How to Effectively Use Azure Management Groups, Subscriptions, and Resource Groups

When used individually, Azure Management Groups, Subscriptions, and Resource Groups are very powerful. But when used together, they can establish the entire organizational structure of Azure.

In this article, I will explain Azure Resource Manager, Management Groups, Subscriptions and Resource Groups. I’ll show the relationship between each and provide guidance on how to most effectively use them all to organize Azure to meet the needs of your business. 

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Azure Resource Manager

In Azure, Subscriptions, Management Groups, and Resource Groups are all essential organizational constructs. But to understand the purpose of Azure Subscriptions and Management Groups, you need to begin by understanding the Azure Resource Management hierarchy.

What is Azure Resource Manager?

Azure Resource Manager is at the core of Microsoft Azure. It serves as an essential component of Azure deployment and provides a unified management layer regardless of the tool set used. Whether you use the Azure website, Azure CLI, Azure Powershell, or one of the many other methods for managing Azure resources, your commands all utilize Azure Resource Manager.

Understanding the Resource Manager Hierarchy

The Azure Resource Manager model uses four levels, or “scopes.” The following diagram provides an example of each of these scopes.

Azure Scope Levels

Image Source: Azure Resource Manager Overview

Azure Management Groups

What is a management group?

An Azure Management group is logical containers that allow Azure Administrators to manage access, policy, and compliance across multiple Azure Subscriptions en masse. Management groups allow you to build an Azure Subscription tree that can be used with several other Azure service, including Azure Policy and Azure Role Based Access Control. Azure Management Groups provide flexibility for organizing policy, access control, and compliance across multiple subscriptions. We can nest Azure Management Groups up to six levels deep for efficient management of resources.

Effective use of management groups

Among the multiple ways management groups can be utilized, Azure Management Groups can mirror your billing hierarchy. Often enterprises begin utilizing management groups in this method. However, the power of management groups is when you use them to model your organization. Azure Subscriptions can be grouped based on a need for common roles assigned along with Azure Policies and initiatives.

Organizing with management groups

Azure Management Groups provide a level of organization above Azure Subscriptions. If your company has more than one or two Azure Subscriptions, you will want to actively control access, policies, and compliance for those subscriptions. All subscription objects within a management group receives a copy of the role-based access control and policy settings applied to the management group. 

Root management group for each directory

Each Azure Active Directory (AD) tenant includes a top level or “root” management group. By default, only an Azure AD Global Administrator can access this root level group, and only after elevating access. The root management group has several important facts to be aware of:

  • Root management group is named Tenant root group, though the name can be changed.
  • The root management group cannot be moved or deleted
  • All management groups in the Azure AD are under the root management group.
  • All Azure users can see the root management group
  • You can only have one root management group
  • New subscriptions are automatically placed in the root management group when created.

Important facts about management groups

  • Up to 10,000 management groups are supported in a single Azure AD tenant.
  • Management group trees can support up to six levels of depth, not including the root level or the subscription level.
  • Management groups and subscriptions can only support one parent.
  • Management groups can have many children.
  • All subscriptions and management groups are within a single hierarchy in each directory. 

Limitations of management groups

Management groups have one large limitation: A management group cannot contain an Azure Resource. It can only contain other management groups or subscriptions.

Azure Subscriptions

What is an Azure Subscription?

An Azure Subscription can be defined in many ways, but at its simplest a subscription refers to the logical entity that provides entitlement to deploy and consume Azure resources. Some other ways to define an Azure Subscription:

  • A logical collection of Azure resources. Each asset in Azure is deployed to a single subscription.
  • A defined administrative security boundary that supports Role-Based Access Control.
  • A limiting factor to Azure scale (more on this below, see Subscription Limitations).
  • A deployment construct for the organization and consistency of Azure resources

Azure Subscriptions come with multiple considerations:

  • An Azure Subscription doesn’t cost anything
  • Each Azure Subscription has its own Administrators
  • Azure Subscriptions are global and can contain resources from multiple regions
  • Subscriptions can be purchased via many different methods (see Types of Subscriptions)

Microsoft’s definition of a subscription is “an agreement with Microsoft to use one or more Microsoft cloud platforms or services, for which charges accrue based on either a per-user license fee or on cloud-based resource consumption.”

How do subscriptions work?

Azure Subscriptions, at their core, are simple constructs. As stated above, an Azure Subscription can be used in multiple ways to organize and store Azure resources, and to organize resources in containers.

Types of subscriptions

There are a large number of ways to create a subscription with Microsoft Azure, I am going to attempt to list the most prevalent. Please see the Microsoft Azure Offer Details site for a complete list of subscription types.

  • Enterprise Agreement (EA) – an Enterprise Agreement is a volume licensing program offered by Microsoft. The Enterprise Agreement most often is seen in larger organizations with 500 or more users, and is a three year contract with Microsoft. The EA is one of the most common types of subscriptions. Also see Enterprise Dev/Test, which offers the same access as an Enterprise Agreement with a reduced rate for development and test workloads.
  • Pay as you go – Pay as you go is the second most common subscription type. Typically, the business will place a credit card file. Though rare, occasionally a client will pay by invoice.
  • Free Trial – Anyone can sign up for a Free Trial of Azure, which is good for 30 days. The free trial subscription includes $200 of Azure spend credits. A free trial is converted to Pay once a credit card is placed on file.
  • Cloud Solutions Partner (CSP) – CSP subscriptions are purchased through a Microsoft partner.

Subscription limitations

Azure has a large number of limitations per subscription, which are often referred to as “quotas”. Many (but not all) of the subscription limits can be raised by opening an online customer support request with Microsoft. Even so, all limits have a maximum value. Once you reach a maximum value, the only way to overcome it is multiple subscriptions. Details on most of the limits can be found on Microsoft Documentation site Azure subscription and service limits, quotas, and constraints.

Subscription design

In addition to Management Groups, subscriptions provide multiple layers to best organize Azure Resources to meet the needs of the enterprise. Ultimately, it is up to the business to determine how best to utilize Azure Subscriptions to organize Azure Resources. My advice; start simple. Generally I recommend beginning with two subscriptions, one for Production resources and one for non-production such as development and test.

How many subscriptions is too many?

As the number of Azure Subscriptions increases, so too does the management complexity and administrative overhead. With that being said, I give the same advice to everyone who asks me this question. Start as simple as possible, and expand as business needs demand. But with that advice, I also include the following caveat. Azure Azure (and your business) grow, be prepared to discover that the business has developed a requirement that will necessitate a move to additional subscriptions.

Subscription and management group hierarchy examples

Used in conjunction, Azure Subscriptions and Management Groups can be used to create an organizational hierarchy for your Azure Resources. An example hierarchy is included below.

Hierarchy of management groups and subscriptions

Image source:

Azure Resource Groups

What is a resource group?

Resource groups are the lowest level of organizational scope, and are the level that contains almost all Azure Resources. Azure Resources Groups are logical collections of virtual machines, app services, storage accounts, virtual networks, web apps, Azure SQL databases, etc. Resource groups can be utilized to subdivide resources by application or environment, among the many options.

Azure Resource Groups are a useful tool for Role-Based Access Control (RBAC). This will allow you to grant user access at the group level. Resource Groups can also simplify reporting and billing.


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