What is Federated Identity in Microsoft 365?

Federated Identity in Microsoft 365 allows users to authenticate with their organization's identity provider (IdP) instead of Azure AD. This enables single sign-on (SSO) and centralized authentication without requiring users to create separate credentials for Microsoft 365.

How Federated Identity Works

1. External Identity Provider (IdP):
   Core identity and access management.
2. Single Sign-On (SSO):
   Users sign in once with their corporate credentials and gain access to Microsoft 365 without re-entering credentials.
3. Security & Policy Enforcement: :
   Authentication policies (like MFA, device compliance) are enforced by the external IdP before granting access to Microsoft 365.

Key Benefits of Federated Identity

1. Seamless Authentication: Users access Microsoft 365 with their corporate credentials, reducing password fatigue.
2. Centralized Identity Management IT admins manage all user identities and security policies from a single directory.
3. Enhanced Security: Organizations can enforce advanced authentication methods before allowing access.

Common Use Cases

• Large Enterprises: Organizations using on-premises Active Directory but requiring seamless cloud access.
• Multi-Cloud Environments: Companies using multiple cloud platforms with a unified authentication system.
• Regulated Industries: Organizations needing strict security and compliance controls over authentication.

How to Configure Federated Identity

Federation is set up using Microsoft Entra ID Connect and PowerShell:

Set-MsolDomainAuthentication -DomainName "company.com" -FederationBrandName "Company IDP" -Authentication Federated

Best Practices

1. Monitor Authentication Logs: Use Azure AD Sign-in Logs to track federated authentication events.
2. Implement Failover Strategies: Ensure a backup authentication method is available in case the IdP goes down.
3. Use Conditional Access Policies Add extra security layers like MFA for federated users.

Federated Identity enhances authentication security, simplifies access, and enables seamless integration between Microsoft 365 and enterprise identity providers.

Explore More

• Setting Up Single Sign-On in Microsoft 365
• Using Set-MsolDomainAuthentication PowerShell cmdlet