When should I use system-assigned vs user-assigned managed identities?

System-assigned identities are simpler — they are created and deleted with the resource, and each resource gets exactly one. Use them for single-resource scenarios where the identity lifecycle matches the resource lifecycle. User-assigned identities are independent resources that can be assigned to multiple Azure resources simultaneously. Use them when multiple resources need the same permissions (reducing the number of role assignments), when you need the identity to persist beyond a resource's lifecycle, or when you pre-create identities in Terraform before the consuming resource exists.

What are federated identity credentials?

Federated identity credentials allow external identity providers (GitHub Actions, Kubernetes, Google Cloud, AWS) to authenticate as an Azure managed identity or app registration without exchanging secrets. The external workload presents its native token (OIDC), Azure validates it against the configured issuer, subject, and audience, and issues an Azure access token. This eliminates the need to create and rotate client secrets for CI/CD pipelines. You configure the trust relationship by specifying the issuer URL, subject identifier, and audience values that must match the incoming token.

Managed Identity Role Builder

IAM & SecurityAzure

Build managed identity role assignments and federated credentials.

Last verified: May 2026

Managed Identity Role Configuration

Identity Name

Identity Type

Resource Group

Location

Role Assignment 1

Role Definition Name

Scope

Description (optional)

Generated Managed Identity Config

Output will appear here...

See It in Action

Your team is migrating Function Apps from app-setting-based connection strings to managed identity authentication for Storage and Key Vault. The builder generates: a user-assigned managed identity 'fn-app-prod-id', role assignments granting Storage Blob Data Reader on specific containers and Key Vault Secrets User on specific secrets (not the entire vault), and the Function App configuration referencing the user-assigned identity. Cost-impact zero, security improvement: substantial — no secrets in app settings, role-scope limited to actually-needed resources.

What This Tool Does

Azure Managed Identities eliminate the need for applications to store credentials by providing an automatically managed identity in Microsoft Entra ID. System-assigned identities are tied to a single resource's lifecycle, while user-assigned identities can be shared across multiple resources. After creating a managed identity, you must assign it the correct RBAC roles on the target resources. The Managed Identity Role Builder helps you configure identity type, role assignments with proper scope, and federated identity credentials for workload identity federation with external identity providers like GitHub Actions or Kubernetes.

Technical Details

The builder configures Azure managed identities (system-assigned or user-assigned) and their RBAC role assignments: identity creation (resource type for system-assigned, separate Microsoft.ManagedIdentity resource for user-assigned), role assignment scope (resource/RG/subscription/management group), built-in or custom role definition reference, and optional federated identity credentials for workload identity federation. Output is generated as az identity + az role assignment commands and Terraform azurerm_user_assigned_identity / azurerm_role_assignment resources.

Common Use Cases

1Configuring a system-assigned managed identity on an App Service with Reader role on Key Vault and Contributor on Storage
2Creating user-assigned managed identities shared across multiple Function Apps that need access to the same Cosmos DB account
3Setting up federated identity credentials for GitHub Actions to deploy to Azure without storing client secrets

Common Questions

When should I use system-assigned vs user-assigned managed identities?: System-assigned identities are simpler — they are created and deleted with the resource, and each resource gets exactly one. Use them for single-resource scenarios where the identity lifecycle matches the resource lifecycle. User-assigned identities are independent resources that can be assigned to multiple Azure resources simultaneously. Use them when multiple resources need the same permissions (reducing the number of role assignments), when you need the identity to persist beyond a resource's lifecycle, or when you pre-create identities in Terraform before the consuming resource exists.
What are federated identity credentials?: Federated identity credentials allow external identity providers (GitHub Actions, Kubernetes, Google Cloud, AWS) to authenticate as an Azure managed identity or app registration without exchanging secrets. The external workload presents its native token (OIDC), Azure validates it against the configured issuer, subject, and audience, and issues an Azure access token. This eliminates the need to create and rotate client secrets for CI/CD pipelines. You configure the trust relationship by specifying the issuer URL, subject identifier, and audience values that must match the incoming token.

Expert Tips

TIP

User-assigned managed identities are the right answer for production resources whose lifecycle is independent of the identity. If you ever need to recreate the resource (Terraform recreate, region migration), system-assigned identities are deleted with it — including all role assignments. User-assigned persists across resource recreation.

TIP

Always grant managed identity roles at the SMALLEST possible scope — specific resources rather than resource groups, RGs rather than subscriptions. The convenience of 'grant Contributor at subscription' is a security debt that compounds. Take the extra 5 minutes to scope properly.

TIP

Federated identity credentials for GitHub Actions / Kubernetes ELIMINATE the most-stolen credential in CI/CD: client secrets in repo. The setup is one-time work; the security improvement is permanent. Make this the default for all new CI/CD pipelines in 2026.

Related Learning Guides

Azure AD & RBAC Guide26 min read

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