My question is hopefully simple.In the period where you have both on-premise and Azure based resources can jobs running in an Azure Kubernetes cluster be configured to use an AD user context such that things like network folders can be accessed or SQL Server connections made using trusted connections? If not, what is the safest way to proceed as I'm not a fan of UID/PWD connection strings as the details tend to get shared where they shouldn't.

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You cannot take the Azure AD-based managed identities and grant them access to on-premises resources. One option would be to move your AKS cluster on-premises via Azure Arc service.

That being more infrastructure required may not be ideal. The best option is to move those resources you need on-premises into the cloud because it lessens the latency that will be incurred trying to retrieve unknown data size between Azure and your on-premises network.

  • need network files, have application re-coded to talk to Storage Account Servies (file share, blob, etc.)
  • need database, migrate to Azure VM or Azure SQL DB/MI that support managed identity authentication

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