP decision point

For MSPs, the choice between EDR and XDR is a decision about which surfaces the client's monitoring covers and which surfaces it does not. An EDR deployment covers managed endpoints well. For a client whose environment is entirely on-premises with no cloud services, that may be sufficient coverage.

For any client using Microsoft 365, Azure services or SaaS applications, a large portion of their environment is outside EDR coverage by architecture. The question is whether the MSP has a detection capability that covers those surfaces or whether those surfaces are unmonitored.

The MSP guides on choosing XDR for an MSP environment typically frame this as an add-on question, but it is more accurately described as a coverage question. The environment has surfaces. EDR covers some of them. The question is what covers the rest.

What Open XDR specifically means for MSPs

Open XDR refers to an XDR architecture that is vendor-agnostic at the ingestion layer. Rather than requiring a single vendor's tools across endpoint, identity and network, Open XDR ingests from whatever tools are already in the environment. For MSPs managing mixed client environments, this means the detection platform can ingest from CrowdStrike Falcon or Microsoft Defender on endpoints, from Entra ID and Exchange Online on the identity and SaaS layer, and from NDR sensors on the network, regardless of vendor.

The practical implication is that an MSP does not need to replace a client's existing EDR to gain cross-surface visibility. XDR ingests from all surfaces and adds the correlation layer on top. The endpoint agent continues to do what it does well. The XDR platform covers the surfaces the agent cannot reach.

The lateral movement use case illustrates this well: an attack that starts on an endpoint and moves to cloud identity is only fully visible if the detection platform has telemetry from both. Endpoint-only MDR catches stage one. Cross-surface XDR catches the full sequence.