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Hybrid Identity Lab — On-Premises AD + Azure Entra ID

Lab Status Azure Windows Server VMware

A hands-on hybrid identity and infrastructure lab combining on-premises Windows Server 2022 with Microsoft Azure Entra ID. Built to demonstrate enterprise-grade Active Directory, identity synchronization, networking, storage, virtualization, and cloud integration skills — aligned with AZ-800 and AZ-104 certification objectives.


Architecture Overview

┌─────────────────────────────────────────────────────┐
│              VMware Workstation (Host)               │
│                                                     │
│  ┌─────────────────┐    ┌─────────────────────────┐ │
│  │      DC01        │    │        SERVER02          │ │
│  │ 192.168.10.10   │    │    192.168.10.20         │ │
│  │                 │    │                          │ │
│  │ • AD DS         │◄──►│ • Domain Member          │ │
│  │ • DNS           │    │ • DHCP Server            │ │
│  │ • Group Policy  │    │ • File Services          │ │
│  │ • Entra Sync    │    │ • DFS Namespace          │ │
│  │ • Azure Arc     │    │ • Hyper-V Host           │ │
│  └────────┬────────┘    └──────────────────────────┘ │
│           │                VMnet10 (192.168.10.0/24)  │
└───────────┼─────────────────────────────────────────┘
            │ HTTPS
            ▼
┌─────────────────────────────────────────────────────┐
│                Microsoft Azure                       │
│                                                     │
│  • Entra ID (kotsvagg83gmail.onmicrosoft.com)       │
│  • Entra Cloud Sync                                 │
│  • Azure Arc (DC01 Connected)                       │
│  • Azure Monitor / Log Analytics                    │
│  • Microsoft Sentinel                               │
└─────────────────────────────────────────────────────┘

Lab Environment

Component Details
Hypervisor VMware Workstation
OS Windows Server 2022 Standard Evaluation
Domain lab.hybrid.local
NetBIOS LAB
DC01 IP 192.168.10.10
SERVER02 IP 192.168.10.20
Network VMnet10 — Host-only (192.168.10.0/24)
Azure Tenant kotsvagg83gmail.onmicrosoft.com
Azure Region West Europe

Modules

# Module Status
1 VMware Network & DC01 Setup ✅ Complete
2 Active Directory Domain Services ✅ Complete
3 SERVER02 Domain Join ✅ Complete
4 Group Policy Objects ✅ Complete
5 Azure Entra Cloud Sync ✅ Complete
6 DHCP Server ✅ Complete
7 File Services ✅ Complete
8 DFS Namespace ✅ Complete
9 Hyper-V ✅ Complete
10 Azure Arc ✅ Complete
11 Azure Monitor ✅ Complete

Module 1 — VMware Network & DC01 Setup

Configured an isolated Host-only network (VMnet10) in VMware Workstation and deployed the first Windows Server 2022 VM (DC01) with a static IP.

Key configurations:

  • VMnet10: 192.168.10.0/24, Host-only, DHCP disabled
  • DC01: 4GB RAM, 60GB disk, static IP 192.168.10.10
  • Windows Server 2022 Standard Evaluation

VMnet10 Configured DC01 VM Settings DC01 Static IP


Module 2 — Active Directory Domain Services

Installed the AD DS role on DC01, promoted it to a domain controller, and built the OU structure with test users.

Key configurations:

  • Domain: lab.hybrid.local
  • OU Structure: HybridLab > Users / Computers / Groups / ServiceAccounts
  • Test users: Alice Johnson, Bob Smith, Carol White
  • UPN suffix: kotsvagg83gmail.onmicrosoft.com

AD DS Role Installed Domain Controller Verified OU Structure Created Test Users Created


Module 3 — SERVER02 Domain Join

Deployed a second Windows Server 2022 VM (SERVER02) and joined it to the lab.hybrid.local domain.

Key configurations:

  • SERVER02: Static IP 192.168.10.20
  • Successfully joined to lab.hybrid.local
  • Verified via Get-ADComputer on DC01

SERVER02 VM Created SERVER02 Static IP SERVER02 Domain Join SERVER02 Joined Domain


Module 4 — Group Policy Objects

Created and linked two GPOs using Group Policy Management Console (GPMC) and verified policy application on SERVER02.

GPOs created:

GPO Linked To Settings
Security-PasswordPolicy Domain root Min length 12, complexity, 60-day max age, 5 lockout attempts
User-DesktopPolicy OU=HybridLab Wallpaper, drive map, restricted Control Panel

GPMC Opened GPO Password Policy GPO Lockout Policy GPO Desktop Policy GPResult SERVER02 GPMC Policies Overview


Module 5 — Azure Entra Cloud Sync

Configured identity synchronization between on-premises Active Directory and Azure Entra ID using Microsoft Entra Cloud Sync (replacing the legacy Connect Sync due to certificate compatibility on free-tier tenants).

Key configurations:

  • UPN suffix added: kotsvagg83gmail.onmicrosoft.com
  • All user UPNs updated to match Azure tenant
  • Sync admin account created: [email protected]
  • Entra Cloud Sync agent installed on DC01
  • Sync configuration enabled and verified

Entra Tenant Domain UPN Suffix Added Users UPN Updated Sync Admin Created Cloud Sync Agents Empty Cloud Sync Agent Installer Start Cloud Sync Agent Confirm Cloud Sync Agent Complete Cloud Sync Agent Active Cloud Sync New Configuration Cloud Sync Configuration Created Cloud Sync Review Enable Cloud Sync Configuration Enabled Cloud Sync Agent Service Running Cloud Sync Network Adapters Cloud Sync Connectivity Test

Note: Microsoft Entra Connect Sync was initially attempted but failed with error AADSTS700027 (expired service principal certificate — known limitation on free-tier tenants). Entra Cloud Sync was used as the modern, lightweight alternative.


Module 6 — DHCP Server

Installed the DHCP Server role on SERVER02 and configured a scope to serve IP addresses to lab clients.

Key configurations:

  • DHCP role installed on SERVER02
  • Scope: 192.168.10.100 – 192.168.10.200
  • Subnet mask: 255.255.255.0
  • Default gateway: 192.168.10.1

DHCP Role Installed DHCP Role Complete DHCP Console DHCP Scope Created


Module 7 — File Services

Installed the File Services role on SERVER02 and created a shared folder accessible across the domain.

Key configurations:

  • File and Storage Services role installed
  • Shared folder: SharedDocs
  • Share path: \\SERVER02\SharedDocs
  • NTFS and Share permissions configured

File Services Installed Shared Folder Created Shared Folder Verified


Module 8 — DFS Namespace

Configured a Distributed File System (DFS) Namespace to provide a unified path for shared resources across the domain.

Key configurations:

  • DFS Namespace: \\lab.hybrid.local\HybridLab
  • Namespace type: Domain-based
  • Folder target: \\SERVER02\SharedDocs → mapped as SharedDocs

DFS Management Console DFS Namespace Created DFS Folder Added


Module 9 — Hyper-V

Enabled nested virtualization on SERVER02 within VMware Workstation and installed the Hyper-V role to demonstrate Windows Server virtualization capabilities.

Key configurations:

  • VMware VT-x/EPT enabled on SERVER02 VM for nested virtualization
  • Hyper-V role installed on SERVER02
  • Virtual Switch created: LabInternalSwitch (Internal network)
  • Nested VM created: LabVM01 (Generation 1, 512MB RAM)

Hyper-V VMware VTx Enabled Hyper-V Manager Open Hyper-V Virtual Switch Created Hyper-V VM Created


Module 10 — Azure Arc

Onboarded DC01 to Azure Arc, extending Azure management capabilities to the on-premises domain controller.

Key configurations:

  • Azure Connected Machine Agent installed on DC01 via PowerShell script
  • DC01 registered in Azure Arc as a connected machine
  • Resource Group: sentinel-lab-rg, Region: West Europe
  • Arc agent status: Connected
  • FQDN: DC01.lab.hybrid.local visible in Azure portal

Azure Arc Portal Azure Arc Agent Installing Azure Arc DC01 Connected Azure Arc DC01 Details


Module 11 — Azure Monitor

Connected DC01 (via Azure Arc) to Azure Monitor and the existing Log Analytics Workspace, enabling hybrid cloud monitoring and telemetry collection from the on-premises domain controller.

Key configurations:

  • Azure Monitor Agent configured on DC01 via Arc
  • Log Analytics Workspace: sentinel-lab-workspace
  • OpenTelemetry metrics enabled (CPU, memory, disk, network)
  • Log-based metrics (classic) enabled
  • Onboarding status: Successful

Azure Arc DC01 Monitoring Azure Monitor Configure DC01 Azure Monitor Onboarding Successful


Skills Demonstrated

Category Skills
Active Directory AD DS installation, domain promotion, OU design, user management
Group Policy GPO creation, linking, filtering, verification with gpresult
Hybrid Identity UPN suffix configuration, Entra Cloud Sync, identity synchronization
Networking Static IP configuration, DHCP scope management, DNS
File Services SMB shares, NTFS permissions, DFS Namespace
Virtualization VMware Workstation, Hyper-V nested virtualization, virtual switching
Azure Arc On-premises server onboarding, connected machine agent
Azure Monitor Log Analytics integration, metrics collection, hybrid monitoring
Security Password policies, account lockout, GPO-based hardening

Repository Structure

Hybrid-Identity-Lab/
├── README.md
├── docs/
│   └── screenshots/          # 60 sequential lab screenshots
└── scripts/                  # PowerShell scripts used in lab

Author

Evangelos Kotsis System Administrator | Cloud Security Enthusiast

LinkedIn GitHub Portfolio

About

Hybrid Identity Lab — On-premises Active Directory integrated with Microsoft Azure Entra ID. Covers AD DS, Group Policy, Entra Cloud Sync, DHCP, File Services, DFS, Hyper-V, Azure Arc, and Azure Monitor.

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