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For a workload running in Azure, start with a managed identity if its hosting service supports one. If it does not, Microsoft recommends a service principal. For supported workloads outside Azure, workload identity federation can avoid storing a client secret or certificate. Avoid repurposing a human user account for automation when a workload identity option is available.
In Microsoft Entra, the practical choice is usually between managed identities and service principals. “Service account” is also used informally for a human account pressed into automated work; that is different from a purpose-built nonhuman identity.
Choose the identity based on where the workload runs
Microsoft’s guidance is specifically for Azure and Microsoft Entra. It is not a universal naming or implementation rule for every cloud provider.
| Workload situation | Starting choice | Why |
|---|---|---|
| Runs in Azure, and its hosting service supports managed identity | Managed identity | Azure manages the identity credentials, so the application does not maintain a client secret or certificate for that identity. See Microsoft’s managed identities overview. |
| Runs in Azure but cannot use managed identity | Service principal | Microsoft recommends a service principal as the next option. Use the narrowest permissions that work and choose a credential approach appropriate to the scenario. Microsoft explains app objects and service principals. |
| Runs outside Azure and needs access to Microsoft Entra-protected resources | Service principal, or supported workload identity federation | Microsoft generally recommends a service principal for services outside Azure. Federation is an option for supported identity providers and environments; verify that it fits the specific platform and scenario. See Microsoft’s workload identity federation guidance. |
| Is a multi-tenant application | Service principal | Microsoft’s comparison recommends service principals for multi-tenant services and identifies user accounts as unsuitable. See the service principal comparison. |
| Uses a human account or personal access token (PAT) for automation | Plan a migration to workload identity | Microsoft advises against using Entra user accounts as service accounts. For Azure DevOps, consider Entra tokens, service principals, managed identities, or federation as appropriate to the connection. See Azure DevOps service connection guidance. |
Compare hosting location and platform support, whether credentials need to be stored and rotated, tenant requirements, permission scope, identity lifecycle ownership, and migration effort. Microsoft’s guidance establishes these as relevant decision factors; it does not provide comparative cost figures.
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Understand what each identity means
Managed identity
A managed identity is an identity for an Azure workload whose credentials are managed by Azure. A system-assigned identity is attached to a particular service instance and follows that resource’s lifecycle. A user-assigned identity is a standalone Azure resource that can be assigned to supported resources. Choose between them according to how the workload and its identity should be owned and managed; they are not interchangeable lifecycle labels. Details and supported scenarios are in Microsoft’s managed identities overview.
Service principal
A service principal is the application’s identity in a tenant. It is commonly used when managed identity does not fit, including many workloads outside Azure and multi-tenant applications. Depending on the scenario, it can authenticate using a client secret, certificate, or federated identity credential. The application object and the service principal are related but distinct; Microsoft describes that distinction in its app objects and service principals documentation.
User account used as a service account
This is an ordinary user identity repurposed for scripts, services, or scheduled jobs. It can carry human-account risks and lifecycle dependencies, such as credentials or access continuing after the original purpose changes. Microsoft states: “We do not recommend user accounts as service accounts because they are less secure.” See Microsoft’s guidance on governing service accounts.
Do these 3 things before closing this tab:
1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsUse federation when a supported external workload needs secretless access
Workload identity federation lets an external workload use an identity provider’s token to obtain an access token from Microsoft identity platform. The workload presents its external token; Microsoft validates the configured trust relationship and issues an access token for resources the identity is authorized to reach. This avoids managing a stored application secret or certificate for that federated authentication path.
Microsoft documents federation scenarios for Kubernetes environments such as AKS, EKS, GKE, and on-premises clusters; GitHub Actions; Azure compute workloads using app identities; Google Cloud; AWS; other external compute platforms; SPIFFE/SPIRE; and Azure Pipelines. The setup differs by provider and environment, so support for one scenario does not establish identical behavior across all of them. See the federation documentation.
In the trust configuration, the issuer, subject, and audience must match the corresponding claims in the external token, including case. A mismatch can prevent token exchange. Follow the provider-specific setup instructions rather than copying values from another platform.
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Secure and operate the identity after choosing it
- Give it one clear purpose and an owner. Record the workload, accountable owner, permissions, risk, expected lifetime, and review cadence. Avoid identities shared across unrelated tasks.
- Limit access. Grant only what the workload needs. Microsoft recommends reducing scopes and checking whether a less powerful scope can satisfy the task.
- Protect service-principal credentials when they are required. Limit credential duration, plan reviews before expiration, and avoid credentials that never expire. Microsoft says certificates are more secure than client secrets because they cannot accidentally be embedded in code. Store credentials securely, such as in Azure Key Vault where appropriate. See Microsoft’s service-account governance guidance.
- Monitor activity and grants. Review sign-ins for unexpected or absent usage patterns, export logs to a SIEM where appropriate, and periodically check whether the identity’s purpose and permissions remain valid.
- Retire identities deliberately. Check recent activity and dependencies first. Revoke role assignments and consent grants, then delete the identity after the defined warning period. For a managed service identity, Microsoft’s deprovisioning guidance says to disable sign-in but not remove it from the directory. Follow the applicable steps in the governance documentation.
- Scope Azure DevOps connections narrowly. Grant service connections access only to the resources they need. Where suitable, use workload identity federation with an app registration or managed identity instead of an app registration secret. See Azure DevOps connection guidance.
A practical decision sequence
- Identify the workload’s host. If it runs in Azure, check whether the specific hosting service supports managed identity.
- Use managed identity when supported. Decide whether an identity tied to one resource or a separately managed user-assigned identity better fits the lifecycle.
- If managed identity does not fit, check federation support. For an external workload, confirm its identity provider and environment are supported and configure the matching trust claims.
- Use a service principal when needed. Select a suitable authentication method, constrain permissions, and set an owner and credential review plan.
- Replace human-account automation. Inventory what depends on the account or PAT, migrate the workload, validate access, then revoke obsolete credentials and grants.
- Review continuously. Monitor sign-ins, permissions, ownership, and dependencies so the identity remains appropriate for its purpose.
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