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What Is Active Directory and How Does It Work?

Aidan Simister | 8 min read| Updated On - April 24, 2024

what is active directory

Organizations of all sizes all over the world use Active Directory to help manage permissions and control access to critical network resources. But what exactly is it, and how can it potentially help your business?

What is Active Directory?

Active Directory (AD) is a directory service that runs on Microsoft Windows Server. The main function of Active Directory is to enable administrators to manage permissions and control access to network resources. In Active Directory, data is stored as objects, which include users, groups, applications, and devices, and these objects are categorized according to their name and attributes.

What are the Benefits of Using Active Directory?

Active Directory is a powerful tool that provides many advantages for an organization. It makes life simpler for both administrators and end users and improves security by controlling access to network resources.

Administrators can centrally manage user identities and access privileges across the enterprise as well as have centralized control over computer and user configurations by using AD Group Policy. And single sign-on means that users can authenticate once and then seamlessly access any resources in the domain for which they’re authorized.

There are a variety of functional and business benefits provided by Active Directory and these include:

  • Security – security is improved by controlling access to network resources.
  • Extensibility – it is a straightforward process for companies to easily organize Active Directory data to align with their organizational structure and business needs.
  • Simplicity – administrators can centrally manage user identities and access privileges across the enterprise which then helps to reduce operations expenses.
  • Resiliency – Because Active Directory supports redundant components and data replication, it facilitates business continuity.

How does Active Directory work?

The main Active Directory service is Active Directory Domain Services (AD DS), which is part of the Windows Server operating system. Once the Active Directory Domain Services is installed on a server, it becomes a domain controller (DCs). This server stores the entire AD database, including objects, trees, and their relationships. Organizations normally have several Domain Controllers, and each one has a copy of the directory for the entire domain. Changes made to the directory on one domain controller, for example this could be a password update or the addition or deletion of data, are replicated to the other DCs so that they all remain up to date. Desktops, laptops and other devices running Windows (rather than Windows Server) can be part of an Active Directory environment, but they do not run Active Directory Domain Services.

It’s important to note that Active Directory is only for on-premise Microsoft environments. Microsoft cloud environments use Azure Active Directory. Azure Active Directory is Microsoft’s next-generation, cloud-based identity management solution used to control access to SaaS solutions like Microsoft 365, internally developed cloud apps running on Azure, as well as traditional enterprise applications AD and Azure AD are separate but can work together to some extent if your organization has a hybrid deployment of on-premise and cloud IT environments.

Hierarchical Structure of Active Directory

The Active Directory consists of the following hierarchical structure:

Domains: A domain represents a group of objects such as users, groups, and devices, which share the same AD database. You can think of a domain as a branch in a tree. A domain has the same structure as standard domains and sub-domains, e.g. and

Trees: A tree is one or more domains grouped together in a logical hierarchy. Since domains in a tree are related, they are said to “trust” each other.

Forest: A forest is the highest level of organization within AD and contains a group of trees. The trees in a forest can also trust each other, and will also share directory schemas, catalogs, application information, and domain configurations.

Organizational Units: An OU is used to organize users, groups, computers, and other organizational units.

Containers: A container is similar to an OU, however, unlike an OU, it is not possible to link a Group Policy Object (GPO) to a generic Active Directory container.

Active Directory Services

Active Directory Domain Services: Active Directory Domain Services (AD DS) is a core component of Active Directory and provides the primary mechanism for authenticating users and determines which network resources they can access. AD DS also provides additional features such as Single Sign-On (SSO), security certificates, LDAP, and access rights management.

Lightweight Directory Services: AD LDS is a Lightweight Directory Access Protocol (LDAP) directory service. It provides only a subset of the AD DS features, which makes it more versatile in terms of where it can be run. For example, it can be run as a stand-alone directory service without needing to be integrated with a full implementation of Active Directory.

Certificate Services: You can create, manage and share encryption certificates, which allow users to exchange information securely over the internet.

Active Directory Federation Services: ADFS is a Single Sign-On (SSO) solution for AD which allows employees to access multiple applications with a single set of credentials, thus simplifying the user experience.

Rights Management Services: AD RMS is a set of tools that assists with the management of security technologies that will help organizations keep their data secure. Such technologies include encryption, certificates, and authentication, and cover a range of applications and content types, such as emails and Word documents.

The server that hosts AD DS is called a domain controller (DC). A domain controller can also be used to authenticate with other MS products, such as Exchange Server, SharePoint Server, SQL Server, File Server, and more.

Getting Started with Windows Active Directory

A comprehensive step-by-step guide to setting up Active Directory on Windows Server is beyond the scope of this article. Instead, I will provide a basic summary of the steps required to install AD, which should at least point you in the right direction. Assuming you already have Windows Server (2016) installed, you will need to…

  • Change your DNS settings so that your server IP address is the primary DNS server.
  • Open the Server Manager, which you can access via PowerShell by logging in as administrator and typing ServerManager.exe.
  • On the Server Manager window, click on Add roles and features, and click the Next button to start the setup process.
  • On the window that says Select Server Roles, check the box that says Active Directory Domain Services. A pop-up box will appear. Click on Add Features, and then click Next to continue.
  • Keep clicking the Next button until you get to the final screen. Unless you know what you are doing, you are better off leaving the default settings as they are.
  • Once you have got to the end of the wizard, click Install, and wait for the installation process to complete.

Once you have Active Directory Domain Services installed, you will then need to configure your installation, which includes changing default passwords, setting up OUs, domains, trees, and forests. As mentioned, a detailed explanation of setting up and configuring Active Directory is beyond the scope of this article. For detailed up-to-date instructions, you will need to consult the official documentation.

Why AD Management and Security is Important?

The main factor that makes Active Directory security of unique importance in a business’s overall security position is that Active Directory controls all system access. Effective Active Directory management therefore helps protect your business’s credentials, applications, and confidential data from unauthorized access.

There are a wide range of tasks involved within Active Directory management and these include setting up domains and forests, keeping your AD organized and healthy, correctly managing Group Policy, and always ensuring business continuity with a reliable backup and recovery process. Active Directory management also includes the process of managing permissions and access rights of user groups and accounts with the help of systems, tools, and various processes.

Monitoring your Active Directory is an essential, continuous process with the objective being to ensure the performance and security of AD and its components. This is achieved by analyzing the AD environment closely using a range of technologies.

Managing the broad range of activities involved within Active Directory management can be time consuming and complex. A more straightforward approach is to use Lepide Auditor. Active Directory auditing from Lepide Auditor enables you to easily audit, monitor and set alerts for everything that is happening to your Active Directory, all from a single platform. It provides all the critical information you need in a way that’s readable, understandable, and actionable.

If you’d like to see how the Lepide Auditor can audit Active Directory, start your free trial today.

Aidan Simister
Aidan Simister

Having worked in the IT industry for a little over 22 years in various capacities, Aidan is a veteran in the field. Specifically, Aidan knows how to build global teams for security and compliance vendors, often from a standing start. After joining Lepide in 2015, Aidan has helped contribute to the accelerated growth in the US and European markets.

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