Entra ID vs Active Directory in 2026

Ruben van der Graaf·May 2, 2026·4 min read

Active Directory still runs in many places while Entra ID is becoming the standard. The state of play in 2026: what to do with your AD, when to move, what to keep hybrid.

In 2026 Microsoft Entra ID is the de facto standard for identity in the Microsoft world. At the same time, on-prem Active Directory still runs across a large slice of mid-market companies. This post covers the decision: stay hybrid, migrate, or do nothing?

TL;DR

Entra ID is Microsoft's cloud-first identity platform. AD is the legacy on-prem system.
A full migration to Entra ID is often possible but not always needed.
Hybrid (Entra Connect) is the most common setup in 2026.
New Entra apps run on Entra ID. Legacy file shares stay on AD.
ABAC, license management, and self-service work on both.

Short: what they are

Active Directory (AD). Microsoft's on-prem directory service. Runs on one or more domain controllers in your own datacenter. Uses Kerberos and LDAP. Standard for Windows authentication in enterprises since 2000.

Microsoft Entra ID (formerly Azure AD). Cloud-native identity and access management. Uses OAuth2, OpenID Connect, SAML. Standard for M365, Azure, and modern SaaS.

They can run side by side through Entra Connect: sync attributes and password hashes from AD into Entra ID.

The three possible setups in 2026

Setup	Who uses this	When to pick it
Entra ID only (cloud-only)	New companies, fully M365	No legacy apps, no file shares, everything cloud
Hybrid (AD + Entra Connect)	the majority of mid-market	You have legacy that needs AD
AD only	Shrinking group, mostly regulated industries	Strict on-prem requirements or offline environments

When to stay hybrid

Stay hybrid if you have any of these:

File shares on Windows servers with NTFS ACLs
Legacy apps requiring Kerberos or NTLM
Print servers using domain authentication
Network shares only reachable through SMB
Line-of-business apps doing LDAP binding against AD

You can't move these to Entra ID easily. Entra Connect is your friend.

When to migrate fully

Cloud-only works if:

All file shares are already in SharePoint or OneDrive
No apps still require Kerberos or LDAP
Printers are all Universal Print or cloud-managed
VPN is replaced by Azure AD Join or Conditional Access

This is rare in 2026 but growing. Startups and cloud-native organizations fit here.

What Entra Connect actually syncs

In hybrid setups, Entra Connect syncs almost everything from AD to Entra ID:

User accounts and attributes (including jobTitle, department, manager)
Security groups
Password hashes (with Password Hash Sync) or real-time auth (with Pass-Through Authentication)
Device objects (with hybrid Azure AD Join)

What doesn't sync: file share permissions (those stay local to AD), group policy objects, certificate services.

How ABAC works in a hybrid setup

Common question. Short answer: ABAC runs in Entra ID. Attributes arrive from AD via sync. Group memberships that Entra ID computes get written back to AD through Entra Connect where needed.

For ServiceChanger this means: you don't have to choose. We run on top of Entra ID, use the attributes AD provides, and let Entra Connect write memberships back to AD for legacy apps.

The reality in the Netherlands

In 2026 the typical Dutch mid-market organization (100-500 employees) is hybrid:

Identity primarily in Entra ID
M365, SaaS tools, modern apps: pure Entra ID
Old file servers, branch-office printers: still AD
Some line-of-business apps still bound to AD (vendor lock-in)

Phasing AD out fully is usually a multi-year project. That's fine. You don't have to solve it all now.

Pitfalls

Double administration. If Entra Connect isn't configured correctly, you'll make changes manually in two systems. Set write-direction clearly (usually AD as master, Entra ID secondary).
Password policy mismatch. AD has different password policies than Entra ID. Syncing once a quarter leads to confusion. Align policies.
No disaster recovery for Entra Connect. If your Entra Connect server goes down, sync stops. Test backup and recovery.

FAQ

Do I need to migrate Entra Connect to Cloud Sync? Microsoft pushes Cloud Sync as the successor. For most standard scenarios it works. For complex setups (like multiple forests) classic Entra Connect is still required.

Does ServiceChanger work in cloud-only and hybrid? Both. We detect your setup and adapt the workflow.

What if I want to move from AD-only to hybrid? Start by installing Entra Connect, syncing a pilot group, connecting M365. A mid-market organization can usually do this in 2-4 weeks.

In a hybrid environment you want the same access rules across Entra ID and on-prem AD. For how to set that up with attributes, read ABAC in Entra ID.

Next step

Want IAM automation in your hybrid or cloud-only setup? ServiceChanger works on both. Book a demo or read the Active Directory docs.

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