April 17, 2024

Azure Managed Identities vs Service Principals

9 min read
Discover the differences between Azure Managed Identities and Service Principals and learn which one is the best fit for your application.
Two overlapping circles

Two overlapping circles

When it comes to authentication and authorization to access Azure resources, there are two options available – Azure Managed Identities and Service Principals. Azure Managed Identities and Service Principals have their own set of benefits and limitations, and it’s important to understand them to make an informed decision about which one to choose for your application. In this article, we’ll cover the differences between Azure Managed Identities and Service Principals, their benefits, limitations, and how to create and configure them.

What are Azure Managed Identities?

Azure Managed Identities are a way to provide Azure services with an automatically managed identity in Azure Active Directory (AD). Managed identities are assigned to Azure services such as Azure Virtual Machines, Azure Functions, and Azure App Service. A managed identity eliminates the need for developers to manage credentials by providing an automatically managed identity for the services. Managed identities are available in two forms – system-assigned and user-assigned managed identities.

System-assigned managed identities are automatically created and managed by Azure. They are tied to a specific Azure service instance and are deleted when the instance is deleted. On the other hand, user-assigned managed identities are created as standalone Azure resources and can be assigned to multiple Azure service instances. This allows for greater flexibility and control over the management of identities.

What are Service Principals?

Service Principals are another way to provide authentication and authorization to access Azure resources. Service Principals are non-human identities that can be used to authenticate and authorize access to Azure resources. They are like users in Azure AD, but they don’t have a password – instead, they use a certificate or secret to authenticate.

Service Principals can be used in scenarios where you need to automate access to Azure resources, such as when deploying resources using Azure DevOps or other automation tools. By using a Service Principal, you can avoid the need to manually enter credentials every time you need to access Azure resources.

Service Principals can also be used to grant access to Azure resources to applications that are not running in Azure, such as on-premises applications or applications running in other cloud providers. By creating a Service Principal and granting it the necessary permissions, you can enable these applications to access Azure resources securely.

Understanding the differences between Managed Identities and Service Principals

The main difference between Azure Managed Identities and Service Principals is in how they are used. Managed Identities are used to provide authentication and authorization to Azure services, while Service Principals are used to provide authentication and authorization to any application or service that needs to access Azure resources. Managed Identities are assigned to Azure services, while Service Principals are created by application developers and assigned to their applications.

Another important difference between Managed Identities and Service Principals is in their lifecycle management. Managed Identities are managed by Azure and are automatically deleted when the associated Azure service is deleted. On the other hand, Service Principals are managed by the application developer and need to be manually deleted when they are no longer needed. Additionally, Managed Identities have a one-to-one relationship with the Azure service they are assigned to, while Service Principals can be assigned to multiple applications or services.

Benefits of using Azure Managed Identities

Azure Managed Identities have several benefits over Service Principals. Firstly, managed identities eliminate the need for developers to manage credentials for the services, making it easier and more secure to authenticate and authorize access to Azure resources. Secondly, managed identities are Azure AD objects, which makes it easier to manage access to resources across multiple Azure services. Finally, managed identities can be used to authenticate and authorize access to resources in other Azure AD tenants, making it easier to access resources in multi-tenant architectures.

Another benefit of using Azure Managed Identities is that they provide automatic rotation of credentials, which helps to improve security by reducing the risk of unauthorized access. This means that the credentials used to access Azure resources are automatically rotated on a regular basis, without any intervention required from developers or administrators.

In addition, Azure Managed Identities can be used to authenticate and authorize access to resources in other cloud environments, such as AWS or Google Cloud Platform. This makes it easier to manage access to resources across multiple cloud providers, without the need for separate identity management solutions for each provider.

Benefits of using Service Principals

Service Principals also have several benefits over Azure Managed Identities. Firstly, they can be used to authenticate and authorize access to any application or service that needs to access Azure resources, not just Azure services. Secondly, Service Principals can be granted only the necessary permissions to access resources, which is not possible with Managed Identities. Finally, Service Principals can be used to authenticate and authorize access to resources in other directories or external systems, making them more versatile than Managed Identities.

Another benefit of using Service Principals is that they can be easily managed and monitored through Azure Active Directory. This allows administrators to track and audit the usage of Service Principals, ensuring that they are being used appropriately and securely. Additionally, Service Principals can be easily revoked or deleted if they are no longer needed, reducing the risk of unauthorized access to resources. Overall, Service Principals provide a flexible and secure way to manage access to Azure resources for a wide range of applications and services.

Key features of Azure Managed Identities

Some of the key features of Azure Managed Identities include automatic management of credentials, simplified authentication and authorization for Azure services, ease of use, multi-tenant support, and simplified management of access to resources across multiple Azure services.

In addition to these features, Azure Managed Identities also provide enhanced security by eliminating the need for storing credentials in code or configuration files. This reduces the risk of credentials being compromised or leaked. Managed Identities also support role-based access control (RBAC), allowing administrators to grant specific permissions to users or groups based on their roles and responsibilities. This helps ensure that users only have access to the resources they need to perform their job functions, reducing the risk of unauthorized access or data breaches.

Key features of Service Principals

Some of the key features of Service Principals include being able to be used for non-Azure services, selective authorization for applications, external access to resources, granular control over permissions, and more versatility than Managed Identities.

Another important feature of Service Principals is that they can be used to authenticate and authorize access to Azure resources across multiple tenants. This means that a single Service Principal can be used to access resources in different Azure Active Directory (AD) tenants, making it easier to manage access across different environments.

Additionally, Service Principals can be configured to use certificate-based authentication, which provides an extra layer of security compared to using just a client secret. This is because certificates are more difficult to compromise than secrets, which can be easily leaked or stolen.

How to create and configure Azure Managed Identities

To create and configure Azure Managed Identities, you’ll need to follow these steps:

  1. Create an Azure service that supports Managed Identities.
  2. In the service, create a system-assigned or user-assigned managed identity.
  3. Assign the managed identity to the appropriate Azure resources.

It’s important to note that Managed Identities provide an easier and more secure way to authenticate with Azure resources. With Managed Identities, you don’t need to store any secrets or credentials in your code or configuration files. Instead, Azure automatically handles the authentication process for you, using the managed identity you’ve assigned to your resources.

How to create and configure Service Principals

To create and configure Service Principals, you’ll need to follow these steps:

  1. Create a Service Principal in Azure AD.
  2. Create a certificate or secret for the Service Principal.
  3. Assign necessary permissions to the Service Principal.

Once you have created and configured your Service Principal, you can use it to authenticate and access Azure resources programmatically. This can be done by using the Service Principal’s credentials to obtain an access token, which can then be used to make API calls to Azure resources.

It is important to regularly review and update the permissions assigned to your Service Principal, to ensure that it only has access to the resources it needs. You can do this by using Azure AD’s access reviews feature, which allows you to periodically review and update the permissions assigned to your Service Principals and other Azure AD objects.

Best practices for using Azure Managed Identities

Some best practices to follow when using Azure Managed Identities include using system-assigned identities over user-assigned identities, assigning identities to specific resources, and monitoring the usage of the identities to ensure they are being used effectively.

Another best practice is to limit the number of identities created to only what is necessary. This helps to reduce the risk of unauthorized access and simplifies identity management. Additionally, it is important to regularly rotate the credentials associated with the identities to further enhance security.

Finally, it is recommended to use Azure Key Vault to securely store and manage any secrets or keys associated with the identities. This helps to ensure that sensitive information is not exposed and can be easily managed and updated as needed.

Best practices for using Service Principals

Some best practices to follow when using Service Principals include creating a separate Service Principal for each application, creating appropriate permissions for each Service Principal, and rotating the certificates or secrets regularly to ensure security.

Another best practice is to limit the scope of permissions granted to each Service Principal. This can be achieved by using the principle of least privilege, which means granting only the minimum permissions required for the Service Principal to perform its intended function. This reduces the risk of unauthorized access or misuse of resources.

It is also important to monitor the usage of Service Principals and review their permissions periodically. This helps to identify any anomalies or suspicious activities and take appropriate actions to mitigate any security risks. Additionally, it is recommended to use multi-factor authentication for Service Principals to add an extra layer of security.

Security considerations when using Managed Identities vs Service Principals

When using Azure Managed Identities, it’s important to consider the security implications of having an automatically managed identity for Azure services. While Managed Identities eliminate the need to manage credentials manually, they can also be a security risk if not used properly. On the other hand, when using Service Principals, it’s important to ensure that the certificates or secrets are stored securely and not exposed to unauthorized users.

Limitations of Azure Managed Identities

Azure Managed Identities have some limitations, including that they cannot be used for on-premises resources, they only work with Azure services, and they have limitations on the number of resources to which they can be assigned.

Limitations of Service Principals

Service Principals also have some limitations, including that they require manual management of credentials, they cannot be used to authenticate and authorize access to on-premises resources, and they cannot be used for multi-tenant applications without additional configuration.

Real-world use cases for Managed Identities

Managed Identities are best suited for scenarios where Azure services need to access other Azure services. Examples include Azure Virtual Machines accessing Azure Storage, or Azure Functions accessing Azure Event Hubs.

Real-world use cases for Service Principals

Service Principals are best suited for scenarios where external applications or services need to access Azure resources. Examples include deploying an application to Azure using Azure DevOps, or a third-party application accessing Azure resources.

Conclusion: which one to choose for your application?

When it comes to choosing between Azure Managed Identities and Service Principals, the type of application or service you’re building, the resources you need to access, and the level of control you require over permissions will all be factors in your decision. Azure Managed Identities are best suited for scenarios where Azure services need to access other Azure services, while Service Principals are best suited for scenarios where external applications or services need to access Azure resources. Ultimately, it’s up to the application developer to decide which option is the best fit.

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