Azure Active Directory vs Active Directory: What’s the Difference?

There are many possible reasons why you may want to know the difference between Active Directory and Azure AD. Maybe you’ve just migrated from Microsoft Office to Office 365. You might be moving on-prem virtual machines into Azure. Or perhaps you’re developing a greenfield cloud-native app that won’t be connected to your on-prem resources at all.

However you came to this question, you might assume at first that Azure AD is the same as the Active Directory Domain Services you currently have running on-premises. While Active Directory and Azure AD have some things in common, they also have some very specific differences. One is not a replacement for the other. 

But is one option better than the other? We’ll discuss Azure AD vs Active Directory below so you can learn more.

What is Active Directory?

Active Directory, or AD, is a directory service developed by Microsoft for Windows domain networks. Its purpose is to facilitate the management of network resources and user identities in a Windows-based environment. You can think of it as a database that stores information about users, groups, and various network objects, and provides both authentication and authorization to these entities.

The hierarchical structure of Active Directory uses a domain-based model, where network objects are organized into units called domains. Each domain represents a distinct security boundary and administrative scope.

At the heart of Active Directory’s functionality is the Domain Controller. A Domain Controller is a server that stores a copy of the AD database for a specific domain. It serves as the source for authentication and authorization requests within that domain. When a user attempts to log in or access resources, the Domain Controller verifies their credentials and determines their permissions based on the information stored in the AD database.

Core functions of AD include:

• Authentication: It validates the identities of users and devices accessing network resources.

• Authorization: Once authenticated, it grants users permissions to resources based on their roles and privileges.

• Directory services: It keeps a database of entities on the network.

• Group Policy management: It enforces policies across the network to regulate user behavior, security settings, and software distribution.

Understanding Azure Active Directory

Azure Active Directory (Azure AD) is a cloud-based directory and identity and access management service provided by Microsoft. It gives users a centralized directory to manage user identities, authentication, and authorization in the Azure cloud environment, as well as other linked services and applications. It extends the functionality of on-premises AD into the Azure cloud environment.Azure AD offers a variety of features that help secure cloud-based applications, ensure compliance, and streamline IT processes, including the following: 

• Cloud-based identity management: It centralizes user identities and authentication mechanisms.
• Single Sign-On (SSO) and Multi-Factor Authentication (MFA): It supports SSO as well as MFA which requires users to provide multiple forms of verification before gaining access.
• Application integration: It offers seamless integration with various Microsoft services and supports various authentication protocols and standards, making it compatible with a wide range of applications.
• B2B and B2C identity scenarios: It allows secure collaboration with external partners and enables businesses to manage identities and authentication for their customers.

Similarities between Azure AD and Active Directory

While Azure AD and Active Directory have distinct purposes and target different environments, they share some common features. These include:

• User and group management: Both allow administrators to create, manage, and organize users and groups.
• Authentication: Both support validating user and device identities.
• Authorization: Both grant users permission to resources based on their roles.

Active Directory and Azure AD also share some common objectives, including:

• Centralized management: Both platforms provide a solution for managing user identities, authentication, and authorization in one place.
• Improved security: Both offer security features, like MFA, to protect user identities and control access.
• Streamlined user experience: Both allow users to use one set of credentials to access a large number of applications.

Differences between Azure AD and Active Directory

While both platforms share some common features, there are also some differences between them. The core architectural difference between Active Directory is that AD was designed for on-premises data centers and Azure AD was designed for the Microsoft cloud. They also have some distinct differences in their features, including:

• Protocols: Active Directory supports traditional authentication protocols like Kerberos and LDAP, while Azure AD uses modern protocols like SAML, OAuth 2.0, and OpenID Connect.
• Group Policy: Active Directory allows admins to manage Group Policy Objects, while Azure AD uses Conditional Access policies.
• Domain Services: Active Directory provides DNS, DHCP, NPS, Wi-Fi, and VPN access, but Azure AD does not.
• User device management: Azure AD manages devices accessing cloud resources including mobile devices, but AD primarily manages on-premises devices on the local network.
• B2B and B2C: Azure AD manages access for external partners and customer-facing applications while AD focuses on internal user management.
• Application integration: Azure AD integrates with many cloud services and applications, while Active Directory is tailored to on-premises resources.

Benefits of Active Directory

Microsoft Active Directory was introduced in 1999 with Windows 2000 Server and remains the official solution for organizations that want to manage their on-premises Windows network resources efficiently and securely. Here are some of the reasons AD is an irreplaceable part of many organizations’ infrastructures:

• User and resource management: AD simplifies administration by providing a centralized repository for user identities, computers, groups, and other network resources.
• Seamless integration: AD easily integrates with Windows operating systems and applications and creates a consistent user experience and easy management of Windows-based resources.
• Granular security: AD allows fine-grained control over permissions and access rights which mitigates security risks and ensures data integrity.
• Auditing and monitoring: AD has auditing features that enable businesses to track changes and monitor user activity for compliance and accountability.
• Compatibility: AD supports services and legacy applications that rely on traditional Windows authentication and authorization methods and allows organization to maintain compatibility with older systems.

Benefits of Azure Active Directory

Azure AD provides many benefits that cater to the modern cloud and hybrid IT environments. It is more than just a cloud version of Active Directory. Here are some of the reasons an organization would prefer Azure AD:

• Cloud integrations: Azure AD has many pre-integrated cloud services and applications, which combined with the SSO functionality, improves productivity.
• Conditional access policies: It can tailor access controls based on factors like user location, device health, and risk assessment.
• Scalability and flexibility: Azure AD’s cloud-native architecture and integration with the Azure Cloud enables it to dynamically and rapidly scale to fit demand.
• Centralized identity management: With SSO, users can connect to multiple SaaS applications with one set of credentials. Azure AD also allows you to manage the access of business partners and customers.
• Access from anywhere: Because it is based in the cloud, your team, clients, and customers can access resources securely from any location

Considerations for choosing between Azure AD and Active Directory

Now that you know some of the similarities and differences, which do you use: AD or Azure AD? This depends on your organization’s needs and infrastructure.

If your business relies heavily on on-premises infrastructure and needs traditional domain services, Active Directory is the best choice. Many organizations still have legacy and bespoke applications that are important to their operations, are difficult to migrate to the cloud, and work better with traditional AD.

If instead, your organization primarily uses cloud services like Microsoft 365, Azure, and other SaaS applications, Azure AD would be a better choice. It provides seamless integration and centralized identity management for cloud services. Azure AD will also scale with your cloud infrastructure to fit the needs of your business as it grows.

If your organization has a hybrid environment and its infrastructure is split between on-premises and the cloud, it doesn’t have to be an either-or question. Azure AD Connect allows you to extend your on-premises AD identities to Azure AD, creating an identity platform that spans both environments. This can be highly beneficial if you want to leverage the benefits of both platforms while maintaining a unified identity and access management strategy.

How to choose between Active Directory and Azure AD

Identity and access management is an important part of organizational security. Microsoft offers two solutions for this: Active Directory (AD) and Azure Active Directory (Azure AD). While these platforms share some similarities, they each have features that cater to different environments. Here are the main features for each solution:

• Azure AD is a cloud-based identity and access management service, while AD is a directory service that is on-premises.
• Azure AD offers features and integrations for cloud-based environments, while AD manages traditional on-premises infrastructure and applications.
• Azure AD provides scalability and flexibility in the cloud, while AD is limited by the capacity of on-premises hardware.

The right solution for your organization might include one or both of these platforms and depends on your organization’s needs, infrastructure, and future plans. As cloud technologies continue to evolve, cloud-based solutions like Azure AD will play an increasingly important role in securing organizational resources. 

However, as we mentioned earlier, Azure AD doesn’t replace on-premises Active Directory, just as the cloud didn’t replace every business’ corporate data center completely. It is only an either-or question for companies completely in the cloud or completely on-premises. For companies that straddle both environments with a hybrid infrastructure, the answer could be to use both.

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