What are Azure Users, Groups, service principals, and managed identities?

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In Azure, users, groups, service principals, and managed identities are all components related to identity and access management (IAM). They help control access to Azure resources and services. Here, I’ll explain each of these concepts with step-by-step examples and provide details on a live environment.


  • Definition: Users in Azure are individuals who have their own credentials (username and password) or use other forms of authentication like multi-factor authentication (MFA) to access Azure resources.
  • Example: Let’s create a new user in an Azure Active Directory (Azure AD) tenant.


  • Sign in to the Azure portal (https://portal.azure.com/).
  • In the left-hand menu, navigate to “Azure Active Directory.”
  • Under “Users,” click on “New user.”
  • Fill in the user details, including username, name, and password.
  • Assign the user to the appropriate role or group to grant access to specific Azure resources.


  • Definition: Groups in Azure AD are collections of users. They help simplify access management by granting permissions to multiple users at once rather than individually.
  • Example: Create a new security group in Azure AD.


  • In the Azure portal, navigate to “Azure Active Directory.”
  • Under “Groups,” click on “New group.”
  • Choose the group type (security or Microsoft 365), set a name, and add members to the group.
  • Assign roles or permissions to the group to control access to Azure resources.

Service Principals:

  • Definition: Service principals represent applications, services, or automated processes in Azure AD, allowing them to authenticate and access resources.
  • Example: Create a service principal for an Azure application.


  • In the Azure portal, go to “Azure Active Directory.”
  • Under “App registrations,” click on “New registration.”
  • Configure the application’s settings and note down the Application ID (Client ID) and optionally create a client secret or certificate.
  • Assign the necessary permissions to the service principal to access Azure resources.

Managed Identity:

  • Definition: Managed identities are automatically managed identities for Azure resources. They simplify authentication by providing Azure services with an identity that can be used to access other Azure resources securely.
  • Example: Create and use a managed identity for an Azure Virtual Machine (VM).


  • In the Azure portal, navigate to the VM’s settings.
  • Under “Identity,” enable the system-assigned managed identity.
  • Grant the managed identity permissions (e.g., to access an Azure SQL Database or Azure Key Vault).
  • In your application code running on the VM, use the managed identity for authentication without storing any credentials.

Live Environment Details:
In a live Azure environment, you would typically use these identity components to manage access to Azure resources. For example, you might create users and assign them to groups based on their roles, create service principals for applications, and use managed identities for resources like VMs or Azure Functions. You can also set up role-based access control (RBAC) to define fine-grained permissions for users, groups, and service principals.
Please note that the Azure portal interface and specific steps may evolve over time, so it’s essential to refer to the latest Azure documentation for the most up-to-date instructions.

Azure Service Principal and How to create it

In Azure, a Service Principal is like a special user account for applications, services, or automated processes instead of individual humans. It allows these applications and services to interact with Azure resources securely without needing a username and password. Think of it as a way for software to prove its identity to Azure.

Here’s a step-by-step explanation with a simple example:

Scenario: Imagine you have a script that needs to access an Azure Storage account to upload or download files. Instead of hardcoding your Azure credentials in the script, which is not secure, you can use a Service Principal.


Create a Service Principal:

  • Go to the Azure portal.
  • Navigate to “Azure Active Directory.”
  • Under “App registrations” or “App registrations (Preview),” click on “New registration.”
  • Give your application a name and specify its type (e.g., Web app/API).
  • After registration, note down the “Application (client) ID.” This is like the Service Principal’s username.

Generate a Client Secret:

  • Under your application’s settings, go to “Certificates & secrets.”
  • In the “Client secrets” section, click on “New client secret.”
  • Set an expiration and save the secret value somewhere safe. This secret is like the Service Principal’s password.

Assign Permissions:

  • Decide what resources (e.g., Azure Storage) your Service Principal needs access to.
  • Go to those resources’ settings and assign the necessary permissions to the Service Principal. This is like giving it keys to specific doors.

Use the Service Principal in Your Script:

  • In your script, use the Application ID (client ID) and the client secret to authenticate with Azure.
  • Your script can now interact with Azure resources as if it’s you, but without exposing your own credentials.

Rotate Secrets (Optional):

  • For security reasons, it’s a good practice to rotate (change) the client secret periodically and update it in your script.

So, in simple terms, a Service Principal is like a secure ID card for your software to access Azure resources. It helps keep your Azure credentials safe while allowing your applications to do their work.
Remember to keep the client secret secure, as it’s a critical piece of information for your Service Principal’s authentication

Azure Managed Identity and How to create it.

Azure Managed Identity is a feature that helps your applications or services running in Azure securely access other Azure services and resources, without you having to manage credentials like usernames and passwords. It’s like giving your application a built-in ID card that allows it to access Azure resources seamlessly.

Here’s how it works and the steps to use it:

Scenario: Imagine you have an Azure Virtual Machine (VM) running a web application, and this application needs to connect to an Azure SQL Database.


Enable Managed Identity on the VM:

  • Go to the Azure portal.
  • Find your VM’s settings.
  • In the “Identity” section, enable the system-assigned managed identity. This is like creating an ID card for your VM.

Assign Permissions:

  • Decide what Azure resource (e.g., Azure SQL Database) your VM needs access to.
  • Go to that resource’s settings and assign the necessary permissions to the managed identity. This is like giving your VM permission to enter a specific room.

Use the Managed Identity in Your Application:

  • In your application running on the VM, you don’t need to store any credentials.
  • The managed identity information is available to your application as environment variables or via the Azure SDK.
  • Your application can now securely access the Azure SQL Database using the managed identity, just like showing the ID card to access a room.

Automatic Credential Rotation (Important):

  • Azure takes care of rotating the credentials behind the scenes, so you don’t have to worry about it. This ensures security.

In simple terms, Azure Managed Identity is like giving your application an automatic ID card that allows it to access Azure services. It’s a secure and convenient way to handle authentication without dealing with usernames, passwords, or secrets directly in your code.
This feature enhances security because it reduces the risk of accidental credential exposure, and it’s easier to manage because you don’t have to manually update or rotate credentials.

Managed Identity vs. Service Principal: Overview of Key Differences

Managed IdentityService Principal
CreationAutomatically created and managed by Azure.Must be manually created and managed by the user.
LifecycleTied to the lifecycle of the resource it’s assigned to. When the resource is deleted, the identity is also deleted.Independent of any resource and must be manually deleted.
PermissionsPermissions are directly assigned to the resource.Permissions are assigned to the service principal, which can be used across multiple resources.
Rotation of SecretsNo need to manage secrets as Azure takes care of it.User is responsible for managing and rotating secrets.
UsageCan only be used within the Azure environment.Can be used both within and outside of Azure.
ScopeLimited to the resource it’s assigned to.Can be used across multiple resources and services.

How to Transition From an Azure Service Principal to an Azure Managed Identity

Azure Managed Identity is a more modern and secure solution compared to Service Principal. As such, many organizations are looking to transition from Service Principal to Managed Identity. If you’re one of them, here are the steps you need to take.

These steps are for individual Service Principals, repeat for every one you want to transition.

1. Evaluate Your Current Setup

Begin by assessing your current Azure Service Principal setup. Understand the roles, permissions, and resources it has access to. This will help you determine the equivalent Managed Identity permissions needed.

2. Create a Managed Identity

Navigate to the Azure portal and create a new Managed Identity. You can choose between 2 identity types, System Assigned Managed Identity or User Assigned Managed Identity, based on your requirements. If you’re not sure which you need, consider the following.

  • System Assigned Managed Identity is best when you want the identity to be tied to a single resource and don’t need it to exist independently
  • User Assigned Managed Identity is best when you need an identity that can be used for multiple Azure resources

3. Assign Roles and Permissions

Once your Managed Identity is created, assign it the necessary roles and permissions. Ensure these match the ones previously held by the Service Principal.

4. Update Your Applications

Modify your applications to use your new Managed Identity instead of the old Service Principal. This will likely involve updating your application’s code and configuration settings.

5. Test

Conduct thorough testing to ensure your applications function correctly with the new Managed Identity. This should include testing all functionalities that require Azure resources.

6. Monitor Performance

After everything is set up, monitor your applications for any performance issues or unexpected behavior. You can use Azure Monitor and Log Analytics for this purpose.

7. Decommission Service Principal

Once you’re confident that your Managed Identity is working as expected, you can decommission the old Service Principal. Don’t forget to revoke all permissions and delete it from the Azure portal.

Learn How to Leverage Identity and Access Management Like an Azure Pro

Azure Service Principal and Managed Identity both have their strengths. Your choice depends on your needs. Although many people are transitioning to Managed Identity, it’s perfectly fine if you would rather stick with Service Principal.

If you think you’ll still need some help with security & identity management, Atmosera can lend a hand. We can guide you on how to use these tools effectively – whether you’re thinking of switching or just want to improve your current setup. We can also take over any tedious manual management tasks that you want off your plate.

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