Modern applications no longer live in a vacuum. They connect consumers, business customers, and partners through web and mobile interfaces, and that means identity becomes a core feature. In the past, app developers often managed customer identity themselves, keeping tabs on the whole identity stack, including usernames, passwords, password resets, MFA, and compliance controls. It’s also important to understand that maintaining identity infrastructure can also introduce risk, liability, and unnecessary complexity.
That’s where Customer Identity and Access Management (CIAM) platforms come in. These platforms handle critical identity components so that developers can focus on building great products. Microsoft’s offering in this space is Microsoft Entra External ID, a unified platform for managing customer and partner access securely at scale.
In this post, we’ll break down what External ID is, how it compares to Azure AD B2C and B2B, and why it’s a significant evolution for identity-driven applications. We’ll also share examples of how External ID can be used to help organizations secure external access.
What Is Microsoft Entra External ID?
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External ID is a cloud-based identity platform built for managing identities that sit outside your organization: consumers, business customers, and external partners. It brings together capabilities that were previously spread across Azure AD B2C and Azure AD B2B, with new architecture and branding under the Microsoft Entra suite.
Unlike traditional Entra (formerly Azure AD) “workforce” tenants, External ID tenants are purpose-built for CIAM scenarios. They support:
While External ID can be deployed as a standalone tenant, many features also now exist in workforce tenants to support B2B collaboration and hybrid use cases. The result: a more cohesive development experience, regardless of whether your users are employees or external customers.
Azure AD B2C and B2B: What Changed?
Microsoft’s CIAM landscape used to be fragmented:
- Azure AD B2C was a standalone identity service for customer-facing apps
- Azure AD B2B allowed partners to access workforce resources like SharePoint or Teams
External ID unifies both into a single extensible platform with consistent APIs, sign-in experiences, and policy management. Microsoft has discontinued Azure AD B2C for new customers as of May 2025 and recommends using External ID for all new projects.
Core Capabilities of Microsoft Entra External ID
External ID enables modern identity experiences without building custom auth infrastructure. Key features include:
Self-Service Signup & Branding
You can configure user signup flows that collect custom attributes, show branded sign-in screens, and allow users to register via:
- Email + password
- One-time passcodes
- Social accounts (Google, Facebook, Apple)
- Enterprise federation (SAML, OIDC)
Signup flows are modular and UI-driven, and there’s no need to redeploy your app to change how onboarding works.
Conditional Access and MFA
Organizations can enforce Conditional Access policies for external users based on:
- MFA
- Device compliance (Workforce tenants only)
- User risk levels (Workforce tenants only)
- Location or network (Workforce tenants only)
External ID supports MFA via email or SMS one-time codes and allows workforce tenants to trust MFA claims from other Microsoft tenants, avoiding duplicate prompts for guests.
Lifecycle Management
Guest user onboarding and offboarding is built into Workforce (classic) Entra ID tenants. Through Microsoft Entra ID Governance, you can:
- Automate group or app assignments after approval
- Set access expiration dates
- Trigger access reviews to clean up inactive users
External accounts are stored in your directory as guest objects, with full audit trails and access control.
Cross-Tenant Collaboration
Also found in Workforce tenants, B2B collaboration allows inbound and outbound access across Microsoft Entra tenants. You can:
- Allow or block specific partner domains
- Trust external MFA or device compliance claims
- Restrict who in your org can invite guests
Self-service signup flows in workforce tenants let users register and gain access without manual provisioning.
Planning Your Microsoft Entra External ID Implementation
Based on our experience working with Entra External ID, here are some best practices for a successful rollout.
1. Choose the Right Tenant Configuration
Ask: is this a consumer app, or a partner collaboration use case?
- For consumer apps, use an external tenant. This keeps customer data separate from your corporate directory and supports custom branding.
- For partner collaboration, use a workforce tenant. This integrates with Microsoft 365 and other internal services.
If you have both needs, you can run multiple tenants or use features from both within a single workforce tenant depending on your use cases. Running multiple tenants is a common practice where a business’s consumers will exist in the ‘external’ tenant while all employees and business partners exist in the ‘workforce’ tenant.
2. Map Out Identity Providers and Auth Methods
Plan which types of accounts you’ll support, potentially including:
- Local accounts with email/password
- Social logins (Google, Facebook, Apple, etc)
- Enterprise federation (SAML/OIDC)
- Passwordless flows (email OTP)
Choose which accounts you’ll support based on your user base. You should also consider any branding requirements or regulatory constraints.
3. Define Conditional Access and Governance Policies
Adopt a Zero Trust model from the start:
- Require MFA or device compliance for sensitive resources
- Apply risk-based policies (e.g., block sign-ins from unknown locations)
- Use access reviews and entitlement policies to clean up inactive accounts
Most of these features are, for now, Workforce only features. Also keep in mind that Workforce External ID integrates with Microsoft’s identity governance suite for full control.
4. Streamline Guest Onboarding and Offboarding
Automate where possible:
- Use APIs to send invitations and pre-fill attributes
- Configure policies that assign apps automatically
- Use scheduled access reviews to avoid stale access
For guest collaboration in workforce tenants, restrict who can send invites and set policies on which domains can (or cannot) receive invites.
5. Customize Invitations and the User Experience
First impressions matter. Use Entra ID’s customization options to:
- Brand invitation emails with your logo
- Configure sign-in screens with your logo, background images, text, and colors
- Use custom domains for sign-in (e.g., login.contoso.com)
All of this helps external users trust your app from the first click.
Real-World Applications and Why Microsoft Entra External ID Tenant Represents the Future of CIAM
Here are just a few examples of how organizations are using External ID today:
- Higher Education: Universities use External ID tenants to create portals for alumni, prospective students, donors, and continuing education learners. These users can sign in with social identities like Google or Facebook, or request one-time passcodes via email, without needing an internal university account.
- Manufacturing and Supply Chain: Manufacturers can rely on Workforce External ID features to provide secure access to supplier portals and service documentation. Federated login support allows large partners to authenticate using their enterprise credentials, while Conditional Access ensures only compliant devices gain access.
- SaaS Providers: Software companies embed External ID tenant flows directly into their applications, allowing business customers to register new users, customize branding, and delegate access management. By offloading authentication and policy enforcement to External ID, developers can focus on building product features—not security infrastructure.
Why Focus on a Microsoft Entra External ID Tenant over a Workforce Tenant?
While many features of External ID are available in traditional workforce tenants, it’s important to understand the distinct value of creating a dedicated External ID tenant for CIAM use cases.
An External ID tenant:
- Isolated from internal user and group data, improving data privacy and reducing risk
- Supports custom branding at the tenant level, including login pages and email domains
- It is better aligned with consumer and partner identity patterns, like one-time passcodes, social sign-in, and self-service account creation
- Simplifies access control, since it’s not bound by internal app dependencies (like Microsoft 365 integration)
For organizations building customer-facing or public-facing applications, using an External ID tenant keeps the identity boundary clean and manageable. It’s purpose-built for CIAM and avoids the long-term complexity of mixing internal and external users in the same environment.
B2C Was More Flexible…but at a Cost
Some developers coming from Azure AD B2C might feel that External ID is more constrained—at least for now. Azure AD B2C offered nearly limitless customization through identity experience framework (IEF) policies, allowing you to craft almost any user journey imaginable.
External ID, by contrast, trades some of that extreme flexibility for easier configurability, consistency, and supportability. User flows are driven by a wizard and configuration options, rather than XML policies. This lowers the learning curve and removes much of the complexity but may feel limiting for edge cases.
However, External ID still supports extensibility through:
- API event hooks, such as OnAttributeCollectionStart and OnAttributeCollectionSubmit, and token issuance start
- Be sure to check out our article on writing a custom claims provider for more information: Building a Custom Claims Provider in Entra ID | A Deep Dive
- Custom domains and branding
- Integration with third-party OTP or email providers
For many use cases, this level of control is more than sufficient—and a welcome simplification. But Microsoft is continuing to expand its capabilities over time, and many IEF-style features may return in updated forms.
A Strategic Bet on the Future
Adopting External ID isn’t just a tactical improvement—it’s a strategic one.
- Azure AD B2C is being sunset for new customers as of May 2025. Microsoft has committed to supporting existing B2C tenants through at least 2030, but new development should target External ID.
- External ID aligns with the broader Entra suite, integrating more easily with Verified ID and Identity Governance.
- Licensing is more generous: External ID tenants include a free tier that supports up to 50,000 monthly active users (MAU), making it a cost-effective solution for many external identity projects compared to a classic (“workforce”) Entra ID tenant or other CIAM solutions on the market.
In short, if your organization is building or modernizing applications that serve users outside your internal directory, now is the time to adopt External ID.
Final Thoughts: Why Microsoft Entra External ID Matters
External ID isn’t just a rebranding—it’s a major shift in how Microsoft supports identity scenarios beyond the enterprise. By combining consumer-friendly auth flows with enterprise-grade governance and security, it gives you a single platform to support:
- Customer applications
- Partner collaboration
- Developer extensibility
- Zero Trust enforcement
For developers, this means fewer custom auth systems to maintain. For security teams, it means consistent policy enforcement across internal and external users. And for organizations, it unlocks scalable identity management for everyone who interacts with your digital footprint.
Need Help Getting Started?
At Ravenswood Technology Group, we specialize in designing secure identity architectures that align with your business goals. We’ve helped clients across industries design greenfield B2C and External ID platforms along maintaining and growing existing environments. We focus on configuring secure collaboration with external partners and customers, tailoring the solution to your specific needs.
If you’re evaluating your options—or already have Azure B2C or External ID and want to use it to its full potential—get in touch. We’d love to help.
