Introduction
In today's cloud-first world, identity has become the new security perimeter. Managing users is no longer just about creating accounts, it's about organizing identities efficiently, automating access, and simplifying administration at scale.
In this hands-on guide, I'll walk through essential Microsoft Entra ID group management tasks, including creating Microsoft 365 and Security groups, configuring dynamic membership rules, adding users and licenses to groups, and exploring how group-based licensing simplifies administration. Whether you're preparing for the AZ-104 exam or building real-world Azure administration skills, these are practical tasks every cloud administrator should know.
Exercise - Perform basic Group Management tasks
In this exercise you will explore the beginner level tasks associated with creating and using groups. You make a new group and assign members and set some basic access levels.
This exercise should take approximately 15 minutes to complete.
Task 1 - Create a Microsoft 365 group
1.Open the Microsoft Entra admin center at https://entra.microsoft.com.
2.Log in using the credentials for your tenant.
3.From the menu on the left, select Groups and then All groups.
4.Select New group option.
5.Enter the requested information:
| Field | Value |
|---|---|
| Group type | Microsoft 365 |
| Group name | Project233 |
| Group description | This group consists of members of the new AI Simulation software with codename Project233 |
| Membership type | Assigned |
6.Under the Members heading, select No member selected.
7.Add Bhogeswar Kalita, by marking the box and choosing the Select button.
8.Select the Create button.
Task 2 - Create a Security group
1.Open the Microsoft Entra admin center at https://entra.microsoft.com.
2.Log in using the credentials for your tenant.
3.From the menu on the left, select Groups and then All groups.
4.Select New group option.
5.Enter the requested information:
| Field | Value |
|---|---|
| Group type | Security |
| Group name | Guest Users |
| Group description | This group has all the Guest users currently in the tenant. |
| Membership type | Dynamic User |
6.Under the Dynamic user members heading, select Add dynamic query.
7.Create a dynamic query with the following values:
| Field | Value |
|---|---|
| Property | userType |
| Operator | Equals |
| Value | Guest |
8.Select the Save item from the top of the page.
9.Select the Create button.
Note - It will take up to 2 minutes for the group to be populate.
10.From the Groups select the Refresh item.
11.Select the Guest Users group we just created.
12.Select Members.
Task 3 - Add an existing user to a new group
1.Open the Microsoft Entra admin center at https://entra.microsoft.com.
2.Log in using the credentials for your tenant.
3.From the menu on the left, select Groups and then All groups.
4.Select the Project233 group we created in Task 1.
5.Select the Members option from the menu.
6.Select + Add members from the menu near the top.
7.Mark the box next to External User and use the Select button.
Subtask 1 - Alternative method to add an existing user to a new group
1.Open the Users menu, then select All users.
2.Find and select External User from the list.
3.Select the Groups item from the menu.
4.Select the option to + Add memberships.
5.Mark an existing group and use the Select button to add them.
Task 4 - Add licenses and owners to a group
1.Open the Microsoft Entra admin center at https://entra.microsoft.com.
2.Log in using the credentials for your tenant.
3.From the menu on the left, select Groups and then All groups.
4.Select the Project23 group we created in Task 1.
5.Choose the Owners option from the menu.
Note - Your tenant administrator will automatically be added as the owner of a group, if no owner is specified.
6.Select the + Add owners menu item.
7.Mark the box next to Bhogeswar and use the Select button.
8.Notice the new owner has been added to the group.
Subtask 1 - Adding a license to a group
1.Open a new tab in your browser.
2.Connect to Microsoft 365 admin cetner at https://admin.microsoft.com.
3.From the menu on the left, open the Billing section and select Licenses.
4.Select the Microsoft Power Automate Free license.
5.Select the + Assign licenses item.
7.Use the dropdown on the right side of the screen to select the Project 233 group created earlier.
Note: I I unassigned license to a group and created a security group called Project 233, which I assigned the license to. You cannot assign a Microsoft Power Automate Free license (or other Microsoft 365/Entra group-based licenses) to a Microsoft 365 group.
8.Use the Assign licenses button at the bottom of the screen.
9.Close the You assigned licenses… notification.
10.Use the Refresh button to see the added group licenses.
Summary
In this article, I explored the fundamentals of group management in Microsoft Entra ID through a series of practical, hands-on exercises. I demonstrated how to create both Microsoft 365 and Security groups, configure dynamic user membership using rules, add users to existing groups, and assign Microsoft licenses through group-based licensing. Along the way, I also highlighted the differences between Microsoft 365 groups and Security groups, including why only Security groups support group-based licensing. These are essential identity and access management skills for Azure administrators and anyone preparing for real-world cloud administration or the AZ-104 certification.
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