System-Assigned vs User-Assigned Managed Identities

The most secure way for applications to access these services is by using managed identities. These are automatically managed identities within Microsoft Entra ID. A system-assigned identity is tied to a single Azure resource, while a user-assigned identity can be shared. Using managed identities means your application code never contains passwords or connection strings, as Azure handles authentication automatically. You then grant these identities specific roles, like App Configuration Data Reader or Key Vault Secrets User, following the principle of least privilege.