If you run Microsoft infrastructure, you’re almost certainly running Active Directory (AD). But as organizations move to Microsoft 365 and Azure, a second identity system — Entra ID (formerly Azure Active Directory) — has entered the picture. Many IT Managers are now asking: should we keep AD, move to Entra ID, or run both?

This article gives you a clear, honest comparison to help you make the right decision for your organization.

What Is Active Directory?

Active Directory Domain Services (AD DS) is Microsoft’s on-premises identity platform — the system that manages users, computers, Group Policy, and authentication within your network. It’s been the backbone of enterprise IT since Windows 2000 and remains deeply embedded in most organizations.

AD is designed for a world where users sit inside a physical network and access resources on-premises. It uses Kerberos and LDAP protocols and manages objects through Organizational Units (OUs) and Group Policy Objects (GPOs).

What Is Entra ID?

Entra ID (formerly Azure Active Directory) is Microsoft’s cloud-based identity platform. It manages identities for cloud and SaaS applications — Microsoft 365, Azure, Salesforce, ServiceNow, and thousands of other apps via SAML, OAuth, and OpenID Connect.

Entra ID is built for a cloud-first world where users access applications from anywhere, on any device. It doesn’t manage Group Policy or domain-join computers in the traditional sense — those functions are handled differently in the cloud model.

Key distinction: Active Directory manages on-premises resources. Entra ID manages cloud and SaaS identities. They solve related but different problems.

Head-to-Head Comparison

  • Protocol: AD uses Kerberos/LDAP — Entra ID uses OAuth 2.0/SAML/OpenID Connect
  • Device management: AD uses Group Policy — Entra ID uses Intune (MDM/MAM)
  • Authentication: AD requires network connectivity — Entra ID works from anywhere
  • MFA support: AD has limited native MFA — Entra ID has built-in, modern MFA
  • Application SSO: AD supports legacy apps — Entra ID supports 3,000+ cloud apps
  • Maintenance: AD requires patching, DC management — Entra ID is fully managed by Microsoft

The Three Scenarios

Scenario 1: Keep AD Only

This makes sense if your organization has no cloud workloads, no Microsoft 365, and no plans to move to the cloud. In reality, this is increasingly rare — if you are running M365, you already have Entra ID whether you know it or not.

Scenario 2: Hybrid Identity (AD + Entra ID)

This is the most common scenario for established organizations. You keep your on-premises AD for managing domain-joined computers, Group Policy, and legacy applications — while using Entra ID for cloud app access, MFA, and Conditional Access. The two are connected via Microsoft Entra Connect, which synchronizes users and passwords between them.

Hybrid identity gives you the best of both worlds during a transition period. It’s the right choice for organizations with significant on-premises infrastructure who are gradually moving to the cloud.

Scenario 3: Cloud-Only (Entra ID only)

For new organizations or those that have fully migrated to the cloud, Entra ID alone is a viable identity foundation. Devices are Entra ID-joined (not domain-joined), managed through Intune, and all applications are cloud-based. This is the cleanest architecture but requires fully abandoning on-premises dependencies.

Which Should You Choose?

For most established organizations in the region: hybrid identity is the right answer today. It allows you to maintain your existing AD infrastructure while benefiting from Entra ID’s modern security features (MFA, Conditional Access, PIM) immediately.

The long-term direction for most organizations is cloud-first — but the transition takes time, and a well-designed hybrid architecture manages that journey safely.

PDI’s approach: We start with an Active Directory Assessment to understand your current state, then design the right hybrid or cloud identity architecture for your organization’s specific roadmap.