What is Azure Active Directory?

Who uses Azure AD?

Azure AD provides different benefits to members of your organization based on their role:

  • IT admins use Azure AD to control access to apps and app resources, based on business requirements. For example, as an IT admin, you can use Azure AD to require multi-factor authentication when accessing important organizational resources. You could also use Azure AD to automate user provisioning between your existing Windows Server AD and your cloud apps, including Microsoft 365. Finally, Azure AD gives you powerful tools to automatically help protect user identities and credentials and to meet your access governance requirements.
  • App developers can use Azure AD as a standards-based authentication provider that helps them add single sign-on (SSO) to apps that works with a user’s existing credentials. Developers can also use Azure AD APIs to build personalized experiences using organizational data.
  • Microsoft 365, Office 365, Azure, or Dynamics CRM Online subscribers already use Azure AD as every Microsoft 365, Office 365, Azure, and Dynamics CRM Online tenant is automatically an Azure AD tenant. You can immediately start managing access to your integrated cloud apps.

What are the Azure AD licenses?

Microsoft Online business services, such as Microsoft 365 or Microsoft Azure, use Azure AD for sign-in activities and to help protect your identities. If you subscribe to any Microsoft Online business service, you automatically get access to Azure AD free.

To enhance your Azure AD implementation, you can also add paid features by upgrading to Azure Active Directory Premium P1 or Premium P2 licenses. Azure AD paid licenses are built on top of your existing free directory. The licenses provide self-service, enhanced monitoring, security reporting, and secure access for your mobile users.


  • Azure Active Directory Free. Provides user and group management, on-premises directory synchronization, basic reports, self-service password change for cloud users, and single sign-on across Azure, Microsoft 365, and many popular SaaS apps.
  • Azure Active Directory Premium P1. In addition to the Free features, P1 also lets your hybrid users access both on-premises and cloud resources. It also supports advanced administration, such as dynamic groups, self-service group management, Microsoft Identity Manager, and cloud write-back capabilities, which allow self-service password reset for your on-premises users.
  • Azure Active Directory Premium P2. In addition to the Free and P1 features, P2 also offers Azure Active Directory Identity Protection to help provide risk-based Conditional Access to your apps and critical company data and Privileged Identity Management to help discover, restrict, and monitor administrators and their access to resources and to provide just-in-time access when needed.
  • “Pay as you go” feature licenses. You can also get licenses for features such as, Azure Active Directory Business-to-Customer (B2C). B2C can help you provide identity and access management solutions for your customer-facing apps.


Which features work in Azure AD?

After you choose your Azure AD license, you’ll get access to some or all of the following features:

Category Description
Application management Manage your cloud and on-premises apps using Application Proxy, single sign-on, the My Apps portal, and Software as a Service (SaaS) apps.
Authentication Manage Azure Active Directory self-service password reset, Multi-Factor Authentication, custom banned password list, and smart lockout.
Azure Active Directory for developers Build apps that sign in all Microsoft identities, get tokens to call Microsoft Graph, other Microsoft APIs, or custom APIs.
Business-to-Business (B2B) Manage your guest users and external partners, while maintaining control over your own corporate data.
Business-to-Customer (B2C) Customize and control how users sign up, sign in, and manage their profiles when using your apps.
Conditional Access Manage access to your cloud apps.
Device Management Manage how your cloud or on-premises devices access your corporate data.
Domain services Join Azure virtual machines to a domain without using domain controllers.
Enterprise users Manage license assignments, access to apps, and set up delegates using groups and administrator roles.
Hybrid identity Use Azure Active Directory Connect and Connect Health to provide a single user identity for authentication and authorization to all resources, regardless of location (cloud or on-premises).
Identity governance Manage your organization’s identity through employee, business partner, vendor, service, and app access controls. You can also perform access reviews.
Identity protection Detect potential vulnerabilities affecting your organization’s identities, configure policies to respond to suspicious actions, and then take appropriate action to resolve them.
Managed identities for Azure resources Provide your Azure services with an automatically managed identity in Azure AD that can authenticate any Azure AD-supported authentication service, including Key Vault.
Privileged identity management (PIM) Manage, control, and monitor access within your organization. This feature includes access to resources in Azure AD and Azure, and other Microsoft Online Services, like Microsoft 365 or Intune.
Reports and monitoring Gain insights into the security and usage patterns in your environment.
Workload identities Give an identity to your software workload (such as an application, service, script, or container) to authenticate and access other services and resources.


To better understand Azure AD and its documentation, we recommend reviewing the following terms.

Term or concept Description
Identity A thing that can get authenticated. An identity can be a user with a username and password. Identities also include applications or other servers that might require authentication through secret keys or certificates.
Account An identity that has data associated with it. You can’t have an account without an identity.
Azure AD account An identity created through Azure AD or another Microsoft cloud service, such as Microsoft 365. Identities are stored in Azure AD and accessible to your organization’s cloud service subscriptions. This account is also sometimes called a Work or school account.
Account Administrator This classic subscription administrator role is conceptually the billing owner of a subscription. This role enables you to manage all subscriptions in an account.
Service Administrator This classic subscription administrator role enables you to manage all Azure resources, including access. This role has the equivalent access of a user who is assigned the Owner role at the subscription scope.
Owner This role helps you manage all Azure resources, including access. This role is built on a newer authorization system called Azure role-based access control (Azure RBAC) that provides fine-grained access management to Azure resources.
Azure AD Global administrator This administrator role is automatically assigned to whomever created the Azure AD tenant. You can have multiple Global administrators, but only Global administrators can assign administrator roles (including assigning other Global administrators) to users.
Azure subscription Used to pay for Azure cloud services. You can have many subscriptions and they’re linked to a credit card.
Azure tenant A dedicated and trusted instance of Azure AD. The tenant is automatically created when your organization signs up for a Microsoft cloud service subscription. These subscriptions include Microsoft Azure, Microsoft Intune, or Microsoft 365. An Azure tenant represents a single organization.
Single tenant Azure tenants that access other services in a dedicated environment are considered single tenant.
Multi-tenant Azure tenants that access other services in a shared environment, across multiple organizations, are considered multi-tenant.
Azure AD directory Each Azure tenant has a dedicated and trusted Azure AD directory. The Azure AD directory includes the tenant’s users, groups, and apps and is used to perform identity and access management functions for tenant resources.
Custom domain Every new Azure AD directory comes with an initial domain name, for example domainname.onmicrosoft.com. In addition to that initial name, you can also add your organization’s domain names. Your organization’s domain names include the names you use to do business and your users use to access your organization’s resources, to the list. Adding custom domain names helps you to create user names that are familiar to your users, such as alain@contoso.com.
Microsoft account (also called, MSA) Personal accounts that provide access to your consumer-oriented Microsoft products and cloud services. These products and services include Outlook, OneDrive, Xbox LIVE, or Microsoft 365. Your Microsoft account is created and stored in the Microsoft consumer identity account system that’s run by Microsoft.