Azure Service Principal vs. Managed Identity: What’s the Difference?

Service Principal and Managed Identity are both tools for Azure identity management. However, their ideal usage differs. Service Principal is great for apps that need specific access and control. Whereas Managed Identity is good when you want Azure to handle the login details automatically. If you’re trying to decide which to use, this article is here to help you compare Azure Service Principal vs. Managed Identity.

“Robust identity and access management in Azure is the cornerstone of cloud security, protecting your data starts with controlling who can access it.” – Jacob Saunders, Executive Vice President of Professional Services, Atmosera


Azure Service Principal: Pros & Cons


Full Control

Azure Service Principal grants you total control over your resources. You can customize and manage to meet your unique needs as you see fit.



Azure Service Principal offers the ability to adapt and change according to your evolving requirements. You can scale up or down, switch services, or alter configurations as needed.



Azure Service Principal allows for automation and scripting of tasks. You can program your resources to perform certain actions at specified times, reducing manual effort and increasing efficiency.



Security Risks

Because you’re responsible for securing your resources, you need to stay on top of the latest security threats and implement appropriate measures. This can be challenging and lead to risks if mismanaged.


No Automatic Rotation

Without automatic rotation, you have to manually update and change your resources. This can be a tedious task and can lead to security vulnerabilities if not done regularly.



Azure Service Principal is reliant on Azure. Any issues or downtime on Azure’s end can directly impact your operations.


Azure Managed Identity: Pros & Cons


Automatic Management

Azure Managed Identity takes care of the management for you. It automatically handles tasks such as credential rotation and secure delivery, reducing the burden on your team.



Automatic management comes with the added benefit of increased security. There’s much less of a chance of someone missing something or accidentally creating a vulnerability.


Scoped to Resources

Managed Identity can be tied to specific Azure resources. This means you can control access on a per-resource basis, which enhances security and organization.



Limited Scope

Being tied to Azure is a double-edged sword. On one hand, it makes Managed Identity ideal for Azure users. On the other, it can’t be used for anything but Azure resources.


Less Control

While Azure Managed Identity simplifies management, it also means you have less control over your resources. You are limited to the features and configurations that Azure provides.


Limited Support

Azure Managed Identity may not be compatible with all applications or services. This can limit your options and potentially require additional solutions for unsupported resources.


Managed Identity vs. Service Principal: Overview of Key Differences*

Managed Identity Service Principal
Creation Automatically created and managed by Azure. Must be manually created and managed by the user.
Lifecycle Tied to the lifecycle of the resource it’s assigned to. When the resource is deleted, the identity is also deleted. Independent of any resource and must be manually deleted.
Permissions Permissions are directly assigned to the resource. Permissions are assigned to the service principal, which can be used across multiple resources.
Rotation of Secrets No need to manage secrets as Azure takes care of it. User is responsible for managing and rotating secrets.
Usage Can only be used within the Azure environment. Can be used both within and outside of Azure.
Scope Limited to the resource it’s assigned to. Can be used across multiple resources and services.

*Please note that some key differences may vary based on configuration.


How to Transition From an Azure Service Principal to an Azure Managed Identity

Azure Managed Identity is a more modern and secure solution compared to Service Principal. As such, many organizations are looking to transition from Service Principal to Managed Identity. If you’re one of them, here are the steps you need to take.

These steps are for individual Service Principals, repeat for every one you want to transition.


1. Evaluate Your Current Setup

Begin by assessing your current Azure Service Principal setup. Understand the roles, permissions, and resources it has access to. This will help you determine the equivalent Managed Identity permissions needed.


2. Create a Managed Identity

Navigate to the Azure portal and create a new Managed Identity. You can choose between 2 identity types, System Assigned Managed Identity or User Assigned Managed Identity, based on your requirements. If you’re not sure which you need, consider the following.

  • System Assigned Managed Identity is best when you want the identity to be tied to a single resource and don’t need it to exist independently
  • User Assigned Managed Identity is best when you need an identity that can be used for multiple Azure resources

3. Assign Roles and Permissions

Once your Managed Identity is created, assign it the necessary roles and permissions. Ensure these match the ones previously held by the Service Principal.


4. Update Your Applications

Modify your applications to use your new Managed Identity instead of the old Service Principal. This will likely involve updating your application’s code and configuration settings.


5. Test

Conduct thorough testing to ensure your applications function correctly with the new Managed Identity. This should include testing all functionalities that require Azure resources.


6. Monitor Performance

After everything is set up, monitor your applications for any performance issues or unexpected behavior. You can use Azure Monitor and Log Analytics for this purpose.


7. Decommission Service Principal

Once you’re confident that your Managed Identity is working as expected, you can decommission the old Service Principal. Don’t forget to revoke all permissions and delete it from the Azure portal.

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Learn How to Leverage Identity and Access Management Like an Azure Pro

Azure Service Principal and Managed Identity both have their strengths. Your choice depends on your needs. Although many people are transitioning to Managed Identity, it’s perfectly fine if you would rather stick with Service Principal.

If you think you’ll still need some help with security & identity management, Atmosera can lend a hand. We can guide you on how to use these tools effectively – whether you’re thinking of switching or just want to improve your current setup. We can also take over any tedious manual management tasks that you want off your plate.

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