| Definition |
Identity used by applications or services to authenticate with Azure resources. |
Identity automatically managed by Azure for authenticating Azure resources to other services. |
| Creation |
Manually created via Azure CLI, PowerShell, or Portal. |
System-assigned: auto-created. User-assigned: manually created, reusable across resources. |
| Lifecycle |
Exists independently and must be manually maintained. |
System-assigned: tied to resource lifecycle. User-assigned: independent of resource lifecycle. |
| Credential Management |
Requires manual handling of secrets or certificates. |
Credentials and key rotation handled entirely by Azure. |
| Scope |
Can span across multiple subscriptions, tenants, and resources. |
System-assigned: specific to a single resource. User-assigned: sharable across multiple resources. |
| Permissions |
Must assign roles manually using RBAC. |
Roles also assigned using RBAC, but no need to handle credentials. |
| Use Case |
Suitable for external apps, CI/CD tools, or multi-tenant apps. |
Ideal for Azure-native workloads like VMs, Functions, and App Services accessing Azure services. |
| Security |
Prone to mismanagement if credentials are exposed or not rotated. |
More secure — no secret exposure and built-in credential rotation by Azure. |