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What Is Azure Active Directory? A Complete Guide

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28th Sep, 2023
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What Is Azure Active Directory? A Complete Guide

In the ever-evolving landscape of cloud computing, Azure Active Directory or Azure AD has emerged as a cornerstone in identity and access management. Whether you’re a seasoned IT professional or just beginning to explore the intricacies of cloud services, understanding Azure AD is essential. 

Managing several user logins simultaneously can be challenging at times. Access to Azure services can simplify and alleviate the burden of their work. Services such as SQL database, machine learning, and Azure active directory domain services can be made available to employees by assigning a unique user ID and password for each service. Azure AD makes it easier for the administrator to operate multiple user logins. 

This comprehensive guide aims to demystify Azure AD, providing you with a thorough understanding of what it is, how it works, and why it’s a pivotal component in the Microsoft Azure ecosystem. Read through the blog to learn more about AD domain service.

Understanding the Concept of Azure Active Directory

Azure Active Directory can be defined as a multi-tenant and cloud-based directory of Microsoft. Besides this, Azure Active Directory also performs Microsoft’s identity management service. With the help of Azure AD, the employees of an organisation can sign up and access multiple services. These services remain accessible everywhere over the cloud and require just one set of login credentials. Azure AD is designed to facilitate secure authentication and authorisation while simplifying the management of user identities and access.

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The two types of resources that Azure AD gives access to the employees are: 

  • External resources- These resources include Microsoft Office 365, SaaS applications, the Azure portal, etc. 
  • Internal resources- These resources include the apps that are on your corporate network alongside the apps designed by your own organisation. 

A traditional on-premise setup with Active Directory can be amalgamated with Azure AD by simply using AD Connect. This will help manage the accessibility of the cloud application. 

Windows Azure Active Directory: How Does It Work?

Microsoft’s newly designed Azure AD supports cloud infrastructure using REST APIs for data transmission. The data from one system passes to other cloud systems and applications that support REST. 

Azure AD has a flat structure in a single tenant. For example, imagine the tenant as a circle, and that circle surrounds your data. You can have control over the data that is inside the tenant. However, you can apply control over your data only until it leaves the circle.

1. Users and Groups

These are the building blocks for Azure AD. Users can be further categorised into groups that behave identically. Users in Azure AD can be both from outside and inside. This implies that you can let people join your organisation’s tenant from outside and grant them certain permissions that make them a part of your organisation. When approached correctly, this acts as an additional security to the organisation’s data. 

2. Adding User and Groups to Azure AD

The different ways users and groups can be added to the Microsoft Azure Active Directory are: 

  • Using Connect Azure AD to sync users from Windows AD. The enterprises that have Windows AD already mostly opt for this method. 
  • Manually creating users in the Azure AD Management Portal. 
  • Using PowerShell to add new users. If not installed, connect to Azure AD Powershell by installing the Microsoft Online Powershell Module. 
  • Programming the process with the help of the Azure AD Graph API. 

3. Customer Domains

Adding a customer domain to Azure AD enhances the user’s experience while migrating to the new system. This is how a default Azure AD domain looks: 


Once you configure Azure AD domain services, your users can work more conveniently, thus improving user experience. 

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Windows AD vs Azure AD: Studying the Comparisons

The table below shows the difference between Windows Active Directory and Azure Active Directory: 

Field Windows Active DirectoryAzure Active Directory
AuthenticationWindows Active Directory uses Kerberos and NTLM for authentication.Azure Active Directory uses cloud-based protocols.
CommunicationUses a Lightweight Directory Access Protocol (LDAP) for communication.Uses Representational State Transfer (REST) APIs for communication.
Entitlement ManagementAdministrators assign users to groups.Administrators organise users into groups. 
Network OrganisationThe network organisation in Windows Active Directory comprises organisational units, domains, and forests.The network organisation in Azure Active Directory is a flat structure of users and groups. 
DesktopsDesktops are governed by Group Policy (GPOs).Desktops can use Microsoft Intune to join.
DevicesThere is no mobile device management.Mobile device management exists.
Servers Manages servers by GPOs or other on-premise servers.Manages servers by using domain services.

Reasons for Using Azure AD: The Benefits 

In today’s world, where remote work and cloud services are the norm, securing user identities and managing access to resources is paramount. Azure AD offers a robust solution to these challenges, providing a foundation for secure, seamless, and efficient identity management and access control. 

Below are a few reasons why using Azure AD can benefit users:

  • Boosts security

Azure AD implements certain authentication policies like multi-factor authentication and conditional access that are more powerful. This ensures that the accessibility to the company’s resources is limited only to authorised users. 

  • Centralises management

Azure AD enables centralised management for user identities. This feature lets you create, modify, and delete users from any connected application and service. This does not require managing each application separately. Hence, this acts as a time-saver and reduces the chance of errors. 

  • Highly scalable

This means adding and removing users and applications can be easily done. Business organisations can benefit from it as they scale up or down. 

  • Carries out a smooth integration 

Azure AD provides a seamless integration that makes managing user identities easier. You can work with many applications and services simultaneously, including Microsoft 365. 

  • Cost-effectiveness

Azure AD is a cloud-based solution that eliminates the need to purchase on-premises hardware and software. Hence, it helps save money while getting the job done. Azure Active Directory pricing is flexible, with multiple options available. 

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Features and Licensing of Azure AD

The two licenses that give access to Azure AD are-

  1. Azure AD Premium licenses
  2. Microsoft Online Services

You can access all the non-paid Azure features with a Microsoft Azure license or Microsoft 365. 

The Power BI Premium licenses below give access to Azure Premium features:

  1. Premium P1
  2. Premium P2 licenses

Below are the features of Azure AD:

  • Authentication

Azure Active Directory offers strong authentication services. It has a feature that enables users to manage and reset self-service passwords.

  • Application Management

It uses services like the My Apps portal, Application Proxy, SaaS apps, etc., to manage cloud and on-premises apps. 

  • Business-to-Business

Under Azure AD, managing guests and external partners has become easy. You can also maintain your own corporate data simultaneously. 

  • Business-to-Customer (B2C)

Azure Directory permits users to customise others’ interaction with their apps. For example, users can customise how others can log in, sign up, or handle their profiles.

  • Reports and monitoring

Users can acquire reports of the security and usage patterns in their work environment. 

  • Protection of identity

It helps in threat detection and risk-based authentication. It also resolves suspicious actions, if any. 

  • Identity governance 

You can manage the identity of your organisation through business partners, vendors, app access controls, etc. 

  • User enterprise

Azure AD provides the management of license assignments and app access. You can set up representatives through groups and administrative roles. 

  • Privileged Identity Management (PIM)

With this feature, users gain access to the resources of Azure AD Directory Services. This also includes Microsoft Online Services such as Microsoft 365 and Intune. 

  • Azure AD for developers 

The apps that can be built with the help of Azure AD can sign in to all the Microsoft identities.

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Azure Active Directory Connect

Active AD Connect combines the on-premise directories with Azure Active Directory. The amalgamation provides accessibility to both cloud and on-premise resources with a common identity. 

The features of Azure AD Connect are: 

  • Synchronises a hashed user with Azure AD through an on-premise AD password.
  • Provides a pass-through authentication through which users can have a similar password on-premise and on the cloud.
  • Validates the identification of users and groups by matching them with the cloud.
  • Acts as a central monitoring system.

Azure AD: Common Attacks Against It

With the easy accessibility to the internet, Azure AD is prone to brute force attacks. The attackers mostly use deceptive usernames and passwords to intrude into Azure AD accounts. This method of attack is known as credential stuffing. 

Another widespread attack is the phishing method. In this method, credential theft occurs, giving the attackers direct access to your tenant. 

Azure skeleton key attack is an attack on Azure AD Connect. This method of attacking occurs when the server, Azure Agent, is installed. The attackers take advantage of the Pass-Through Authentication in this method. 

Other types of attacks include Man-in-the-Middle attacks, DDoS attacks, token theft and replay attacks among others.

Azure AD: Securing and Managing Devices

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Azure Active Directory login supports a strong password policy with multi-factor authentication that can resist force attacks. By staying vigilant and implementing security measures, organisations can significantly reduce the risk of security breaches and protect their Azure AD environment from common attacks. 

Some best practices that can mitigate these threats and enhance Azure AD security include:

  • Implement multi-factor authentication for an added layer of security.
  • Encourage users to create strong passwords and change them regularly.
  • Use Azure AD ID Protection to detect and mitigate risks.
  • Establish policies based on location, risk and device to control access.
  • Constantly monitor user and administrative activities for suspicious behaviour.
  • Educate users about security best practices, including recognising and avoiding phishing attempts. 

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Azure AD acts as the identity control plane in a cloud-based or hybrid environment, ensuring users have secure and seamless access to resources. It centralises identity management, offers robust security features, and integrates with various applications and services, making it a fundamental component in modern cloud-based IT ecosystems. 


Pavan Vadapalli

Blog Author
Director of Engineering @ upGrad. Motivated to leverage technology to solve problems. Seasoned leader for startups and fast moving orgs. Working on solving problems of scale and long term technology strategy.

Frequently Asked Questions (FAQs)

1Is Azure Active Directory a service?

Azure Active Directory is an enterprise identity service. It is a part of Microsoft Entra with various features like multi-factor authentication, single sign-on, etc.

2What are the four types of Azure AD?

Azure has four types of cloud services. They are: Software as a Service (SaaS) Infrastructure as a Service (IaaS) Platform as a Service (PaaS) Serverless

3What are the key types in Azure?

Azure Key Vault supports two types of resources — Software-protected Module (SPM) and Hardware Security Module (HSM) keys.

4Is Azure Active Directory free with Office 365?

Microsoft 365 uses Azure AD for managing user identities. If you get a subscription to Microsoft 365, it will give you a free subscription to Azure AD.

5What is an Active Directory used for?

Active Directory is used to store information about different objects in the network. It makes it easy for administrators to access the information.

6What are the different editions of Azure AD?

The different editions of Azure AD are: Free: provides basic Functionalities Basic: provides basic features and is good for standard users Premium: provides full-service features that are divided into 2 levels P1: provides all service functionalities P2: provides additional features in security and protection

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