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Azure’s hierarchy is a crucial concept for efficiently managing resources, enforcing policies, and monitoring costs. This article explains the structure of Azure’s hierarchy—comprising management groups, subscriptions, and resource groups—and how these components work together.

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Management Groups

When managing multiple projects or departments with separate Azure subscriptions, management groups provide an effective way of consolidating administration. They enable you to group subscriptions under a single hierarchical structure, making it easier to apply policies and governance across the organization. At the top of the hierarchy is the root management group, which is provided by default. This ultimate parent oversees all other groups and subscriptions. Azure supports nesting up to six levels beneath the root management group, accommodating even complex organizational requirements. For instance, consider the diagram below, which illustrates a root management group containing two management groups—“IT” and “Finance.” Under the “IT” management group, further subdivisions like Production and Development may be used to segregate environments.
The image illustrates a hierarchy of management groups, subscriptions, and resource groups, explaining their roles in organizing and managing resources. It includes a flowchart showing the structure from the root management group down to individual subscriptions.

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Subscriptions and Resource Groups

Descending down the hierarchy, each subscription in Azure serves as a distinct account in which resources are provisioned. Within a subscription, resources are logically organized into resource groups. Resource groups are containers that house virtual machines, databases, app services, and other assets, enabling granular management of settings, policies, and budgets. This structured approach is essential for robust governance, controlled access, and effective cost management. It provides a comprehensive overview of your resources while allowing flexibility to focus on individual components as necessary.

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Working with Management Groups in the Azure Portal

Managing Azure’s hierarchy is straightforward via the Azure portal. The following steps illustrate how to create and manage management groups:
  1. When you access the management groups section for the first time, you’ll encounter a button labeled “Start using management groups.” Clicking this initiates the creation of the root management group.
  2. After initialization, you are prompted to set up a new management group (e.g., assign an ID like “001” and a name such as “IT”).
The image shows a Microsoft Azure portal page for managing groups, indicating that there are no management groups to display. It includes options to start using management groups and provides navigation links on the left.
During creation, you might encounter validation errors. For example, the system might indicate that the management group ID cannot be empty and must adhere to specific character rules.
The image shows a Microsoft Azure portal interface for creating a management group, with an error message indicating that the management group ID cannot be empty and must follow specific character rules.
Once the management group is submitted successfully, the portal displays the tenant root group along with a list of available subscriptions. You can easily move subscriptions to their appropriate management groups by selecting a subscription and clicking “Move” to assign it—for example, to the “IT” group.
The image shows the Microsoft Azure portal displaying a list of management groups and subscriptions, including details like names, types, and IDs.

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Elevated Permissions and Access Control

To move subscriptions or manage the tenant root group, you must have elevated permissions through Azure Active Directory (Azure AD). Typically, this requires Global Administrator rights.
Without these elevated permissions, you may not be able to perform certain actions. Once the necessary permissions are assigned, you can click on a management group like “IT” to configure access control, review security policies, analyze costs, and set budgets.
The image shows a Microsoft Azure portal interface displaying details of a management group named "IT," including its ID, access level, and associated subscriptions. The sidebar includes options for subscriptions, resource groups, and governance features like security and policy.
Be aware that governance and cost management features are not available for the tenant root group unless you have the required elevated permissions. If you attempt to access the root group without proper rights, you will receive an authorization error.

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Summary of Azure Hierarchy Components

Below is a concise summary of the key components of Azure’s hierarchy:
ComponentDescriptionExample
Management GroupsTop-level grouping that organizes subscriptions and nested management groups.”IT”, “Finance”
SubscriptionsAccounts under which resources are provisioned. They are organized under management groups.Subscription 001
Resource GroupsLogical containers for resources within subscriptions such as virtual machines, databases, etc.Production/V2
This structure is designed for efficient policy management, access control, and cost oversight. Additionally, Role-Based Access Control (RBAC) provides a finer level of control over who can access and manage specific resources within your organization. For more detailed information on Azure and its features, consider referring to these resources: Happy learning!

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