Azure Active Directory Cost Management Strategies

Azure Active Directory (Azure AD) is a powerful tool for managing identities and access in the cloud. It's free to use for up to 500,000 objects.

To get the most out of Azure AD, you need to understand how to manage its costs effectively. This involves implementing cost management strategies that align with your organization's needs.

One key strategy is to use Azure AD's free tier for as long as possible, which can save you up to $6 per user per month. This can add up quickly, especially for large organizations.

By implementing cost management strategies, you can reduce your Azure AD costs and make the most of your budget.

Azure Active Directory costs can be broken down into several components. To fully assess the total cost of ownership (TCO) of Azure AD, you need to account for the costs of Azure AD Premium Package, Add-Ons for device management, External Identities, Azure AD DS, Active Directory, LDAP Server, RADIUS Server, and Integration/Management Time for your implementations.

You can use an equation to help you understand the TCO of AAD: Costs of Azure Active Directory = Azure AD Premium Package + Add-Ons for device management + External Identities + Azure AD DS + Active Directory + LDAP Server + RADIUS Server + Integration/Management Time for your implements.

Azure AD Premium Packages come in different tiers, including AAD Free, Premium 1 (P1), and Premium 2 (P2), each with varying features and costs. Here's a breakdown of the different tiers:

M365 subscriptions also bundle AAD, with different tiers offering varying levels of device management and AAD features.

By leveraging managed domain services, you can save costs and operate more efficiently. This is especially true when it comes to deploying and managing identity infrastructure for virtual machines and legacy applications.

Microsoft Entra Domain Services enables you to use managed domain services without having to deploy, manage, or patch domain controllers. This can be a huge time-saver and cost reducer.

Access to managed domain services such as Windows Domain Join, group policy, LDAP, and Kerberos authentication is also available. This allows you to simplify your identity infrastructure and reduce administrative costs.

Lift-and-shift migration of legacy applications from your on-premises environment to a managed domain is also possible. This can help you modernize your applications and reduce costs associated with on-premises infrastructure.

By using managed domain services, you can reduce operational and maintenance costs associated with managing identity infrastructure for your virtual machines and legacy applications. This can help you free up resources to focus on other important tasks.

Standalone M365 is a bit of a misnomer, as you can't actually have M365 without Azure Active Directory (AAD). M365 subscriptions bundle AAD, which is the substrate for managing your users.

M365 directory features are gated off into multiple tiers, each with varying levels of AAD capabilities. You can't even use M365 without AAD, which is often encountered through Office.

Here are the different M365 editions and their corresponding AAD features:

It's worth noting that EMS E5 is essentially the same as M365 E5, with the same AAD features.

AAD's pricing model is complicated, and non-system access needs may obligate you to purchase more CALs. The first step in understanding your costs is to determine your current situation.

If you have a Microsoft Enterprise Agreement, Open Volume agreement, or are part of the Cloud Solutions Program, you'll have a right to certain functionality, including Basic and Premium depending on your specific agreement. This can save you money on CALs.

Client Access Licenses (CALs) are another important cost to consider, purchased based on user count or device count. Core licensing has become even more expensive.

Azure AD is already bundled into Office 365 licenses AND Azure licenses, but Office and Azure clients can still purchase P1 and P2 versions for additional benefits.

Azure Active Directory Premium P1 includes features like Advanced group management, Advanced security and usage reports, and Application Proxy for on-premises, header-based, and Integrated Windows Authentication.

Azure Active Directory Premium P2 includes all the features of P1, plus features like Access certifications and reviews, Entitlements management, and Privileged Identity Management (PIM).

Here's a comparison of the two:

It's worth noting that SMEs can overspend on AAD or be upsold by a Microsoft partner due to the complexity of its licensing, so it's essential to take the time to understand your requirements versus what you're paying for.

Managing Identities is a crucial aspect of Azure Active Directory cost optimization. Self-managed and managed Domain Services can be compared to determine the best approach for your organization.

By enabling managed domain services, you can reduce operational and maintenance costs associated with managing identity infrastructure. This can be a significant cost savings, especially for organizations with complex identity infrastructures.

With managed domain services, you can also reduce the time and effort required to manage your virtual machines and directory-aware applications deployed in Azure. This is because you can enable managed domain services with just a click of a button, streamlining your identity management process.

You can enable managed domain services for virtual machines and directory-aware applications deployed in Azure with a click of a button.

This simplifies identity management and reduces operational and maintenance costs associated with managing identity infrastructure for your virtual machines and legacy applications.

By using managed domain services, you can join Azure virtual machines to a managed domain without the need for domain controllers, which reduces administrative tasks and costs.

This allows you to focus on more strategic initiatives and reduce the burden on your IT team.

With managed domain services, you can also lift-and-shift migration of legacy applications from your on-premises environment to a managed domain, making it easier to move to the cloud.

This can help you take advantage of the scalability and flexibility of the cloud while minimizing disruptions to your business.

Managing External Identities can be a complex task, especially when it comes to non-Microsoft identities. Microsoft Entra is necessary to manage external identities and devices.

For non-Microsoft identities like Google Workspace, you'll be charged for every single MFA authentication. This can add up quickly.

AAD P1 or P2 licenses are required to work with external identities, so be sure to factor those costs into your budget.

When managing identities, having the right documentation is crucial for making informed decisions about your identity services.

Self-managed Domain Services and managed Domain Services have different approaches to identity management, with self-managed requiring more hands-on effort from administrators.

Microsoft Entra ID is a managed identity service that offers a more streamlined experience, with features like automatic identity provisioning and deprovisioning.

You can compare the two options by evaluating their respective pros and cons, such as the level of administrative effort required and the security features offered.

By carefully considering your organization's needs and comparing self-managed and managed Domain Services with Microsoft Entra ID, you can make an informed decision about which identity service is best for you.