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Unlock the Power of Azure Management Groups

Managing Azure at scale becomes harder when subscriptions pile up quickly, and when you’ve got hundreds of policies. Without a clear hierarchy, your environment grows chaotic and fixing it later takes ten times the effort.

That’s when Azure Management Groups are indispensable for large, growing environments.

They restore order and provide a clear, hierarchical way to control governance, policy enforcement, and cost visibility across every subscription.

Author

Niels Kroeze IT Business Copywriter

Reading time 4 minutes Published: 28 November 2025

What are Azure Management Groups?

Azure Management Groups are logical containers used to organise your subscriptions into a hierarchy. They sit above subscriptions and help you group, manage, and apply policies consistently across your Azure environment.

Management Groups play a pivotal role in governing hierarchy, which allows organisations to stay compliant and manage policies and access across multiple subscriptions.

Every Azure tenant starts with a tenant root group, which is created automatically. From there, you can create additional management groups to reflect your organisation’s structure — for example, separating dev, test, and prod environments or business units.

Diagram illustrating the Azure Resource Entity Hierarchy, showing the relationship between the Root, nested Management Groups, Subscriptions (represented by keys), and Resource Groups (represented by blue cubes). — **Source:** Microsoft

Tip:

Avoid placing resources or subscriptions directly under the root management group. Use it only for global settings such as organisation-wide compliance or monitoring policies. Keeping operational resources in their own management groups improves clarity and control.

Azure Management Groups can scale up to 10000 groups with a six-level hierarchy, offering a powerful solution for managing complex, large-scale enterprise environments.

Here’s a simple structure example:

Hierarchical diagram illustrating Azure resource organization from Corporate IT Management Group down through Environments (Production, Development, QA), Subscriptions (represented by keys), and finally Resource Groups containing applications. — **Source:** Microsoft

See how each subscription might contain multiple applications. For example, App 1 -6 spread across the production subscriptions.

This structure helps separate workloads and apply the right governance settings to each.

Benefits of Azure Management Groups

There are several advantages of using management groups in Azure, if done correctly:

Hierarchy and structure

Management groups provide a clear governance hierarchy. You can apply settings, policies and compliance rules all at one level and have them automatically propagate down to all subscriptions and resources below.

Centralised governance

You manage access, compliance and policies across the organisation in one place. For example, apply policies, and compliance (ISO 27001, HIPAA, etc.) at the root level so it applies to every environment.

Policy enforcement and RBAC

Apply Azure Policy and role-based access control (RBAC) at any level. For instance:

At the tenant root, enforce global policies (like data residency or encryption).
At the production group, enforce stricter compliance (HIPAA or ISO).
At sandbox or development levels, relax restrictions for testing.

Simplified administration

Manage policies and access once from the management group level rather than doing it every time per subscription. This reduces repetitive work and keeps configurations consistent.

Cost management

Management groups also help with cost management by grouping subscriptions by business unit, department, or environment. This lets you assign budgets, track spending, and report costs per group for better financial visibility.

Better separation of environments

Using dedicated management groups for distinct environments (prod, dev, test, decommissioned) helps prevent cross-environment risks. For example:

Prevent network connectivity between Dev and Prod.
Test production-level policies in Sandbox before rollout.
Keep decommissioned subscriptions for audit and compliance retention.

Closing thoughts

Instead of configuring everything at the subscription or root level, leverage Azure Management groups. Because without proper structure, you lose governance clarity, create policy sprawl, and make compliance harder to manage.

With management groups you can:

Control access and compliance consistently.
Apply global or local policies as needed.
Isolate environments safely.
Track and manage costs effectively.

Especially when you’re just starting out, don’t neglect the importance of setting up a clear hierarchy. It will pay off as your environment grows.

Learn more about management groups here.

FAQ about Azure Management Groups

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