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We use Sophos as our Endpoint Protection Solution and from what we've gathered, third-party solutions alongside built-in OS protection can interfere with each other on a lower level. Sophos recommends disabling other solutions: Information on installing Sophos products alongside a competitor's software 

Deferring updates to our devices so that they do not upgrade to macOS Monterey is one thing but that can't be the solution for the long term. And we continue to use Sophos due to our environment having been setup already with a purchased license, Windows management, and familiarity with the service.

So what would be the best move here?

Several things here:

The link goes into detail about 3rd party solutions (think Crowdstrike, Mcafee, etc.) and not necessarily OS level malware and exploit protection. Before switching to jamf Protect I used Sophos for several years and while it was kind of a like a horse loose in a hospital on Macs Sophos had no issues with XProtect.

Are you thinking of deferring updates because of a Sophos incompatibility with macOS 12.x or XProtect alone? XProtect has been around since 10.6 (2009) so this isn't is a newly release feature in Monterey that Sophos isn't prepared for. 

Best move is to play around in a sandbox or test environment and trial it out. That is unless you have done that already, but this post makes me think you haven't. 

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