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How Hybrid Identity with Azure Active Directory (AD) Works (Explained). First of all, Hybrid Identity is essential when an on prem Active Directory needs to be extended to the Azure Active Directory environment. Organizations implement this to modernize their existing IT infrastructure. This helps in management and employees’ demand to access sensitive organizational data.

Please note that to implement Hybrid Identity with Azure AD, you must have Azure AD Connect.

Shall we start with How Hybrid Identity with Azure Active Directory (AD) Works (Explained)?

What Is Azure AD?

Primarily, Azure Active Directory is Microsoft’s identity management service. A cloud based multi tenant directory. Once implemented in your organization, Azure AD makes it convenient for your employees to sign up for various MS services from anywhere by entering their credentials to log in securely.

It consists of the following audiences:

  • App developers easy availability of various cloud based services helps them personalize client experience as well as helps them in app management by assisting in the creation, configuration, and monitoring of the applications.
  • IT admins ensures a safe login experience for their employees with secure sign in methods such as multi factor authentication, single sign in, etc. This helps in securing organizational data from cyber attacks.
  • Online customers comprises the B2C services dealing in CRM services, Office 365 services, etc. seeking assistance with customer access management.

What Is Azure AD Connect?

Altogether, Azure AD Connect is a tool that connects the infrastructure of on prem identity data to the Azure Active Directory environment.

All in all, this solution synchronizes the services (health monitoring and federation integration) between Active Directory and Azure Active Directory.

How Hybrid Identity is achieved with Azure AD?

The identity solutions by Microsoft cover on prem and cloud based services. While using these services, a user might need to log in from a different location which requires a secure login. These solutions help in creating a common user identity for secure login via various authentication and authorization methods for signing in to multiple resources —  Hybrid Identity.

To set up and implement Hybrid Identity with the AAD, you need to install the Azure Active Directory Connect with either express settings or custom settings.

Benefits Of Hybrid Identity With Azure AD

  • Improves the productivity factor as well as a secure single sign on and easy automation by allowing users to connect with the apps remotely.


  • By synchronizing the directories, it simplifies the authentication process for various resources.


  • Reduces the IT helpdesk overload by creating methods such as SSPR (Self Service Password Reset for both data center and cloud based directories) to encourage user identity management without any support. Alongside this, it alerts the admin in case of abuse or misuse of the user account.


  • Ensures data protection within organizations with auditing and alerts related to security helping users be informed about: whether the services they are paying for are actually being used by them; if there is any malicious activity in the tenant account. Also, in case there was a security breach.


  • Acts as a unified solution for the identity management of your entire workforce.


  • User access interruptions are reduced to a great extent, since it allows the user to monitor the connection’s health.


  • Protects organizations from any inappropriate activities by letting them have transparency and complete command over security.

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How Hybrid Identity with Azure Active Directory (AD) Works

Please consider the following key points before you implement Azure AD in your organizational space:

  • The licensing offered includes a monthly subscription to Microsoft Office 365 licenses.


  • The cloud apps and services have to be configured to set up Hybrid cloud and Azure SSO enablement.


  • Identify your scenario and requirement well before installing AAD. If you have Windows AD, Hybrid is advisable (followed by Federation configuration) while Azure AD goes best with the cloud based infrastructure.


  • User provisioning are improved by encouraging self enrolment.

Deployment Of Hybrid Identity With Azure AD

The three methods used to deploy Hybrid Identity with Azure AD are:

Password Hash Synchronization (PHS)

Basically, Password Hash Synchronization integrates (whenever on prem password is changed or reset) a hash of the user’s on prem password with the cloud based AAD. It is a default feature and ensures a smooth end user experience.

Moreover, password(s) synchronization helps reduce the IT helpdesk tasks which would otherwise increase to tackle the password reset or forgotten password issues of the users. In this case, users have to remember only one password for on prem and cloud based environments, hence reducing the forgotten password or authentication related issues.

Prerequisite: To use this deployment method, you need to install Azure AD Connect to be able to perform ongoing directory synchronization.

How Does PSH Method Work?
  • On prem AD stores the actual user passwords in hash value representation.
  • The Hash is then synchronized with the Azure Active Directory authentication service. The synchronized passwords are aligned chronologically and are on a per user basis.


  • The data flow in the PSH process mimics the user data synchronization process. The pace of password synchronization depends on how frequently the passwords are changed.


  • The PSH runs every 2 minutes a default function and cannot be changed.


  • Since you cannot define the subset of user passwords, therefore, once enabled for the first time, the PSH performs the initial synchronization for all the users which are within the scope.


  • In case of an on prem password reset, the password synchronization gets done within a few minutes.


  • Password synchronization doesn’t affect a user if the account is signed in already. The user is required to use the new password only when signing in again.

Pass Through Authentication

Besides, it is an AAD service that allows a user to sign in to both on premise as well as cloud based applications by using the same password. PTA comes in the form of an agent (active on one or more on prem joined servers) who connects to AAD (outbound). This service is used mainly when on prem validation or authentication of a user is required.

Certainly, it helps to impose the AAD Password Policies and Security Policies on the users owing to its influence over the on premise AD. This helps the users to access the resources within their organization without entering the password again and again.

Prerequisite: Requires a lightweight agent installed on the premise.

How Does Pass Through Authentication Work?
  • Enter your credentials to sign in to your Azure AD account.


  • Once you hit the ‘sign in button’, Azure AD places the encrypted username and password in the queue.


  • Once received on prem, the authentication agent decrypts the retrieved username and password by using a private key.


  • The agent uses the standard Windows APIs to validate the username and password against AD.


  • The controller of on prem AD then considers the request and sends an appropriate response to the on prem agent. The possible responses are — password expired, sign in success, sign in failure, or user locked out.


  • One of the above responses is then sent back to the Azure AD.

Federation (AD FS)

Concurrently, Federation is a software component (single sign on solution) that includes authentication and authorization. It comprises of several organizations that share a mutual trust regarding resource sharing.

How Does Federation Work?
  • All user authentication in this process is performed on prem.
  • The admins in this process maintain a more rigorous and stringent process to exercise account access control
  • The Federation is availed with both ADFS (Active Directory Federation Service) as well as PingFederate.

Note: Your organization can use Password Hash Synchronization as a backup procedure in case of the failure of ADFS infrastructure.

How Hybrid Identity With Azure AD Is Managed?

Once you implement hybrid identity with AAD, the object and attributes automatically get synchronized from Active Directory to Azure Active Directory. The management is a bit tricky, but provided the appropriate methods are used, it is managed well.

Hybrid Identity Management Ways

  • Make sure that your Azure AD is updated. The components of AAD get updated every six months. Contrary to this, according to the usual corporate practice, organizations implement IT resources for business development and growth and renew them every 4-5 years. Azure ADs’ frequent updates require frequent integrations as well while assuring that the Azure AD is in sync with these changes and within the support boundaries laid down by Microsoft.


  • Be aware and well informed regarding the single point failures of your identity. This would help in mitigating the risk factors timely.


  • It is wise to adopt the MFA (Multi Factor Authentication) for secure logins with user credentials to ensure organizational data security. You migrate your MFA server easily to Azure MFA by using the built in Azure MFA Adapter.

How Hybrid Identity with Azure Active Directory (AD) Works (Conclusion)

Finally, according to IBM Report, the data breaches now cost the companies about $4.24 million per incident. Hybrid Identity is essential in helping these organizations implement a flexible and comprehensive identity management system ensuring secure data access by the users.

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Anmol Nigam

Anmol Nigam

I write bespoke content for SaaS entrepreneurs and brands to help them scale organically.

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