It would be easy to assume that “Active Directory” is just a shorter way of saying “Azure Active Directory.” Makes sense, right? Unfortunately, it’s nowhere near that simple. These are two distinct technologies that can affect your business in profound ways, so it’s important to understand how they’re similar, how they differ and how they sometimes work together.
Note: these offerings are always evolving. Make sure to check the latest specs for the most accurate info, or just give us a call to discuss whether Active Directory or Azure Active Directory is right for you.
What do Active Directory and Azure Active Directory have in common?
Let’s start with the basics. Active Directory (AD) and Azure Active Directory (Azure AD) are both directory systems — that is, an organized, categorized list of key data in your IT environment. Most notably, these objects include user accounts with the names, job titles, usernames, and passwords of every authorized user in your system.
As opposed to a “static” directory (like a printed phone book), AD and Azure AD are both “active” because they perform two key functions: authentication and authorization.
- Authentication is how users validate their identities. For years, many organizations only required a username and password to access devices or applications; more recently, multifactor authentication (MFA) has become the prevailing standard. MFA methods might include biometric verification, Captcha tests or sending codes to users’ smartphones. As an aside, keep in mind that there is an End of Life set in September 2024 for Microsoft legacy MFA requests.
- Authorization determines which authenticated users can access which applications. For example, certain users might have administrative control over key applications while other users might not have access to those applications at all.
But let’s be clear: while AD and Azure AD both perform these key functions, they perform them in quite different ways.
What are the differences between Active Directory and Azure Active Directory?
The most obvious difference between AD and Azure AD is fundamental: AD is on-premises (not premise mind you!), while Azure AD is cloud-based. More specifically, AD lives on domain controllers (DCs), which are on-premises computers that you purchase, install, configure, and maintain. Azure AD lives on Microsoft’s servers in Microsoft’s data centers (Azure cloud).
If you’re using any online service from Microsoft (including Microsoft 365), then you already have Azure AD. And because Azure AD uses modern authentication protocols, like SAML and OAuth, it can seamlessly connect your users to thousands of SaaS applications like Salesforce, ZenDesk or Slack with a single sign-on.
That said, Azure AD has clear limitations. Due to its flat structure, it lacks some features that are useful in an on-premises AD environment. The lack of support for organizational units (OUs) and group policy objects (GPOs) can be an issue, especially for larger organizations with many users or multiple offices.
For these reasons, Azure AD is rarely deployed as a total replacement for AD. Increasingly, the two solutions are deployed together in a hybrid IT environment: AD for managing traditional on-premises infrastructure and applications and Azure AD for managing user access to cloud applications.
Why use both Active Directory and Azure Active Directory?
Some organizations are entirely cloud-based — they never had an on-premises IT environment to begin with. In those cases, Azure AD should be sufficient to meet their needs. But many other organizations have a more complex ecosystem that might require both platforms.
For example, you might have legacy apps that rely on Active Directory for access control, or you might have sensitive data like health records that need to be stored on-premises to maintain HIPAA compliance. In cases like these, it might be a clever idea to pursue a hybrid strategy instead of moving everything to the cloud.
Ok, thanks for the technical jargon, but what do you really think is happening?
Well, I think we can boil this down to a couple of things that come up repeatedly in our customer base. There is a real desire to rid oneself of all the servers in your office and the associated capital outlays and maintenance costs associated with them. We get that. We have the same philosophy. What prevents the shift to the fully cloud-based directory is typically these legacy applications that require a local server. So, familiarity and cost to switch.
So, do we think that the shift to fully cloud-based is coming? Yes, that’s absolutely the future. And would we recommend that new companies architect themselves from the ground up to be fully cloud-based? Yes, we do. It’s much simpler that way!