Small Business IT

Microsoft Entra ID

Also known as: Entra ID, Azure Active Directory, Azure AD

Microsoft Entra ID, known until 2023 as Azure Active Directory (Azure AD), is Microsoft's cloud-based identity and access service.

It stores user accounts, passwords, groups, and devices for Microsoft 365, and controls who can sign in to email, Teams, SharePoint, and thousands of connected apps. It provides single sign-on, multi-factor authentication, and access policies. While most small businesses use Entra ID without realizing it, it's effectively the front door to the whole company, so securing it is one of the most important IT jobs.

Microsoft Entra ID, explained at three levels

At home

Entra ID works like the reception desk of a large office building. Everyone checks in there once, shows ID, and gets a keycard that opens only the rooms they're allowed into. Entra ID does the same online: it confirms who you are with your password and phone, then hands each work app a digital pass saying what you may open.

At work

Microsoft Entra ID is the master list of everyone who works at a company that uses Microsoft 365. It holds each person's account, password, groups and devices, and every connected app checks with it before letting someone in. That makes it the single place IT adds new staff, removes leavers and turns on MFA, and the first place attackers aim for.

Real-world examples

At home

Sophie started a new job and signed in to Outlook, Teams, and the company's HR app with the same work account, all managed through Entra ID.

At work

Marcus runs IT for a Calgary engineering firm. He used Entra ID to require MFA for everyone and to block sign-ins from outdated email apps.

How it compares

featureMicrosoft Entra IDActive Directory
LocationCloudOn-premises servers
Main useMicrosoft 365 and cloud appsOffice networks and Windows domains
Sign-in methodsWeb, MFA, passkeysDomain logins
ManagementAdmin portalsDomain controllers

Active Directory runs office networks. Entra ID runs cloud identity.

For analysts

In any Microsoft 365 assessment, I'd start with Entra ID: MFA coverage, admin accounts, and stale users. That's where most small business compromises begin.

History & origin

Microsoft released Active Directory with Windows 2000 Server, and it became the standard way businesses managed office networks. As Office 365 launched in 2011, Microsoft built a cloud directory, Windows Azure Active Directory, that became generally available in 2013. Over the following decade, it added conditional access, passwordless sign-in, and identity protection. Microsoft renamed it Microsoft Entra ID in July 2023, although features and prices stayed the same. High-profile attacks, including a breach of Microsoft's own systems, disclosed in 2024, that began with a password-spraying attack on an old test account without MFA, showed how central identity security had become. In my view, Entra ID is now more important to a small business than its office firewall.