Discover Managed Identities as Federated Identity Credentials in Microsoft Entra

Microsoft is kicking off the year with a bang, unveiling a major feature in its security ecosystem that is bound to make software developers and IT administrators breathe a little easier. Say hello to Managed Identities as Federated Identity Credentials (FICs), now available as a Public Preview within Microsoft Entra. This innovation is all about strengthening security and reducing the hassle of managing sensitive app secrets or certificates while accessing Azure resources.
In this article, we’ll break down what this feature is, how it works, and why it’s a game-changer for Azure users, all while sprinkling in some insights to help WindowsForum enthusiasts understand its broader implications.

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What Are Federated Identity Credentials, and Why Should You Care?​

Traditionally, developers had to rely on client secrets or certificates when their applications needed to authenticate and access protected resources in Azure or Microsoft services like Graph API. While effective, this approach has always been fraught with challenges:
[]Security Risks: Secrets and certificates can be leaked, stolen, or lost, opening the door to unauthorized access. []Tedious Maintenance: Regular renewal of app secrets or certificates takes careful management to avoid unexpected disruptions.
Microsoft’s new feature flips the script by introducing Managed Identities as Federated Identity Credentials. This method uses tokens instead of secrets or certificates, leveraging Microsoft Entra (formerly Azure Active Directory) and other trusted identity providers to ensure secure, seamless authentication.
If you’re wondering—“How does that actually work?”—let’s dive in.

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How the Magic Happens: Workload Identity Federation Flow​

The spotlight here is on Workload Identity Federation, a security mechanism built on the OpenID Connect (OIDC) protocol. This is how it all comes together:
[]Managed Identity Tokens: Apps obtain tokens representing their managed identity from Microsoft Entra. []Trusted Identity Providers: Microsoft allows integrating tokens from trusted third-party providers like GitHub Actions, Kubernetes, or any other OIDC-compliant issuer.

• Token Exchange: The app exchanges its managed identity token for an access token to access Azure resources or services such as Microsoft Graph.

What’s great here is that Managed Identities remove the need to handle static credentials directly. The tokens are auditable, less prone to leaks, and tied to the app's lifecycle, tightening the authentication handshake.

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Step-by-Step: Setting Up Federated Identity Credentials​

Getting started with this feature is a straightforward process. Here's a brief walkthrough:
[]Assign a User-Assigned Managed Identity: Attach a user-assigned managed identity to the Azure resource that will host your application—for instance, a Virtual Machine or an Azure App Service. []Configure App Registration in the Azure Portal:
[]Navigate to your app registration under Certificates & Secrets. []Select the "Federated Credentials" tab and add a new credential. []Fill Out the Federated Credential Form:
[]Set the "Scenario" to Other. []Provide your tenant's OIDC issuer URL—something like

https://login.microsoftonline.com/{tenantId}/v2.0.

Use the Object ID of your managed identity as the subject.

• Authenticate Your Application: By finalizing this setup, your app can securely interact with Azure resources while trusting its associated managed identity.

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Beyond Basics: Scaling with Multi-Tenant Access​

Here’s where Microsoft raises the bar: this feature also supports multi-tenant configurations. For organizations handling cross-tenant operations—or developers creating apps that need to span multiple tenants—this is huge.
What does that mean in practice? You can enable other organizations (tenants) to use your application in their environments without sharing static credentials. For instance:
[]In Multi-Customer SaaS Offerings: Deploying your app across different Azure tenants becomes safer and easier. []Simplified Resource Sharing: Administrators in other tenants can provision your app with their own managed credentials.

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Why It Matters: Key Benefits for Windows and Azure Users​

Security Fortification​

The elimination of app secrets and certificates directly addresses one of the weakest links in traditional app authentication: human error. Forget about misplaced secrets or certificates exposed in public GitHub repositories! Managed Identities are dynamically generated and managed, ensuring a tighter lock on authentication.

Operational Simplicity​

For IT admins juggling numerous tenants and resources, configuring these credentials via Microsoft Entra or automating them with Bicep templates can streamline deployment at scale. Less credential hassle means more time to focus on building and managing applications.

Broader Compatibility​

Microsoft’s deliberate move to support identity federation with third-party providers like GitHub or Kubernetes signals its intention to grow Azure as a developer-first cloud. Whether you're deploying containers managed by Kubernetes or automating CI/CD pipelines with GitHub Actions, this feature is designed to "just work."

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How This Affects You: Real-World Use Cases​

1. Developers Hosting Apps in Azure​

If your application runs in Azure App Service or on Virtual Machines, managed identities can simplify API and service access securely.

2. Teams Running Multi-Tenant SaaS Platforms​

Cross-tenant complexities in SaaS deployments become manageable without risking credential exposure, making it easier to scale your deployments securely.

3. DevOps Engineers Automating Tasks in GitHub Actions​

Using GitHub Actions? With Federated Identity Credentials, you can securely authenticate deployments straight into Azure resources without juggling secret keys.

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Final Thoughts: A Step Toward a Passwordless Future?​

Federated Identity Credentials in Microsoft Entra are more than a temporary win—they’re a signal of where Microsoft is headed. As the industry moves toward passwordless authentication, this feature is a significant step toward simplifying secure access for enterprise and developer ecosystems alike. It’s safe to say this innovation will become an essential tool in managing secure interactions across Azure environments.
The Public Preview phase means now is the perfect time to give Federated Identity Credentials a whirl. Whether you're a developer, sysadmin, or automation enthusiast, this capability promises to add a layer of security while reducing the complexity that comes with managing traditional credentials.
WindowsForum readers—what do you think? Is this the authentication evolution you’ve been waiting for, or do you foresee challenges in implementation? Join the discussion in the forum!

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Summary of Key Benefits:​

[]No More Secrets or Certificates: Managed Identities eliminate the weakest links—static credentials. []Enhanced Security: Tokens are safer and easier to manage than traditional credentials. []Multi-Tenant Power: Cross-tenant features broaden app deployment potential. []Ease of Automation: Supported by Bicep templates for scaling deployments.
Stay tuned for updates on more Azure innovations and insights.

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Source: Cyber Security News Microsoft Pushes Identity Management Feature for Azure Via Entra