Category: Cloud Identity

Managed Identity

Also known as: Managed Identities for Azure Resources

Simply put

A managed identity is a cloud feature that gives an application, service, or compute resource its own automatically maintained identity, so it can authenticate to other services without a developer having to store and manage credentials. In Microsoft's Azure ecosystem, this identity is provided and maintained by the platform on behalf of the resource. It is designed to reduce the risk that comes from placing passwords or keys directly in code or configuration.

Formal definition

In the Azure ecosystem, a managed identity is a Microsoft Entra ID (formerly Azure Active Directory) feature that provisions an automatically managed identity for an Azure compute resource (such as a Virtual Machine or Virtual Machine Scale Set) or workload, enabling that resource to authenticate to services that support Entra ID-based authentication without embedding secrets in code or configuration. The evidence describes two variants: a system-assigned managed identity, which is created by and bound to the lifecycle of a specific resource and exists only while that resource exists, and a user-assigned managed identity (referenced by name in the evidence but with limited detail provided). This term addresses the authentication of the resource/workload; the separate authorization step, what the identity is permitted to access, depends on the roles or permissions granted to it and is out of scope for this definition. Note that this is an Azure/Entra-specific feature; equivalent workload-identity mechanisms in other cloud platforms are not covered by the evidence provided.

Why it matters

Embedding credentials, passwords, API keys, connection strings, directly in application code or configuration files is a persistent and well-understood source of risk. Secrets stored this way tend to leak into source control, log files, and backups, and rotating them across a fleet of resources is operationally painful. Managed identities address this by shifting the responsibility for provisioning and maintaining the resource's identity to the platform, so that a workload can authenticate to services that support Entra ID-based authentication without a developer ever handling a stored secret.

This matters most for the authentication step of an access flow: it establishes who the workload is to other services. It does not, on its own, determine what that workload may do. The authorization decision depends on the roles or permissions separately granted to the identity, and treating a managed identity as if it automatically confers appropriate access would be a mistake. In most deployments, applying least-privilege scoping to the roles assigned to a managed identity is as important as adopting the feature itself, since an over-permissioned identity remains a meaningful risk even without any stored credential to steal.

Because this is an Azure- and Entra-specific mechanism, teams operating across multiple clouds should not assume the same feature or semantics exist elsewhere; equivalent workload-identity mechanisms on other platforms differ in behavior and are out of scope here.

Who it's relevant to

Cloud and Application Developers

Developers building services that run in Azure can use managed identities to authenticate to other Entra ID-supported services without storing passwords or keys in code or configuration, reducing the risk of credential leakage through source control or logs.

Security Architects

Architects designing workload-identity strategies in Azure need to understand that managed identities handle the authentication of a resource but leave authorization to separately granted roles or permissions. Scoping those permissions to least privilege remains essential.

Cloud Platform and Infrastructure Engineers

Engineers provisioning Azure compute resources such as Virtual Machines and Virtual Machine Scale Sets should understand the lifecycle difference between system-assigned identities, which exist only while their resource exists, and user-assigned identities, when choosing how to attach identity to workloads.

Multi-Cloud and Migration Teams

Teams operating across more than one cloud should note that managed identities as described here are an Azure/Entra-specific feature. Equivalent workload-identity mechanisms on other platforms differ and are not covered by this definition.

Inside Managed Identity

Cloud-Managed Credential Lifecycle

A managed identity is an identity whose credentials are provisioned, rotated, and retired automatically by the cloud platform rather than by the workload owner. This removes the need to embed secrets in application code or configuration in most deployments.

System-Assigned vs. User-Assigned Variants

Managed identities typically come in two forms: one bound to the lifecycle of a single resource (system-assigned), which is created and deleted alongside that resource, and one created as a standalone object (user-assigned) that can be associated with multiple resources. The exact naming and behavior depend on the specific cloud provider.

Authorization Bindings

A managed identity is a principal that is granted access to resources through the platform's authorization model (for example, role assignments). The identity establishes who the workload is; the separate authorization grants determine what it may do. These are distinct steps and should not be conflated.

Token Acquisition Flow

Workloads use a managed identity to obtain access tokens from the platform's identity provider without handling long-lived secrets directly. The tokens obtained are used to authorize calls to downstream services and are subject to the provider's validation and expiration behavior.

Workload-Scoped Identity

Managed identities represent non-human (workload or service) principals rather than end users. They are a mechanism for machine-to-service authentication within a given cloud environment, and their scope is typically limited to resources reachable from that environment.

Common questions

Answers to the questions practitioners most commonly ask about Managed Identity.

Is a managed identity the same as a service account?

Not exactly. Both represent non-human principals, but the distinguishing characteristic of a managed identity is that the platform handles credential lifecycle for you, there are typically no secrets, keys, or passwords that you create, store, or rotate manually. A traditional service account often requires you to manage and rotate its credentials yourself. Behavior varies by platform, so verify how a given provider defines and scopes the term.

Does a managed identity handle both authentication and authorization?

No, keep these steps separate. A managed identity provides the workload an authenticated identity and, typically, a mechanism to obtain tokens without embedded credentials. It authenticates the principal (establishing who the workload is). What that identity is permitted to do is a separate authorization decision, generally governed by whatever access control model and policy the target resource enforces (for example RBAC or ABAC bindings). Being able to authenticate does not by itself grant any access.

How does a workload actually obtain a token using a managed identity?

In most deployments the workload requests a token from a platform-provided endpoint or SDK, and the platform attests to the workload's identity and returns a token without the workload holding any long-lived secret. The exact retrieval mechanism, endpoint, and token format depend on the provider and configuration, so consult the specific platform's documentation rather than assuming a universal flow.

What kind of token does a managed identity typically return, and should I treat it as opaque or self-contained?

This is provider- and configuration-dependent. Some platforms issue self-contained tokens (such as signed JWTs whose claims your service can validate), while others issue opaque tokens that must be validated against an introspection or validation endpoint. Note that a signed token is not necessarily encrypted, signing provides integrity and authenticity, not confidentiality. Confirm the token type and required validation steps for your specific platform before writing validation logic.

How should I scope permissions granted to a managed identity?

Treat authorization as a distinct governance and enforcement concern. Grant the minimum permissions the workload needs on each target resource, typically through that resource's access control bindings. Because the credential lifecycle is platform-managed, over-broad grants are the more common risk than credential leakage, so scope narrowly per resource and review these grants as part of your access certification and least-privilege processes. Specifics depend on the platform's authorization model.

How do managed identities fit into access reviews and governance?

Managed identities are non-human principals that should be included in your identity governance program. Even though the platform handles credential rotation, the access these identities hold still warrants periodic certification, segregation-of-duties evaluation where applicable, and lifecycle handling for identities tied to decommissioned workloads. Whether and how a given IGA tool discovers and reviews platform-managed identities depends on the tool and its integration coverage.

Common misconceptions

A managed identity handles both authenticating the workload and deciding what it can access.

A managed identity establishes the workload's identity so the platform can authenticate it. What the workload is permitted to do is determined separately by authorization grants such as role assignments. Provisioning the identity does not by itself confer any access.

Managed identities eliminate all credentials, so there is nothing to secure.

Managed identities remove the need for developers to store and rotate long-lived secrets, but the underlying tokens and the authorization grants attached to the identity still require careful scoping and governance. An over-privileged managed identity remains a significant risk.

A managed identity is portable and works the same across any cloud or environment.

Managed identities are a platform-specific construct whose behavior, variants, and token issuance depend on the cloud provider and configuration. They are typically scoped to resources within that provider's environment and are not a cross-provider standard.

Best practices

Prefer managed identities over embedded secrets or static credentials for workload-to-service access wherever the platform supports them, to avoid handling long-lived secrets in code or configuration.

Apply least privilege by scoping each managed identity's authorization grants narrowly to the specific resources and actions the workload requires, keeping the authorization decision separate from the identity itself.

Choose the identity variant deliberately: use a single-resource (system-assigned) identity when lifecycle should track one resource, and a standalone (user-assigned) identity when multiple resources must share the same principal.

Include managed identities in identity governance processes such as periodic access reviews and certification, since non-human principals can accumulate excess entitlements over time.

Clean up unused or orphaned managed identities and their authorization bindings, particularly standalone identities that may persist after the associated resources are removed.

Validate that downstream services enforce token expiration and expected authorization scopes, and confirm behavior against your specific cloud provider's documentation rather than assuming cross-provider consistency.