AD and Azure AD: What is the difference, and which is better for you? 

Active Directory (AD) and Azure Active Directory (now known as Microsoft Entra ID but we’ll stick for the old, better-known name), are two dominant solutions Microsoft offers. While both serve to manage and secure user identities, they cater to different environments and use cases.  Understanding their advantages and specifics, functionalities, differences and similarities is crucial to decide which suits your needs best.  

In this article, we delve into the key aspects of AD and Azure AD, providing a comprehensive comparison to guide your decision-making process. 

Active Directory and its key functionality 

Active Directory (AD) is a directory service developed by Microsoft for Windows domain networks. It is included in most Windows Server operating systems as a set of processes and services. Initially released in 2000, AD has become a cornerstone for IT infrastructure in many organizations, providing essential identity and access management services. 

Active Directory remains vital for managing network resources, providing security, and ensuring seamless access to services within an organization. Its comprehensive feature set makes it indispensable for IT administrators in managing complex network environments efficiently and securely. Key functionalities include: 

Centralized domain management: AD allows administrators to manage users, groups, and computers within a domain. Such a centralized approach simplifies network resources management and ensures consistency across the organization. Administrators can add, remove, or modify user accounts, group memberships, and computer settings from a single interface with no hussle or complications. 

Authentication and authorization: AD provides robust security through authentication protocols like Kerberos and NTLM, and permission management. It ensures that only authenticated users can access network resources and assigns permissions based on user roles and group memberships. This enhances security and helps prevent unauthorized access to sensitive information. 

Group policy: Administrators can enforce specific configurations for users and computers across the network. Group Policy allows for the centralized management of operating system settings, application configurations, and user environment settings. This helps maintain compliance with organizational policies and standards and reduces the administrative burden of managing individual devices. 

LDAP protocol: AD uses the Lightweight Directory Access Protocol (LDAP) for directory queries. LDAP is a standard protocol for accessing and maintaining distributed directory information services over an IP network. It allows applications and services to query AD for information about users, groups, and other directory objects. 

Replication: Ensures data consistency across multiple domain controllers. AD uses a multi-master replication model to synchronize directory data across domain controllers. This ensures high availability and fault tolerance, as changes made on one domain controller are replicated to all others. This replication process helps maintain data integrity and consistency across the network. 

Schema and object classes: AD is based on a schema that defines the types of objects (such as users, groups, and computers) and their associated attributes. The schema is extensible, allowing organizations to customize it to meet specific requirements. Object classes define the characteristics and behaviors of directory objects, ensuring consistent data structure and management. 

Sites and services: AD uses the concept of sites to represent the physical topology of a network. Sites are used to manage network traffic, replication, and service location. By defining sites and associating domain controllers with them, administrators can optimize network performance and replication efficiency. 

Federation services: AD Federation Services (AD FS) provides single sign-on (SSO) capabilities for web-based applications. It allows users to authenticate once and access multiple applications without needing to re-enter credentials. AD FS supports various authentication methods and can integrate with other identity providers, facilitating secure access to external and cloud-based applications. 

DNS integration: AD tightly integrates with the Domain Name System (DNS) to provide name resolution services. AD domains rely on DNS to locate domain controllers and other services. The integration ensures that AD can dynamically update DNS records, providing seamless and efficient name resolution for network resources. 

What Is Azure AD? 

Azure Active Directory is Microsoft’s cloud-based identity and access management service, designed to provide secure and streamlined access to external resources such as Microsoft 365, the Azure portal, and thousands of other SaaS applications. It is an integral part of Microsoft’s cloud ecosystem and essential for organizations looking to enhance their security, improve user experience, and streamline identity management in a cloud-centric environment.  

Azure AD’s comprehensive features cater to a wide range of scenarios, from simple user authentication to complex identity management requirements. This makes it a versatile solution for modern businesses. Among the key features are: 

Single Sign-On (SSO): Users can access multiple applications with one set of credentials, enhancing user convenience and reducing password fatigue. This streamlines the user experience and improves productivity by allowing users to sign in once and gain access to all necessary applications. 

Multi-Factor Authentication (MFA): Adds an extra layer of security by requiring additional verification methods, such as a phone call, text message, or mobile app notification. This significantly reduces the risk of unauthorized access, even if passwords are compromised. 

Conditional access: Policies to control access based on specific conditions, such as user location, device compliance, or risk level. This ensures that only authorized users can access sensitive data and only under defined conditions. 

Integration with on-premises AD: Hybrid identity solutions that combine on-premises and cloud identities, enabling seamless user management across different environments. This particularly benefits organizations that are moving to the cloud while maintaining some on-premises infrastructure. 

Self-service password reset: Allows users to reset their passwords without IT intervention, reducing helpdesk calls and improving user satisfaction. This feature empowers users to manage their passwords independently, thus saving time and resources for IT departments. 

Application management: Administrators can manage and configure application access, assign user roles, and monitor usage. This ensures that users have appropriate access to the applications they need while also maintaining security and compliance. 

Identity protection: Built-in identity protection mechanisms detect and respond to suspicious activities. Azure AD leverages machine learning and data analytics to identify potential threats, providing administrators with alerts and recommendations for mitigating risks. 

B2B collaboration: Azure AD supports secure collaboration between businesses. It allows organizations to invite external users to access internal resources, fostering collaboration while maintaining control over access and security. 

B2C identity management: Azure AD B2C provides identity management for customer-facing applications, enabling businesses to offer secure and seamless user experiences to their customers. This includes social login integrations and customizable user flows. 

Access reviews: Regular access reviews ensure that users have the appropriate level of access, helping organizations comply with regulatory requirements and maintain security. Administrators can automate and schedule these reviews to streamline the process. 

Audit logs and reports: Detailed logs and reports provide insights into user activities and security incidents. This transparency helps organizations monitor compliance, detect anomalies, and investigate security events effectively. 

What are the differences between Azure AD and Active Directory? 

Understanding the differences between Azure AD and AD is essential for making an informed decision. Further, we will indicate what to keep in mind when choosing choice Azure AD vs AD, but here is a convenient table of the key differences. 

Feature	Active Directory (AD)	Azure Active Directory (Azure AD)
Deployment	On-premises	Cloud-based
Primary use case	Internal network management	Access to cloud applications
Authentication protocols	Kerberos, NTLM	OAuth, SAML, OpenID Connect
Group policy	Extensive Group Policy management	Limited Group Policy-like capabilities
Device management	Comprehensive device management	Limited device management
Replication	Multi-master replication within domains	High availability through Azure infrastructure
Integration	Integrates with on-premises systems	Integrates with cloud and on-premises systems
Access management	Detailed access management within domain	Broad access management for cloud applications
Multi-factor authentication	Optional third-party integration	Built-in multi-factor authentication
Self-service password reset	Limited or third-party tools	Built-in self-service password reset

Azure Active Directory vs Active Directory: What is similar?  

While having such a significant list of differences between AD vs Azure AD, they share some common features. Those are the following. 

Feature	Active Directory (AD)	Azure Active Directory (Azure AD)
User and group management	Yes	Yes
Security protocols	Robust security protocols	Robust security protocols
Authentication	Provides strong authentication methods	Provides strong authentication methods
Identity management	Centralized identity management	Centralized identity management
Hybrid capabilities	Can be integrated with cloud solutions	Can be integrated with on-premises AD
Role-Based Access Control (RBAC)	Yes	Yes

Strengths of Active Directory 

Comprehensive on-premises management: AD excels in managing users, groups, and devices within an internal network. 

Group policy: Allows detailed and centralized management of user and computer settings. 

Device management: Extensive capabilities to manage and secure domain-joined devices. 

Replication: Ensures data consistency and fault tolerance through multi-master replication. 

Security: Strong security with Kerberos and NTLM authentication protocols. 

Advantages of Azure AD 

Cloud integration: Seamless access to cloud applications, including Microsoft 365 and other SaaS services. 

Scalability: Easily scalable to accommodate growing business needs without additional infrastructure. 

Multi-Factor Authentication (MFA): Built-in MFA to enhance security. 

Conditional access: Fine-tuned access policies based on user conditions and device states. 

Self-service password reset: Reduces IT workload by allowing users to manage their passwords. 

Azure AD vs Active Directory: Which one to choose? 

Choosing between Active Directory (AD) and Azure Active Directory (Azure AD) is a crucial decision that hinges on several factors specific to your organization’s needs. Both services offer distinct advantages, and the right choice depends on your infrastructure, security requirements, management preferences, and integration needs. 

Infrastructure 

On-premises focus: If your organization maintains a significant on-premises infrastructure, including local servers, workstations, and internal applications, Active Directory is likely the more appropriate choice. AD is designed to manage and secure on-premises environments effectively, offering comprehensive device management and group policies tailored for local networks. 

Cloud-first strategy: For organizations moving towards a cloud-first strategy, Azure AD is a better fit. Azure AD is built for the cloud, providing seamless integration with cloud applications, services, and infrastructure. It simplifies management and scales effortlessly with your organization’s growth without the need for additional physical hardware. 

Security requirements 

Robust security: Both AD and Azure AD offer robust security features. Active Directory provides strong on-premises security through protocols like Kerberos and NTLM, and fine-grained access controls. However, Azure AD enhances security for cloud applications with built-in Multi-Factor Authentication (MFA) and Conditional Access policies. 

Additional cloud security: Azure AD’s MFA adds an extra layer of protection by requiring multiple forms of verification, significantly reducing the risk of unauthorized access. Conditional Access policies allow administrators to define criteria for granting or denying access based on user conditions, such as location, device compliance, and risk level. 

Management preferences 

Group policy management: Active Directory excels in on-premises management through its extensive Group Policy capabilities. Group Policy allows administrators to enforce specific configurations and security settings for users and computers, ensuring compliance and consistency across the organization. 

Ease of cloud management: Azure AD offers ease of management for cloud resources. It provides a centralized portal for managing user identities, access, and application settings across the cloud environment. Features like self-service password reset and automated workflows reduce the administrative burden on IT teams. 

Integration needs 

On-premises applications: If your applications and services are primarily on-premises, Active Directory’s integration capabilities will align well with your existing infrastructure. AD supports a wide range of on-premises applications and services, offering seamless integration and management. 

Cloud applications: For organizations heavily utilizing cloud applications, Azure AD is the optimal choice. Azure AD integrates seamlessly with Microsoft 365, the Azure portal, and thousands of other SaaS applications. It provides single sign-on (SSO) capabilities, allowing users to access multiple applications with a single set of credentials. 

Other considerations 

Hybrid environments: Many organizations operate in hybrid environments, combining on-premises and cloud resources. In such cases, a combination of AD and Azure AD can be employed. Azure AD Connect synchronizes on-premises AD with Azure AD, enabling a unified identity and access management system across both environments. 

Cost implications: Consider the cost implications of maintaining on-premises infrastructure versus adopting cloud services. While AD requires investment in physical hardware, ongoing maintenance, and potential upgrades, Azure AD’s cloud-based nature eliminates these costs, offering a pay-as-you-go pricing model. 

User experience: Evaluate the user experience for both IT administrators and end-users. Azure AD’s self-service capabilities, such as password resets and application access requests, enhance user satisfaction and reduce IT workload. AD’s detailed policy management ensures tight control over the on-premises environment but may require more hands-on management. 

Ultimately, when it comes to Active Directory vs Azure AD, the decision should be guided by a thorough assessment of your organization’s current infrastructure, future growth plans, security requirements, and overall IT strategy. For many organizations, a hybrid approach leveraging both AD and Azure AD provides the best of both worlds, ensuring comprehensive identity and access management across all environments. 

Consulting with IT experts or Microsoft partners can provide additional insights and tailored advice to help you make the most informed decision for your organization’s unique needs. 

What to consider while making a choice? 

When deciding between Active Directory and Azure AD, consider the following factors to ensure the best fit for your organization: 

Current IT infrastructure: Evaluate if your existing infrastructure is primarily on-premises or cloud-based. If your organization has significant investments in on-premises hardware and software, AD might be more suitable. For organizations already leveraging cloud services or planning to migrate to the cloud, Azure AD offers more flexibility and integration capabilities. 

Future growth: Consider scalability and future growth plans. Azure AD is more flexible for growing cloud needs, allowing organizations to scale their identity management infrastructure without the need for additional physical hardware. This can be particularly beneficial for organizations experiencing rapid growth or expansion into new regions. 

Security concerns: Assess the security features and compliance requirements of your organization. Both AD and Azure AD offer robust security, but Azure AD’s MFA and conditional access provide enhanced protection for cloud applications. Ensure that the chosen solution meets your organization’s security policies and regulatory compliance requirements. 

Cost: Compare the costs associated with maintaining on-premises infrastructure versus cloud services. On-premises AD requires ongoing investment in hardware, maintenance, and potential upgrades. In contrast, Azure AD’s cloud-based model offers a pay-as-you-go pricing structure, which can be more cost-effective and predictable for many organizations. 

User experience: Consider the ease of use and management for your IT team and end-users. Azure AD’s self-service features, such as password resets and application access requests, can reduce the burden on IT staff and improve user satisfaction. Evaluate the administrative tools and user interface of both solutions to determine which one aligns better with your organization’s needs. 

Bottom line 

Both Active Directory and Azure Active Directory offer powerful identity and access management solutions. AD is well-suited for traditional on-premises environments, while Azure AD excels in cloud-based scenarios. The choice between the two should be guided by your organization’s specific needs, current infrastructure, and future plans. By carefully evaluating these factors, you can select the directory service that best aligns with your business goals. 

Active Directory (AD) and Azure Active Directory (Azure AD) are Microsoft’s key identity management solutions, each suited for different environments. AD, designed for on-premises networks, excels in managing internal resources, offering features like centralized domain management, extensive group policy management, and robust security protocols. In contrast, Azure AD, a cloud-based service, focuses on providing secure access to cloud applications and services, featuring built-in multi-factor authentication, self-service password reset, and seamless integration with cloud platforms like Microsoft 365. Organizations should choose between AD and Azure AD based on their infrastructure needs—AD for on-premises setups and Azure AD for cloud-first or hybrid environments. Azure AD’s capabilities are particularly advantageous for businesses transitioning to the cloud or those requiring scalable, flexible identity management solutions. For many, a hybrid approach using both AD and Azure AD might offer the best combination of features for managing diverse IT environments.

For more detailed guidance and tailored advice, consulting with our IT experts or a Microsoft partner can provide valuable insights into the best solution for your organization.