Microsoft Azure Architect Design (AZ-304) Practice Test 2026 – All-In-One Guide to Master Your Certification!

In the context of Azure, a system-assigned managed identity is designed specifically to allow virtual machines (VMs) to securely access Azure services without the need for managing credentials or manually assigning roles. This built-in identity is tied directly to the lifecycle of the VM; when the VM is created, Azure automatically creates an identity for it in Azure Active Directory (AAD).

When you use a system-assigned managed identity, Azure handles the authentication with Azure services, eliminating the need for other credential management practices such as creating and storing service principals or managing client secrets. This promotes security and simplifies the management overhead, as Azure assumes responsibility for identity management and access control.

The other options, while valid methods of accessing Azure services, involve more complex configurations. For instance, service principals (whether configured to use a certificate or a client secret) require additional setup to manage and secure the credentials associated with them. Similarly, a user-assigned managed identity necessitates separate management and lifecycle considerations since it can be shared across multiple resources but does not have the automatic tie to the VM's lifecycle like a system-assigned identity does. As such, the system-assigned managed identity is the best choice for VMs needing to access Azure services seamlessly and securely.