The answer is federation. This implementation relies on federation because it establishes a trust relationship between your on-premises Active Directory and an external identity provider (IdP) that supports SAML 2.0, allowing the IdP to issue SAML assertions that Microsoft 365 and the third-party SaaS application trust as proof of authentication. On the SC-900 exam, this scenario tests your understanding of how federation enables single sign-on (SSO) across different security domains without sharing passwords—a common trap is confusing federation with simple password synchronization or directory integration, but federation is distinct because it uses a separate IdP to broker authentication via SAML tokens. For a memory tip, think of federation as a “trust bridge”: the IdP vouches for the user’s identity to each relying application, so the user logs in once and the SAML assertion does the rest.
SC-900 Practice Question: Describe the concepts of security, compliance, and identity
This SC-900 practice question tests your understanding of describe the concepts of security, compliance, and identity. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company uses an on-premises Active Directory (AD) and wants to enable single sign-on (SSO) for users to access Microsoft 365 and a third-party SaaS application. They plan to use an external identity provider (IdP) that supports Security Assertion Markup Language (SAML) 2.0. Which identity concept does this implementation primarily rely on?
Correct. Federation enables organizations to trust identities from another identity provider or on-premises system, allowing SSO across different platforms using standards like SAML.
B
Provisioning
Why wrong: Provisioning refers to creating, managing, and deactivating user accounts and access rights, not the trust relationship that enables SSO.
C
Synchronization
Why wrong: Synchronization replicates user objects and attributes between directories (e.g., AD DS to Microsoft Entra ID), but it does not provide the trust for SSO using an external IdP.
D
Directory extension
Why wrong: Directory extension allows adding custom attributes to directory objects in Microsoft Entra ID, which is unrelated to SSO or federation trust.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Federation
Federation is the correct answer because it establishes a trust relationship between the on-premises Active Directory and the external identity provider (IdP) using SAML 2.0, enabling users to authenticate once and gain access to both Microsoft 365 and the third-party SaaS application without re-entering credentials. This relies on the IdP issuing SAML assertions that are trusted by the relying parties (Microsoft 365 and the SaaS app), which is the core mechanism of federated identity.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✓
Federation
Why this is correct
Correct. Federation enables organizations to trust identities from another identity provider or on-premises system, allowing SSO across different platforms using standards like SAML.
Related concept
Read the scenario before looking for a memorised answer.
✗
Provisioning
Why it's wrong here
Provisioning refers to creating, managing, and deactivating user accounts and access rights, not the trust relationship that enables SSO.
✗
Synchronization
Why it's wrong here
Synchronization replicates user objects and attributes between directories (e.g., AD DS to Microsoft Entra ID), but it does not provide the trust for SSO using an external IdP.
✗
Directory extension
Why it's wrong here
Directory extension allows adding custom attributes to directory objects in Microsoft Entra ID, which is unrelated to SSO or federation trust.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse synchronization (e.g., Azure AD Connect) with federation, thinking that syncing user accounts alone enables SSO, but synchronization only copies identities without establishing the SAML trust required for federated authentication.
Detailed technical explanation
How to think about this question
Under the hood, federation with SAML 2.0 involves the external IdP acting as the authoritative source for authentication; when a user attempts to access Microsoft 365, the service redirects the user to the IdP, which issues a digitally signed SAML response containing the user's identity and attributes. The relying party (Microsoft 365) validates the SAML assertion using the IdP's public certificate, and the trust is established via metadata exchange (e.g., importing the IdP's federation metadata XML). A subtle behavior is that federation does not require password synchronization—users authenticate entirely against the external IdP, which can enforce its own MFA policies independently of Azure AD.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this SC-900 question in full detail.
Describe the concepts of security, compliance, and identity — This question tests Describe the concepts of security, compliance, and identity — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Federation — Federation is the correct answer because it establishes a trust relationship between the on-premises Active Directory and the external identity provider (IdP) using SAML 2.0, enabling users to authenticate once and gain access to both Microsoft 365 and the third-party SaaS application without re-entering credentials. This relies on the IdP issuing SAML assertions that are trusted by the relying parties (Microsoft 365 and the SaaS app), which is the core mechanism of federated identity.
What should I do if I get this SC-900 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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