To design governance in Azure, you first map your organization's structure into a logical hierarchy. You analyze departments, projects, and environments (like production or development) to decide how they fit into management groups and subscriptions. Management groups act as containers above subscriptions, allowing you to apply policies and permissions across many subscriptions at once. Subscriptions are the fundamental units for billing and resource limits. Inside subscriptions, you use resource groups to isolate specific workloads and provide a scope for applying policies.
A hierarchical taxonomy diagram showing the flow of Azure governance from the root management group down through child management groups, subscriptions, and resource groups, with inherited policies and resource tagging applied at each level.
A well-planned management group hierarchy is crucial for efficient management. You place a root management group at the top, with child groups reflecting your organizational structure. Role definitions assigned at a parent management group apply to all its child subscriptions and groups. Moving a subscription can break these role assignments if the new parent isn't in the role's assignable scope. To move a subscription or management group, you need management group write permissions on both the source and target parent groups, plus role assignment write permissions on the child being moved.
Within a subscription, you create resource groups to logically group resources that share a common lifecycle, like all components of a single application. This grouping aids in deployment, deletion, and policy management. Resource groups also serve as a key scope for applying Azure Policy, allowing you to enforce rules on a specific set of resources. The design goal is to balance isolation needs with management overhead, ensuring policies are applied at the correct level for governance.
Resource tagging involves applying key-value pairs to resources, groups, and subscriptions to organize and manage them. A consistent tagging taxonomy is vital for automated cost allocation, governance enforcement, and tracking resources. Common tags include "CostCenter" for billing, "Environment" (e.g., Prod, Dev), and "ApplicationOwner." Tags should be applied when resources are first created and enforced through policy to ensure compliance. This strategy enables operations like reporting costs by department or automatically shutting down development resources on weekends.
There are important technical limits to consider. When creating custom roles, only one management group can be defined in the role's assignable scopes initially. Furthermore, custom roles that include DataActions (permissions for data operations) cannot be assigned at the management group scope at all. When restructuring your hierarchy, you must proactively manage permissions to avoid broken role assignments, which can disrupt access. Solutions include removing the assignment before a move, adding the new target to the role's scope, or updating the scope to the root management group.
Azure provides tools to audit your management structure. All events, such as role assignments or policy changes within management groups, are recorded in activity logs. You can query these logs in Azure Monitor to track governance actions. For ongoing monitoring, you can configure diagnostic settings to send these log entries to a Log Analytics workspace, Azure Storage, or Azure Event Hubs. This auditing capability is essential for maintaining transparency, proving compliance, and troubleshooting permission or policy issues across your organized hierarchy.
Azure Policy is a service that helps organizations enforce standards and check compliance across their Azure resources. It lets administrators create rules that resources must follow, such as requiring encryption or restricting where certain types of resources can be created. When resources are deployed, Azure Policy evaluates them against the defined rules and reports whether they comply. This evaluation happens automatically, so teams can see compliance status without manual checking.
Azure Policy includes both built-in and custom policy definitions. Built-in policies are pre-made by Microsoft and address common needs like requiring HTTPS for web apps or enforcing tags on resources. Custom policies are created by organizations to meet specific requirements that built-in policies do not cover. Policies can control access management by ensuring only authorized identities can deploy resources, enforce specific configurations like requiring certain VM sizes, and implement security measures such as blocking public IP addresses on storage accounts.
Policy initiatives group related policies together to address broader compliance goals. Instead of assigning many individual policies, administrators can assign one initiative that contains multiple policies working toward a common objective. For example, an initiative for regulatory compliance might include policies for encryption, logging, and access controls all at once. Initiatives can be applied at subscription level, resource group level, or across multiple management groups for organization-wide governance. Common built-in initiatives include the CIS Microsoft Azure Foundations Benchmark and FedRAMP High, which provide pre-defined sets of controls for specific regulatory frameworks.
When a policy or initiative is assigned to a scope, it begins enforcing rules for all resources within that scope. Administrators can set parameters when assigning policies to customize how they apply without changing the policy definition itself. For instance, a policy that requires tagging could have a parameter specifying which tag name is required. Scopes work in a hierarchy: management groups contain subscriptions, subscriptions contain resource groups, and resource groups contain resources. Policies assigned at a higher scope apply to everything beneath it, though lower assignments can create exceptions for specific needs.
Azure Policy collects compliance data from all assigned policies and shows the overall compliance state through the Azure Portal, CLI, or Azure Resource Graph. The compliance dashboard displays which resources pass and which fail, along with the specific policy each resource violates. When resources are non-compliant, administrators can configure remediation tasks to fix the issue. Remediation can be automatic, where Azure Policy deploys the required configuration, or manual, where administrators receive alerts and make changes themselves. Azure Monitor Logs can be used to create alerts when compliance issues arise, enabling proactive management.
Implementing Azure Policy initiatives provides continuous compliance by automatically evaluating resources as they are deployed and on a schedule afterward. This prevents "configuration drift," where resources slowly diverge from standards over time. The system also generates audit-ready documentation that shows exactly what controls are in place and which resources meet them. Organizations save time by automating enforcement rather than relying on manual reviews, and they can scale governance consistently as their Azure environment grows.
Azure AD Entitlement Management is the core service used to govern identity and access at scale within an enterprise. It groups resources—such as groups, applications, and SharePoint sites—into containers called catalogs. Inside these catalogs, administrators define access packages, which bundle the specific resources and roles a user needs to perform a task. Access is governed by assignment policies, which dictate who can request the package, who must approve it, and how long the access lasts.
Establishing this infrastructure involves specific, sequential deployment steps. Administrators first configure the base entitlement management structure, which typically takes one hour of deployment time. Defining automatic assignment policies takes another hour, while building custom extensions and configuring access reviews each require two hours of setup effort.
To prevent conflicts of interest and maintain regulatory compliance, administrators configure policies that enforce a strict separation of duties. When a user requests an access package, the governance engine checks their existing roles and group memberships. If the requested package contains incompatible permissions, the system blocks the request automatically. This preventative control is backed by monitoring systems that alert administrators to anomalies and generate compliance reports for audit preparation.
Access packages support multi-stage approval workflows to ensure proper authorization before granting permissions. When a user submits a self-service request, the system routes the request to designated approvers, who must sign off before any access is provisioned. To maintain the principle of least privilege, these assignments can be configured with strict expiration dates or require recurring access certifications. This design ensures that access automatically expires unless it is explicitly re-certified during a periodic review.
Organizations can automate access using automatic assignment policies, often referred to as birthright assignments. These policies evaluate user attributes, such as department or job title, and automatically grant the corresponding access packages when a user joins or changes roles. For exceptions or specialized scenarios, administrators can manually assign packages or trigger assignments using automated scripts via PowerShell.
To extend these governance capabilities, administrators integrate Azure Logic Apps to run custom workflows. These workflows are triggered by lifecycle events, such as when a request is created, an assignment is granted, or when an assignment is about to expire. For example, the system automatically triggers notification workflows fourteen days and one day before an assignment auto-expires. These Logic Apps can then send alerts to communication channels, call external APIs, or create tasks in external project management tools.
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A management group hierarchy organizes subscriptions and applies policies and permissions across multiple subscriptions from a parent group, which is crucial for efficient management and governance.
Azure Policy enforces standards and checks compliance by evaluating resources against defined rules. Policy initiatives group related policies together to address broader compliance goals, such as regulatory frameworks, and can be assigned at management group, subscription, or resource group scope.
Azure AD Entitlement Management governs identity and access at scale by grouping resources into catalogs and defining access packages, which bundle resources and roles for users, with policies controlling requests, approvals, and assignment duration.
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