Can I Replace Active Directory with Azure AD? No, Here’s Why.

Written by David Worthington on May 29, 2023

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It’s very common for IT professionals to ask, “Can I replace Microsoft Active Directory with Azure Active Directory?” That’s especially true when the bulk of modern IT environments reside in or are migrating to the cloud. Microsoft even offers incentives to move your core directory to its services. Its path to the cloud can be unwieldy and expensive: small and medium-sized enterprises (SMEs) can be confronted with complex licensing and difficult implementations.

Microsoft’s Azure Active Directory (AAD) is a cloud directory that underpins Microsoft 365 (M365) subscription services. It’s reasonable to assume that it would have all the capabilities of Active Directory® (AD), as the name implies, but the truth is more complicated than that. AAD is a separate platform that can lock customers into a new Microsoft ecosystem. This limits optionality, even though many non-Microsoft resources can be managed by M365 services. 

This article outlines how AD and AAD differ and what options SMEs have for modernization as they make the transition away from AD as their core directory. For instance, Google and JumpCloud have joined together to offer an alternative solution. Many organizations find themselves at this inflection point and may not realize that Microsoft doesn’t have to remain central to identity and device management. In essence, migrating to AAD is similar to adopting another platform than AD. It just happens to be Microsoft’s path to retain AD customers.

Let’s begin by examining what AAD is and why it’s not a direct replacement for AD.

What Is Azure AD Used For?

Azure AD was created to extend Microsoft’s presence into the cloud. It connects Active Directory users with Microsoft Azure services, and is easier to implement than Active Directory Federation Services (AD FS) for single sign-on (SSO). AAD doesn’t incorporate the full features of Active Directory and lacks support for authentication protocols including LDAP and RADIUS without an additional subscription. Familiar concepts such as GPOs are replaced by Intune and Microsoft Endpoint Manager. Even organizational units are replaced by another model called administrative units, which works very differently from AD. Assembling equivalent capabilities to AD DS and NPS server roles requires purchasing the right SKU or separate Azure services from AAD. AAD doesn’t manage your devices and it lacks interoperability with those protocols.

One benefit to AAD is that it can manage non-Microsoft identities, but there are additional fees for multi-factor authentication (MFA) for monthly active users. Guest users are priced on a 1:5 licensing basis. Licensing is complicated and a gated licensing model keeps useful features behind a paywall. For example, group management with role-based access control (RBAC) isn’t included with the free tier of AAD, but it’s usually required to implement the Azure platform. The significance of that is explored in greater detail below the fold where federation is discussed.

A Microsoft-Centric Model

AAD is the cornerstone of Microsoft’s portfolio of identity, compliance, device management, and security products, because it provides a common identity for Azure, Intune, M365, and more. The permutations of products and challenges of migrating from Active Directory to the cloud have given rise to a cottage industry of consultants for implementation and planning. The breadth of configurations and options may be fitting for enterprises that have considerable resources to support deployments. Considering that it’s not even possible to abide by Microsoft’s best practices for AAD without subscribing to Premium tiers, AAD may be a mismatch for small and medium-sized enterprises that have foundational needs.

Unlike AD, there is no single AAD platform. It’s broken up into tiers, and services are behind paywalls. Costs increase when SMEs are pulled deeper into the Azure platform and require interoperability with directories that fall outside of the Microsoft ecosystem. For example, fees are assessed to federate using AAD using non-Microsoft identities. SMEs must pay more for the appropriate number of Azure AD Premium P2 licenses for entitlement management. B2B collaboration is also intended to serve as a gateway to apps that are provided by Microsoft or hosted in Azure, positioning its products and services as its first-class citizens.

B2B Collaboration
Image credit: Microsoft

Can You Replace Active Directory With Azure AD?

The short answer may be no, depending on your subscription level and whether requirements obligate you to select a hybrid deployment between AD and AAD. Again, AAD is not a replacement for Active Directory. AAD was originally intended to connect users with Microsoft 365 services, providing a simpler alternative to AD FS for SSO. As noted above, it evolved into a springboard to new subscription services that target enterprise customers and charge for capabilities that on-prem AD provided at no additional cost.


Securely connect to any resource using Google Workspace and JumpCloud.

Why Azure AD Can’t Replace AD Outright

Azure AD and AD require 3rd party tools

The on-prem directory binds a Microsoft network together. Microsoft would open up the door to potential customer loss by providing a way for customers to start over from scratch with a cloud directory. Instead, it directs SMBs to cloud services that broaden the breadth and depth of its existing product families and upsell established customers. However, many Azure services are intended to service enterprise customers and can be difficult to deploy and learn. 

Think of Azure AD as a user management platform for the Azure cloud platform, along with basic web application SSO capabilities. AAD falls short by failing to manage on-prem systems, non-Windows endpoints, or accessing network resources without being integrated with a domain controller or add-on services. It’s not a complete solution like AD was intended to be.

For example, endpoints can’t be managed without also subscribing to Microsoft Intune. Cross-platform endpoint management requires the most expensive Intune plan, and, at present, provides limited support for Linux. It’s possible to utilize Intune for a domainless enterprise, though many organizations are still compelled to have a hybrid environment for full compatibility with AD or AD FS. Microsoft’s reference architecture prescribes both AD and AAD in an environment.

Microsoft’s reference architecture
Image Credit: Microsoft

JumpCloud: Extend or Replace Azure Active Directory 

JumpCloud realizes that every organization has a different path to the cloud. Microsoft shops that adopt JumpCloud benefit from SSO, simplified Zero Trust security, and cross-OS system management, and can adopt features on a workflow basis (not only the entire platform). Organizations that don’t require on-prem systems and can go further and adopt a domainless architecture, saving on infrastructure, management, and rising CAL licensing costs.

JumpCloud enables admins to have seamless management of users with efficient control over systems (Mac, Windows, and Linux), wired or Wi-Fi networks (via RADIUS), virtual and physical storage (Samba, NAS, Box), cloud and on-prem applications (through SAML, OIDC, RESTful APIs, and LDAP), and more. Automated group memberships pull relevant user attributes from other IdPs or human resources systems, simplifying identity lifecycle management. Environment-wide push/TOTP MFA is available for each protocol and for every resource.

JumpCloud can also seamlessly integrate with AAD, Google Workspace, or Okta to create one core identity provider for an organization. JumpCloud’s open directory platform is interoperable and frees its users to adopt the IT stack of their choosing from best-of-breed services.

System Management

Identities are assigned to devices without additional subscriptions. JumpCloud provides mobile Enterprise Mobility Management (EMM) for Android, device management (MDM) for iOS/iPadOS, as well as endpoint management for Linux and Windows. Zero-touch onboarding is available for Apple devices. Admins deploy GPO-like policies such as full disk encryption

The CLI of each OS is accessible, at root, to deploy custom commands and policies that fall outside of JumpCloud’s point-and-click catalog of policy templates. The agents collect system telemetry and make it possible for admins to provide users with unlimited remote assistance.

The platform services IT management and security needs with security add-ons, including:

JumpCloud and Google

Google provides optionality to SMEs to select the directory that works best for them. JumpCloud and Google partnered to bring access control, identity, and device management to organizations that use Workspace or are seeking an alternative to M365. JumpCloud includes a free, pre-built cloud directory sync that makes it possible for admins to automate lifecycle and provisioning for Workspace users. 

Unifying identity and device management will enable your organization to reduce costs, improve operational efficiencies, strengthen cybersecurity, support workplace and digital transformation, and reduce the pressure on IT admins and security teams.

Try JumpCloud for Free

JumpCloud helps SMEs to improve security, save on licensing, reduce headcount, and save time and effort by unifying identities and devices using a single platform that functions as a secure gateway to resources. Want to learn more about how you can replace Active Directory with JumpCloud? It’s as simple as signing up for a trial of JumpCloud.

David Worthington

I'm the JumpCloud Champion for Product, Security. JumpCloud and Microsoft certified, security analyst, a one-time tech journalist, and former IT director.

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