If you are new to Azure, or to some extent using Azure, you often here the terms Organizations, tenant, Accounts, Subscriptions and Licences used a lot. If you are little confused about the differences, you are not alone.

In this post, I will try to explain these terms by using an analogy of renting an apartment.

Think of Azure as a big apartment complex owned by Microsoft, that I am interested in renting an apartment. Renting an apartment in this complex (Azure) is free, I only pay for the use of amenities like water, gas, in Azure terms, Azure resources.

Organization

I will present myself to the landlord (Microsoft) and fill a registration form. Once my application is accepted, I am referred to as an Organization. More formally,

An organization represents a business entity that is using Microsoft cloud offerings, typically identified by one or more public Domain Name System (DNS) domain names, such as contoso.com.

You don’t have to be a business entity to be referred to as organization, you can be an individual.

Azure AD Tenant

After registration, I will be given an apartment (Azure AD Tenant) with a key and room number (Tenant ID) to identify my apartment.

An Azure AD tenant is a specific instance of Azure AD containing accounts and groups. 

Azure Accounts

If I have a family, I will move in with them (Azure Accounts).

User accounts for all of Microsoft’s cloud offerings are stored in an Azure Active Directory (AD) tenant

Subscriptions

Remember I said, you don’t pay for the apartment, but the use of amenities. To use any amenity in the apartment, I need to enter into a contract with the landlord, to agree on how I want to pay for the use. It could be at the end of every month or pay before use. This is what we call subscription.

A subscription is an agreement with Microsoft to use one or more Microsoft cloud platforms or services, for which charges accrue based on either a per-user license fee or on cloud-based resource consumption

I can sign up for Pay-As-You-Go subscription for example. Whenever I use any resources in Azure, the bill will be tied to my subscription.

Licences

For Microsoft’s SaaS cloud offerings, a license allows a specific user account to use the services of the cloud offering. You are charged a fixed monthly fee as part of your subscription.

Summary of the hierarchy

I can sign up for multiple subscriptions as an Organization, but they must be tied to only one apartment (Tenant). The billing for the use of a resource must be tied to one subscription, and I can rent as many apartments (Tenant) as I want as an Organization.