Does Azure AD replace classic Active Directory?

In most cases, not entirely. They often work in parallel – local AD manages logins to the domain and servers, while Entra ID manages cloud applications. A full cloud setup is also possible for new or smaller companies.

Do I need an additional license for MFA?

Basic MFA is included in most Microsoft 365 subscriptions. For more advanced features, such as conditional access, you need Entra ID P1 or P2.

What happens when an employee leaves?

In Entra ID, their account is disabled or deleted – thereby losing access to the entire Microsoft and connected SaaS environment at once.

Is it suitable for small businesses?

Yes. For many small and medium-sized organizations, pure cloud Entra ID is simpler and cheaper than having their own server with Active Directory.

Microsoft 365 and cloud

Azure AD (Entra ID)

English term:Microsoft Entra ID

Short definition

Microsoft's cloud-based identity and access service that replaces or complements classic Active Directory.

What does it mean Azure AD (Entra ID)?

Azure AD (now Microsoft Entra ID) is Microsoft's cloud-based identity and access management service. It enables users to use single sign-on for Microsoft 365, Azure, and thousands of other applications, while providing administrators with centralized management of permissions, policies, and multi-factor authentication.

Why is this important for businesses?

For a company, it means fewer passwords, fewer forgotten logins, and more control over who can access data and from where. With Entra ID, you can clearly define who accesses email, SharePoint, or business applications, and quickly revoke access when an employee leaves. It is also the foundation for implementing MFA and conditional access policies.

Where does this appear in practice?

The most common example is logging into Microsoft 365 and Teams – Entra ID is always running in the background. It is used for single sign-on to SaaS applications (Salesforce, Atlassian, HR systems), for restricting access from abroad, for requiring MFA during risky logins, and for hybrid connection with classic Active Directory on an office server.

Most common problems or errors

The most common mistake is that companies leave Entra ID in its default configuration – without MFA, without conditional access, and with too many people holding administrative rights. Often, they also forget to disable the accounts of departing employees, which leaves a door open.

Kako pri tem pomaga VitalIT

At VitalIT, we help set up Entra ID so that it is aligned with your workflow: we enable MFA, prepare conditional access policies, connect local Active Directory with the cloud, and ensure that new employees are added to the system following a clear process, while old ones are removed in a timely manner.

Cloud and Microsoft 365 Cybersecurity

Related terms

Active Directory

Microsoft's system for centralized management of users, devices, permissions, and settings in a Windows environment.

Backup

A data backup that enables recovery in the event of loss, hardware failure, or cyberattack.

Bare-metal restore

The process of restoring an entire server or computer from a backup onto empty (or brand new) hardware.

BYOD

The practice where employees use their own devices (phone, laptop, tablet) for work instead of company-issued equipment.

Related Services

Cloud and Microsoft 365 Cybersecurity

Frequently asked questions

Does Azure AD replace classic Active Directory?: In most cases, not entirely. They often work in parallel – local AD manages logins to the domain and servers, while Entra ID manages cloud applications. A full cloud setup is also possible for new or smaller companies.
Do I need an additional license for MFA?: Basic MFA is included in most Microsoft 365 subscriptions. For more advanced features, such as conditional access, you need Entra ID P1 or P2.
What happens when an employee leaves?: In Entra ID, their account is disabled or deleted – thereby losing access to the entire Microsoft and connected SaaS environment at once.
Is it suitable for small businesses?: Yes. For many small and medium-sized organizations, pure cloud Entra ID is simpler and cheaper than having their own server with Active Directory.