Azure Active Directory Vs. Active Directory: Key Differences Explained

Azure Active Directory Vs. Active Directory: Key Differences Explained

27 Feb 2025
Intermediate
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22 min read
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Choosing between Azure Active Directory Vs Active Directory can feel tricky, but it really depends on how your business works. Active Directory (AD) is for managing users, devices, and security in your office network, while Azure AD is cloud-based, making it easy to access apps and services from anywhere. Understanding these differences will help you pick the one that fits your needs best.

In this Azure tutorial, knowing the difference between Azure Active Directory Vs Active Directory can help you choose the right one. Whether you need a system for local computers or cloud apps, understanding them makes your choice easier. Andy, you’ll clearly see which one works best for you. Let’s keep it simple and easy to understand!

What is Active Directory?

Active Directory (AD) is a service that helps you manage users and computers in your company. It stores information about employees, devices, and what they can access, acting like a digital directory.

With AD, you can control who has permission to use certain resources like files or printers, ensuring only authorized people can access them. It’s a reliable tool for keeping everything secure and organized in a local network.

Key features of Active Directory

Here are the key features of Active Directory:

  • User and Group Management: It helps you manage users and organize them into groups, making it easy to assign permissions and control access to resources.
  • Centralized Security: Active Directory ensures that security policies are applied consistently across all devices and users in your network, protecting company data.
  • Single Sign-On (SSO): Users can log in once and access all the resources they are permitted to without needing to sign in multiple times.
  • Access Control: You can set permissions for who can access files, folders, and applications, ensuring that only authorized individuals can see sensitive information.
  • Directory Services: Active Directory provides a centralized directory that stores information about your organization’s users, devices, and resources, making it easy to manage them.

What is Azure Active Directory?

Azure Active Directory (Azure AD) is a cloud service that helps you securely access apps like Microsoft 365 from anywhere. It acts like a digital security guard, making sure only authorized people can sign in. With features like single sign-on (SSO) and multi-factor authentication (MFA), it keeps your accounts safe and easy to manage without needing physical servers. It’s perfect for businesses that need security and flexibility.

Azure Active Directory

Key Features of Azure Active Directory

Here are the key features of Azure Active Directory:

  • Single Sign-On (SSO): You can log in once and access all your apps without needing to remember multiple passwords, saving you time and hassle.
  • Multi-Factor Authentication (MFA): For extra security, you’ll be asked for a second piece of information (like a code sent to your phone) to verify your identity, protecting your account from unauthorized access.
  • Self-Service Password Reset: If you forget your password, you can reset it yourself without needing to ask for help, giving you more control and saving time.
  • Conditional Access: You can set up rules to control who gets access to specific apps based on things like location or device, ensuring your data stays secure.
  • Directory Synchronization: It allows you to sync users and data from your on-premises system to the cloud, keeping everything in sync for easier management.

Use- cases of Azure Active Directory

Here are some common use cases of Azure Active Directory that help businesses stay secure and efficient:

  • Accessing Cloud Apps: Azure AD allows you to securely sign in to apps like Microsoft 365 and other business tools, making it easy to work from anywhere.
  • Managing Users and Groups: It helps you organize users into groups and manage their permissions so you can control who has access to what.
  • Securing Remote Work: With features like Multi-Factor Authentication (MFA), it ensures that employees working remotely can access company data safely.
  • Integration with On-Premises Systems: You can sync your existing on-premises Active Directory with Azure AD, giving you a seamless experience across cloud and local resources.

Key Differences Between Active Directory and Azure AD

Here’s a comparison of the key differences between Active Directory (AD) Vs Azure Active Directory (Azure AD) in a table format:

Active Directory Vs Azure Active Directory

FeatureActive Directory (AD)Azure Active Directory (Azure AD)
Deployment On-premises requires physical servers. Cloud-based, no need for physical infrastructure.
Authentication Protocol Uses Kerberos and NTLM for local network authentication. Uses OAuth, SAML, and OpenID Connect for cloud apps.
Device Management Manages devices in the local network; devices must join the domain. Manages both on-premises and cloud devices, including mobile.
Single Sign-On (SSO) Provides SSO for local network resources (files, printers). Provides SSO for cloud-based apps (e.g., Microsoft 365).
Multi-Factor Authentication (MFA) Requires third-party tools for MFA. Built-in MFA features for cloud apps, such as phone or app-based.
Group Policy Supports Group Policy for managing computer and user settings. Does not support traditional Group Policy; uses Intune for device management.
Hybrid Identity Support Primarily on-premises but can integrate with Azure AD via Azure AD Connect. Designed for the cloud, supports hybrid identity with on-prem AD.

When to Use Active Directory vs Azure Active Directory

Choosing between Azure Active Directory Vs Active Directory depends on how your business operates. Here’s when you should use each:

Use Active Directory (AD) When

  • You have an on-premises office setup with servers and need full control over your network, devices, and security policies.
  • Your company relies on Windows-based systems and needs features like Group Policy to manage computers and users.
  • You want a local authentication system without depending on the internet for user logins and access control.

Use Azure Active Directory (Azure AD) When

  • You need a cloud-based solution that allows employees to securely access apps like Microsoft 365 from anywhere.
  • You want built-in security features like Single Sign-On (SSO) and Multi-Factor Authentication (MFA) without extra setup.
  • Your business is moving to a hybrid or fully cloud environment, and you need identity management that works across both on-premises and cloud apps.
  • In many cases, businesses use Azure Active Directory vs Active Directory together for a hybrid approach, combining on-premises control with cloud flexibility. Choosing the right setup depends on your security needs and how your employees work.

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    Security Considerations: Azure Active Directory vs Active Directory

    When it comes to security, Azure Active Directory Vs Active Directory have different approaches, and choosing the right one depends on how you manage your users and data.

    • Active Directory (AD) is great if you need full control over security policies within your office network. You can set up Group Policies, firewalls, and access restrictions to protect your company’s data. However, since it’s on-premises, you are responsible for keeping everything updated and secure.
    • Azure Active Directory (Azure AD) is designed for cloud security, giving you built-in features like Multi-Factor Authentication (MFA), Conditional Access, and identity protection. If your team works remotely or uses cloud apps, Azure AD ensures that only trusted users and devices can access sensitive data.
    • One big difference in Azure Active Directory Vs Active Directory is how they handle password security. AD relies on traditional password policies, while Azure AD supports passwordless authentication methods like biometrics and authentication apps, making it harder for hackers to break in.
    • If you want the best of both, Azure Active Directory Vs Active Directory can work together in a hybrid setup, combining on-prem security with cloud flexibility. The key is to choose what keeps your business safe while making access easy for your users.

    Cost Comparison: Azure Active Directory Vs. Active Directory

    When deciding between Azure Active Directory Vs Active Directory, cost plays a big role, and understanding the pricing can help you choose the best option for your business.

    • Active Directory (AD) requires physical servers, hardware, and IT maintenance, which means upfront costs for setup and ongoing expenses for upgrades, security, and management. If you already have an on-premises setup, AD might be cost-effective, but scaling can get expensive.
    • Azure Active Directory (Azure AD) follows a subscription model, with a free tier and paid plans for advanced security features.
    • If you're looking for a balance, Azure Active DirectoryVs Active Directory can work together in a hybrid setup, where you keep critical systems on-premises while using Azure AD for cloud-based security and scalability. This way, you control costs while getting the best of both worlds.
    • One major difference in Azure Active Directory Vs Active Directory is that AD has hidden maintenance costs, while Azure AD’s pricing is predictable and based on the number of users and features you need.

    Can Azure AD Replace Active Directory?

    Azure Active Directory is not a full replacement for Active Directory, but it works well for cloud-based businesses. If your company relies on local servers and legacy apps, Active Directory is still needed, but for cloud security and remote work, Azure AD is the better choice.

    Most businesses use a mix of Azure Active Directory Vs Active Directory to get the best of both worlds. If you're planning to move fully to the cloud, Azure AD is the future, but many still rely on AD for on-premises control.

    Conclusion

    In conclusion, Choosing between Azure Active Directory Vs Active Directory depends on how you work. If you need on-premises control, AD is the way to go. If you want cloud flexibility, Azure AD is the future. Many businesses use both for the best balance. No matter what you choose, you should focus on security, flexibility, and what works best for your needs.

    Further Read Articles:
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    Microsoft Azure Certification Exams: Role-based Paths

    Test Your Skills with the Following MCQs

    Test your Azure knowledge with these MCQs to see how ready you are for the Active Directory Vs Active Directory and boost your confidence!

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    Q 1: What is the primary function of Active Directory?

    • Identity and access management
    • Data storage
    • Cloud computing
    • Networking

    FAQs

    Yes, Azure AD can work without Active Directory. If your business uses only cloud apps like Microsoft 365, Azure AD can manage users, security, and access without needing an on-premises AD server. However, if you have local servers and older applications, you may still need Active Directory for full control.

    No, Azure AD and Active Directory are not the same. Active Directory (AD) is for managing on-premises networks, while Azure AD is designed for cloud-based identity and access management. They serve different purposes, but many businesses use them together for a hybrid approach.

    Yes, you can use AD and Azure AD together in a hybrid setup. This allows you to manage on-premises systems with AD while using Azure AD for cloud-based apps and security. It gives you the flexibility of both worlds.

    Azure AD is a cloud-based identity and access management service that handles user authentication for cloud apps. Azure AD Domain Services provides managed domain services like domain join, group policy, and LDAP in the cloud, similar to traditional Active Directory, but without needing to manage domain controllers.

    Azure AD supports hybrid environments by connecting your on-premises Active Directory with cloud-based Azure AD. This allows users to access both local and cloud resources with a single identity, making it easier to manage security and access across both environments.

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    About Author
    Shailendra Chauhan (Microsoft MVP, Founder & CEO at ScholarHat)

    Shailendra Chauhan, Founder and CEO of ScholarHat by DotNetTricks, is a renowned expert in System Design, Software Architecture, Azure Cloud, .NET, Angular, React, Node.js, Microservices, DevOps, and Cross-Platform Mobile App Development. His skill set extends into emerging fields like Data Science, Python, Azure AI/ML, and Generative AI, making him a well-rounded expert who bridges traditional development frameworks with cutting-edge advancements. Recognized as a Microsoft Most Valuable Professional (MVP) for an impressive 9 consecutive years (2016–2024), he has consistently demonstrated excellence in delivering impactful solutions and inspiring learners.

    Shailendra’s unique, hands-on training programs and bestselling books have empowered thousands of professionals to excel in their careers and crack tough interviews. A visionary leader, he continues to revolutionize technology education with his innovative approach.
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