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Today, we worked on a service request that our customer got the following error message : Managed Instance needs permissions to access Azure Active Directory. You need to be a ‘Company Administrator’ or a ‘Global Administrator’ to grant ‘Read’ permissions to the Managed Instance.


Azure SQL Managed Instance needs permissions to read Azure AD to successfully accomplish tasks such as authentication of users through security group membership or creation of new users. For this to work, we need to grant the Azure SQL Managed Instance permission to read Azure AD.


We can do this using the Azure portal or PowerShell. This operation can only be executed by Global Administrator or a Privileged Role Administrator in Azure AD.


You can assign the Directory Readers role to a group in Azure AD. The group owners can then add the managed instance identity as a member of this group, which would allow you to provision an Azure AD admin for the SQL Managed Instance. That means you need to have Global Administrator or Privileged Role Administrator access to provide the read permission to the SQL MI.


Directory Reader role


In order to assign the Directory Readers role to an identity, a user with Global Administrator or Privileged Role Administrator permissions is needed. Users who often manage or deploy SQL Database, SQL Managed Instance, or Azure Synapse may not have access to these highly privileged roles. This can often cause complications for users that create unplanned Azure SQL resources, or need help from highly privileged role members that are often inaccessible in large organizations.
For SQL Managed Instance, the Directory Readers role must be assigned to managed instance identity before you can set up an Azure AD admin for the managed instance.
Assigning the Directory Readers role to the server identity isn’t required for SQL Database or Azure Synapse when setting up an Azure AD admin for the logical server. However, to enable an Azure AD object creation in SQL Database or Azure Synapse on behalf of an Azure AD application, the Directory Readers role is required. If the role isn’t assigned to the SQL logical server identity, creating Azure AD users in Azure SQL will fail. For more information, see Azure Active Directory service principal with Azure SQL.
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