TL;DR
Microsoft Entra ID P2 provides advanced identity security features, including risk-based conditional access, Privileged Identity Management (PIM) for just-in-time admin access, and automated access governance that goes beyond the baseline protections in P1. While Entra ID P2 excels at authentication-layer threat detection, it has visibility gaps with post-authentication changes that require continuous monitoring tools to detect privilege escalations and directory modifications in real time.
Microsoft Entra ID P2 is the premium tier of Microsoft’s cloud identity and access management platform. It includes advanced security features like Identity Protection, Privileged Identity Management, and access governance, capabilities that go well beyond basic authentication.
Recent password-spraying attacks hit over 80,000 Microsoft Entra ID accounts across hundreds of organizations. That makes understanding what P2 actually delivers more important than ever.
The choice between Microsoft Entra ID P1 and P2 comes down to which security controls your environment needs. This guide explains what the Microsoft Entra ID P2 license includes, how it compares to P1, what it costs, and where gaps remain that require additional monitoring.
What Is Microsoft Entra ID P2?
Microsoft Entra ID P2 represents the premium tier of Microsoft’s identity and access management platform. While lower-tier licenses handle basic authentication, P2 delivers advanced security capabilities.
The Evolution from Azure AD to Microsoft Entra ID
Microsoft rebranded Azure Active Directory to Microsoft Entra ID in 2023 as part of a broader consolidation of its identity services. The underlying functionality remained unchanged; this wasn’t a platform rebuild. Existing Azure AD P2 licenses automatically converted to Microsoft Entra ID P2 without requiring migration work or reconfiguration.
The rebrand signaled Microsoft’s strategy to position Entra as a complete identity family. That includes Entra ID (formerly Azure AD), Entra Permissions Management for managing entitlements across multiple cloud platforms, and Entra Verified ID for decentralized credentials. For IT teams, the technical architecture stayed the same. Tenant configurations, API integrations, and PowerShell scripts continued working exactly as they did before the name change.
Core Purpose and Identity Management Capabilities
Microsoft Entra ID P2 functions as a cloud-based identity provider that authenticates users, manages access permissions, and enforces security policies across both cloud and on-premises applications. Rather than stopping at basic authentication like traditional directory services, Entra ID P2 extends into conditional access enforcement, identity threat detection, and automated access lifecycle management.
Entra ID P2 operates as both an authentication service and a policy enforcement layer, applying risk signals to access decisions in real time rather than treating authentication as a binary allow/deny checkpoint.
The platform integrates with thousands of preconfigured SaaS applications through SAML, OAuth, and OpenID Connect protocols. It also supports custom applications through Microsoft Graph API and legacy systems via Application Proxy. This broad compatibility makes it the authentication foundation for mixed environments where users need single sign-on across different systems.
Who Needs Microsoft Entra ID P2?
Organizations handling sensitive data under regulatory frameworks like GDPR or managing privileged access across distributed teams typically require the P2 tier. The license becomes necessary when you need automated responses to credential compromise, time-bound access to administrative roles, or systematic reviews of who can access specific resources.
Companies with strict compliance requirements (e.g., financial services, healthcare, or government contractors) often find P2 features essential rather than optional. The same applies to organizations that have experienced an identity breach or failed an audit due to excessive standing privileges. If your security team spends considerable time manually tracking privileged access or investigating suspicious sign-ins after the fact, P2 addresses those operational challenges directly.
Microsoft Entra ID P1 vs P2: Key Differences
Choosing the right tier means looking past the feature checklist and understanding how each level handles identity risk and privileged access. The core difference between P1 and P2 comes down to automation and depth: P1 gives you solid baseline protections, while P2 adds automated risk detection, time-bound administrative roles, and systematic access governance that security teams can rely on when things get serious.
Overview of Licensing Tiers
Microsoft organizes Entra ID licensing into four tiers: Free, P1, P2, and various Microsoft 365 bundle inclusions. The Free tier handles basic directory services and single sign-on for up to 10 applications. P1 steps it up with hybrid identity capabilities, conditional access, and self-service password reset for cloud users.
Microsoft Entra ID P2 takes everything from P1 and adds Microsoft Entra Identity Protection for risk-based policies, Privileged Identity Management (PIM) for just-in-time admin access, and access reviews for systematic permission auditing. Most organizations realize they need P2 after running into P1’s limitations during a security incident or compliance audit.
The pricing works on a per-user basis, but you only need to license users who actually use premium features. Your entire organization doesn’t need P2 licenses if only administrators and privileged users require those capabilities. That said, calculating the true cost gets complicated when you factor in users who need risk-based access policies or governance workflows.
Feature Comparison Breakdown: Microsoft Entra ID P1 vs P2
Here’s a detailed breakdown of what each tier offers and where the key differences lie.
Capability | Microsoft Entra ID P1 | Microsoft Entra ID P2 |
Conditional Access | Policy-based access control with static conditions | Risk-based conditional access with dynamic sign-in and user risk detection |
Identity Protection | Not included | Machine learning-based risk detection for users and sign-ins |
Privileged Identity Management | Not included | Just-in-time admin access, approval workflows, access reviews for privileged roles |
Access Reviews | Not included | Automated review campaigns for group memberships, application access, and role assignments |
Entitlement Management | Not included | Access packages, automated provisioning, guest lifecycle management |
The biggest gap shows up in threat handling. P1 requires administrators to define access policies manually based on known conditions like location, device compliance, or group membership. Microsoft Entra ID P2 introduces continuous risk scoring that adapts policies automatically when it detects suspicious behavior patterns. This means P2 can block compromised accounts before an attacker gets in, while P1 requires you to spot the threat first.
P2’s risk-based conditional access evaluates each authentication attempt against machine learning models trained on Microsoft’s global threat intelligence, responding to credential compromises within seconds rather than relying on static policy definitions.
Pricing and Cost Considerations
The Microsoft Entra ID P2 license runs about $9 per user monthly, compared to $6 for P1. That $3 difference might not sound like much, but multiply it across hundreds or thousands of users, and it adds up. A 500-person organization faces roughly $18,000 in additional annual costs for P2 over P1.
The extra cost must be considered in the context of what the extra features provide. Organizations that have dealt with identity breaches typically spend far more on incident response, regulatory fines, and remediation than they would have spent on P2 licensing. The hard part is justifying the cost before an incident happens, especially when finance teams see identity security as an IT expense rather than risk mitigation.
Some organizations take a hybrid licensing approach, assigning Microsoft Entra ID P2 only to high-risk users like administrators, executives, and employees with access to sensitive data. Everyone else gets P1 or stays on licenses included with Microsoft 365 subscriptions. This strategy cuts costs while protecting the most valuable accounts, though it requires careful tracking of who needs which license level.
Microsoft Entra ID P2 Features and Business Benefits
The Microsoft Entra ID P2 license delivers security capabilities that go far beyond basic authentication. These features target specific challenges organizations face with privileged access management, compromised account detection, and compliance requirements.
Identity Protection and Risk-Based Access
Identity Protection compares authentication attempts against a database of known attack patterns and unusual behavior. Rather than depending on static rules, it assigns real-time risk scores to each sign-in based on indicators like impossible travel scenarios, unfamiliar IP addresses, password spray patterns, and credential leaks found across the internet.
When Identity Protection flags a user or sign-in as risky, you can set up Conditional Access policies to respond automatically. For example, high-risk sign-ins might require multi-factor authentication, block access completely, or force a password change. This creates a defense mechanism that adjusts to threats without needing manual review every time suspicious activity emerges.
Risk-based policies evaluate authentication context continuously, treating each login as a fresh security checkpoint rather than assuming trust based on previous successful authentications.
The practical advantage here becomes obvious when credential-stuffing attacks target your tenant. Identity Protection recognizes the pattern across multiple accounts simultaneously and blocks compromised credentials before attackers reach your resources. Standard Conditional Access policies can’t achieve this because they evaluate conditions you define manually, not behavioral patterns learned from global threat intelligence.
Privileged Identity Management
PIM solves a critical security vulnerability: standing administrative privileges. Most breaches involving privileged accounts succeed because those accounts maintain elevated permissions constantly, even when administrators aren’t actively performing administrative work.
Here’s how to configure just-in-time access for administrative roles using PIM:
- Identify eligible roles: Review your current administrative assignments and determine which roles should require activation rather than permanent assignment. Start with Global Administrator, Application Administrator, and any custom roles with write permissions to sensitive resources.
- Configure activation requirements: Set time limits for how long an activated role remains valid (typically 4-8 hours). Require multi-factor authentication at activation time, not just during initial sign-in. Add approval workflows for the most sensitive roles, so another administrator must approve activation requests.
- Remove standing assignments: Convert permanent role assignments to eligible assignments. Users lose immediate access to privileged functions but can activate their roles when needed through the Entra ID portal or API.
- Monitor activation patterns: Review PIM audit logs regularly to spot unusual activation timing, frequency, or duration. Set alerts for activations that occur outside business hours or from unexpected locations.
Following these steps reduces your attack surface significantly because compromised credentials can’t immediately access administrative functions. Attackers must not only steal credentials but also pass additional authentication challenges and potentially manipulate another administrator into granting approval.
PIM also generates access reviews automatically, prompting you to confirm whether users still require their eligible role assignments. This establishes an ongoing governance process that prevents privilege creep as people change roles or responsibilities.
Access Reviews and Governance
Access reviews address the problem of permissions that accumulate over time without anyone verifying that they remain necessary. Security teams at organizations following frameworks like ISO/IEC 27001 use these reviews to demonstrate systematic access control validation during audits.
You can schedule reviews for Azure AD group memberships, application assignments, or Azure resource roles. Reviewers receive notifications to confirm whether each user still needs their current access. The system supports self-attestation, where users confirm their own access needs, manager-based reviews, or reviews by resource owners who understand which permissions each role requires.
The automation handles most of the workflow complexity. When reviewers approve continued access, nothing changes. When they deny access or don’t respond within the deadline, Microsoft Entra ID P2 can automatically remove permissions based on your configuration. This creates an audit trail showing who reviewed access, when they reviewed it, and what decisions they made.
Entitlement Management
Entitlement management bundles multiple resources together into access packages that users can request through a self-service portal. Instead of submitting tickets to provision access across different systems individually, users request a package that grants everything they need for a specific job function or project.
Each access package includes approval workflows, automatic expiration dates, and recertification requirements. For example, when someone joins the finance team, they may request the “Finance Analyst” package that grants access to the accounting system, relevant SharePoint sites, specific Microsoft Teams channels, and membership in distribution groups, all through one request that routes to the appropriate approvers.
Security Gaps in Microsoft Entra ID P2 and How to Address Them
Microsoft Entra ID P2 includes powerful features like Identity Protection and PIM, but these tools operate within architectural constraints that create visibility gaps. Recognizing these limitations helps you build a complete security strategy that extends beyond what native tooling provides.
Real-Time Threat Detection Limitations
Identity Protection in Microsoft Entra ID P2 analyzes sign-in attempts and flags risky behavior using machine learning models trained on global threat intelligence. This approach works well for detecting credential compromise at the authentication layer. However, it doesn’t capture what happens after successful authentication, specifically, changes to directory objects, group memberships, role assignments, or policy configurations.
Identity Protection evaluates user and sign-in risk, but it doesn’t monitor attribute-level modifications to existing accounts, policy tampering, or privilege escalations that occur through legitimate administrative sessions. An attacker who compromises an account with standing privileges can modify group memberships, adjust conditional access policies, or add themselves to administrative roles without triggering Identity Protection alerts. These actions happen after authentication completes, which places them outside the scope of what Identity Protection monitors.
Native Entra ID logging captures events but introduces delays through log ingestion pipelines, so critical changes may not surface until minutes or hours after they occur, long after attackers have moved laterally.
The Continuous Monitoring Challenge
Microsoft Entra ID P2 depends on audit logs stored in the Azure portal for change tracking. These logs show who modified what, but they require manual review or integration with SIEM platforms that introduce additional latency. Between the time log data gets ingested, parsed, and correlated, attackers have already exploited their elevated access.
Free assessment tools like TeamFiltration demonstrate how quickly attackers can enumerate Entra ID environments, spray credentials, and establish persistence through refresh tokens. These attacks succeed because there’s a gap between when changes occur and when security teams become aware of them through standard logging mechanisms.
Organizations need continuous change monitoring that captures modifications at the object and attribute levels across both on-premises Active Directory and Entra ID without waiting for log aggregation. This requires direct integration with directory services rather than depending on audit log APIs that batch events.
Strengthening Hybrid Identity Security with Cayosoft Guardian Protector
Cayosoft Guardian Protector addresses the visibility gaps inherent in Microsoft Entra ID P2 through continuous, real-time monitoring of your hybrid identity infrastructure. Rather than waiting for logs to populate or manually reviewing audit trails, Guardian Protector captures every change across Active Directory, Microsoft Entra ID, Microsoft 365, Teams, Exchange Online, and Intune the moment it happens.
The table below compares how Microsoft Entra ID P2’s native tools stack up against continuous monitoring solutions when it comes to detecting and responding to security threats.
Capability | Microsoft Entra ID P2 Native Tools | Cayosoft Guardian Protector |
Change Detection Speed | Delayed by log ingestion pipeline (minutes to hours) | Real-time capture at the moment changes occur |
Hybrid Environment Coverage | Separate tools for on-prem AD and Entra ID | Unified visibility across both environments |
Attribute-Level Monitoring | Requires custom queries and log parsing | Automatic capture of all object and attribute changes |
Threat Intelligence Updates | Microsoft-managed, updated periodically | Automatic updates to detection rules without manual configuration |
Cost for Core Monitoring | Included with P2 license, SIEM integration costs extra | Zero cost, no licensing restrictions on object count |
Guardian Protector fills the operational gap between what Microsoft Entra ID P2 provides and what security teams actually need. You get instant alerts when someone modifies privileged group memberships, alters conditional access policies, reactivates dormant accounts, or tampers with Group Policy Objects. These are actionable notifications that let you respond while the threat is still contained.
The platform runs without agents, which means there’s no deployment overhead across domain controllers or cloud endpoints. It monitors an unlimited number of Microsoft identity objects across your entire environment without licensing caps or feature restrictions. Guardian Protector extends the security capabilities of organizations already invested in Microsoft Entra ID P2 by adding the continuous monitoring layer that native tools can’t deliver.
Download Guardian Protector to gain real-time visibility across your hybrid Microsoft identity infrastructure without adding cost or complexity to your existing security stack.
Choosing the Right Microsoft Entra ID P2 License Strategy
Microsoft Entra ID P2 delivers advanced identity protection and governance capabilities that prove their worth for organizations managing sensitive data or meeting strict compliance requirements. The additional licensing expense pays off when you need risk-based conditional access, just-in-time privileged access, or systematic access reviews that P1 can’t offer. However, the native tooling creates operational gaps around real-time change visibility and hybrid environment monitoring that demand separate solutions.
An effective strategy pairs the Microsoft Entra ID P2 license with continuous monitoring tools that spot threats immediately instead of hours later through log aggregation. Begin by evaluating whether your security incidents originate from authentication compromise or post-authentication privilege escalation, which will tell you whether P2’s features alone address your challenges or whether you need additional change monitoring to close visibility gaps throughout your hybrid identity infrastructure.
FAQs
Microsoft offers four Entra ID tiers: Free (basic directory services), P1 (conditional access and hybrid identity), P2 (advanced risk detection and privileged access management), plus various inclusions within Microsoft 365 bundles. Each tier builds on the previous one, with P2 adding Identity Protection, Privileged Identity Management, and access governance features.
Yes, organizations commonly assign Entra ID P2 licenses only to administrators and high-risk users while keeping other employees on P1 or lower tiers to reduce costs. Taking a hybrid approach protects the most critical accounts with advanced security features while maintaining baseline protections for standard users.
Upgrade when you need automated threat response to compromised credentials, time-limited administrative access, or systematic access reviews for compliance requirements. Organizations that have experienced identity breaches, failed audits due to standing privileges, or that operate under strict regulatory frameworks typically find P2 essential rather than optional.
Identity Protection focuses on authentication-layer threats but doesn’t capture post-authentication changes like group membership modifications, role assignments, or policy tampering. Organizations need additional continuous monitoring tools to detect privilege escalations and directory changes that occur through legitimate administrative sessions.
Microsoft 365 E3 includes some P1 capabilities, while E5 bundles the full Entra ID P2 license with advanced security features. Organizations already paying for E5 don’t need separate P2 licenses, but those on lower-tier subscriptions must purchase standalone identity licenses for premium features.
Want to See Cayosoft in Action?
Cayosoft is recognized by Gartner as an ITDR solution provider and provides solutions that make identities more resilient to attacks and guarantee a fast forest recovery, if needed. Learn how Cayosoft Guardian facilitates granular change tracking, post-breach analysis, and long-term AD security improvements. Schedule a demo to see the capabilities in depth.