Direct Integration of Partners with Entra ID B2B

Direct integration of partners with Entra ID B2B enables companies to interact flexibly and securely with suppliers, service providers, and customers. Entra ID B2B provides a simple and secure solution for managing external users and controlling access to internal resources. In combination with my-IAM RealIdentity, companies can reduce administrative effort, improve data quality, and increase security by consolidating identity data from various sources. This post explains what companies should consider when integrating external users.

What is Entra ID B2B?

Entra ID B2B (Business-to-Business) is a feature of Entra ID that allows companies to invite external users as guest users to their Microsoft 365 directory. These guests retain their own identities, whether an Entra ID account, a Microsoft account, or a social identity like Google or LinkedIn. Companies do not need to manage or synchronize these accounts, reducing administrative effort.

Entra ID B2B is enabled by default in all Microsoft Entra ID tenants, but no connections are available when a new tenant is created. Administrators can make detailed settings to control and manage the connection to other companies. A key benefit is that companies do not need to build separate infrastructure to manage external identities, as Microsoft provides the technical foundation and security mechanisms.

Entra ID B2B vs Azure AD Federation

Azure AD Federation is a technology focused on integrating identities between on-premises Active Directories and Entra ID. It enables Single Sign-On (SSO) and identity federation, allowing users to access both on-premises and cloud resources with their existing credentials. This integration is often used in hybrid environments where companies want to extend their existing on-premises infrastructure with cloud services. Azure AD Federation uses protocols such as SAML and OpenID Connect to create trust relationships between different identity providers.

In contrast to Entra ID B2B, Azure AD Federation is more complex to set up and manage, as it often requires the use of Active Directory Federation Services (AD FS). Therefore, Microsoft is increasingly recommending switching to more modern solutions like Entra ID B2B to simplify management and enhance security.

A key difference from Azure AD Federation is that Entra B2B enables secure collaboration with external guest users who are not part of the organization’s directory. While Federation relies on existing accounts from trusted identity providers and requires complex configuration with Active Directory Federation Services (AD FS), Entra B2B offers a simpler and more flexible authentication option without requiring direct trust establishment.

Why do companies need Entra ID B2B?

Without Entra ID B2B, separate accounts would need to be created for external partners – a high manual effort with security risks. With Entra ID B2B, external users use their own credentials, which reduces administrative effort and increases security.

The benefits:

• Easy invitation of external users – no separate user account required

• Secure access to Microsoft 365 services – Teams, SharePoint, OneDrive, etc.

• Conditional Access & MFA – sign-in policies improve security

• Flexibility in integration – integration of external partners into ERP and CRM systems

Security aspects and integration of external identity providers

A key aspect of secure collaboration with Entra ID B2B is the use of Conditional Access (CA) policies. These allow sign-ins to be restricted based on geographic locations, times of day, device types, or sign-in risks. For more on this, read our post on Conditional Access in Microsoft Entra, which provides an in-depth look at the various security policies.

Additionally, Microsoft recommends using Multi-Factor Authentication (MFA) to further enhance security. Both methods are fully integrated into Microsoft Entra ID and provide a high level of protection for corporate resources.

The limitations of Entra ID B2B

Despite many benefits, Entra ID B2B also has some limitations that companies should consider:

1. Cluttered management of guest users – no automatic grouping by projects or partners
2. No automatic lifecycle – admins must manage external access manually
3. Limited third-party integration – not all external applications support B2B guest management
4. Dependence on external identity providers – companies have little control over their security policies
5. Limited delegation – guest accounts cannot be managed without global admin rights

The role of RealIdentity in collaboration

While Entra ID B2B simplifies the integration of external partners, RealIdentity provides an advanced solution for identity management. It allows seamless integration of all identities within a company – including customers, partners, and suppliers – across different systems. RealIdentity processes identity data from various sources, prepares it, and provides it in real-time to third-party applications, enabling companies to maintain consistent and automatically updated records that can be used across the enterprise.

RealIdentity in conjunction with IDM-Portal goes beyond the functionality of Entra ID B2B by enabling flexible management of identities across multiple tenants and applications. It provides a central platform that allows companies to manage external user access and delegate administrative tasks without the need for global admin rights. Furthermore, RealIdentity supports broad integration with third-party systems, allowing companies to easily integrate identity data from various sources – such as Entra ID, CRM systems, and HR solutions – without losing control over their security policies.

By combining RealIdentity with Entra ID B2B, companies can gain better insights into external partner networks, manage user permissions more flexibly, and enhance security. The management of external identities is simplified and centralized, and companies can ensure consistent policies across their entire network.

Case Study
A company introduces a new application and needs to integrate identity data from Entra ID and a CRM system. Without RealIdentity, this process would be tedious and error-prone. However, thanks to real-time synchronization and centralized identity data management, companies can seamlessly and automatically carry out the process – a real relief for IT and the company as a whole.

Conclusion

Entra ID B2B provides companies with a secure and efficient way to integrate external partners into their IT environment without having to manage their own identities. By integrating security policies such as MFA and conditional access, a high level of protection is ensured. However, companies should be aware of the management boundaries and consider additional solutions such as RealIdentity to more precisely control guest access.