Managing licenses in Microsoft Entra ID (formerly Azure Active Directory) is a vital component of identity governance, controlling access to paid features such as Conditional Access, Privileged Identity Management (PIM), and Microsoft 365 services. For an Azure Administrator, the goal is to ensure …Managing licenses in Microsoft Entra ID (formerly Azure Active Directory) is a vital component of identity governance, controlling access to paid features such as Conditional Access, Privileged Identity Management (PIM), and Microsoft 365 services. For an Azure Administrator, the goal is to ensure efficient distribution of these resources while minimizing administrative overhead.
The most scalable method for handling this is group-based licensing. Unlike direct assignment, where an admin manually applies a license to an individual user, group-based licensing assigns specific subscriptions to a security group. When a user joins the group, they automatically inherit the licenses; when they leave, the licenses are revoked. This capability integrates powerfully with dynamic groups, allowing licenses to be provisioned automatically based on user attributes like Department or Country, ensuring a 'zero-touch' lifecycle workflow.
Administrators must also handle conflicting license variations and service dependencies. For instance, if a user inherits a standard license from one group and a premium license from another, the additive nature of Entra ID ensures they receive the capabilities of both. However, admins must define the 'Usage Location' for users before assignment, as this is a compliance requirement for most Microsoft services.
Monitoring usage is equally important. Entra ID provides dashboards to view the number of available versus assigned seats, helping organizations avoid payment for unused subscriptions. Administrative privileges are required to configure these settings; typically, the License Administrator role is delegated to handle these tasks to adhere to the Principle of Least Privilege, separating financial and licensing duties from general user management.
Manage Licenses in Microsoft Entra ID
Introduction Managing licenses in Microsoft Entra ID (formerly Azure Active Directory) is a fundamental administrative task found within the AZ-104 exam. It involves assigning access rights to Microsoft cloud services (like Microsoft 365, Dynamics 365, and Azure AD Premium features) to individual users or groups.
Why is it important? Proper license management is critical for three reasons: 1. Compliance: Ensuring the organization is not using more seats than purchased. 2. Feature Access: Many advanced security features (like Conditional Access, PIM, and Identity Protection) require specific licenses (Entra ID P1 or P2) to be active on the user accounts. 3. Automation: Utilizing group-based licensing reduces administrative overhead by automating assignments based on group membership.
What is it? At its core, managing licenses is the process of mapping a purchased subscription (Product SKU) to a user object. A license specifies not just the high-level product (e.g., Microsoft 365 E5) but also the specific Service Plans enabled within that product (e.g., Exchange Online, Microsoft Teams).
How it works The licensing engine operates on a few specific rules that are valid for the exam:
1. Usage Location Before a license can be assigned to a user, the Usage Location property must be set on the user object. This is required because legal availability of services varies by country. If this is missing, the assignment will fail.
2. Assignment Methods Direct Assignment: You manually apply a license to a specific user object. Group-Based Licensing: You assign a license to a group. All members of that group inherit the license. If a user joins the group, they get the license; if they leave, the license is removed.
3. License State & Conflicts Entra ID attempts to assign all service plans within a license. If a user already has a specific service (e.g., Exchange Online) via a different license, Entra ID detects the conflict. Administrators can selectively disable specific service plans within a license assignment to resolve this.
4. Reprocessing When group-based licensing fails (e.g., due to missing Usage Location), the status enters an error state. Once the user configuration is fixed, the group must be "reprocessed" to retry the assignment.
How to answer questions regarding Manage licenses When facing exam scenarios, adopt the following troubleshooting flowchart: 1. Check Usage Location: If a scenario states a license assignment failed, look immediately for the user's location property. 2. Check Availability: Ensure there are available seats in the subscription pool. 3. Analyze Group Logic: If using group-based licensing, determine if the user is actually a member of the group and if the group has valid licenses assigned. Note that nested groups are not supported for license assignment inheritance (unless explicitly stated otherwise in recent updates, generally for AZ-104, assume direct group membership is required).
Exam Tips: Answering Questions on Manage licenses in Microsoft Entra ID
Tip 1: The "Usage Location" Trap This is the most common "gotcha" question. If a question asks why you cannot assign a license to a newly created user, the answer is almost always: "You must configure the Usage Location property for the user."
Tip 2: Direct vs. Inherited Understand the source of a license. A user can have a license assigned Directly and Inherited (via Group) simultaneously. If the user is removed from the group, they lose the inherited license but keep the direct one. Licenses are additive.
Tip 3: P1 vs. P2 Features While this falls under governance, remember that you cannot configure Privileged Identity Management (PIM) without an Azure AD Premium P2 license (now Entra ID P2). Dynamic Groups require at least P1.
Tip 4: Group Deletion If you delete a security group that handles licensing, all users in that group immediately lose the licenses associated with that group. Their data (like mailboxes) enters a grace period (usually 30 days) before permanent deletion.