Step-by-Step Guide for AAD Connect Custom installation + Federation with AD FS

When setting up an Office 365 environment and you want to use your own Active Directory domain you definitely need to setup synchronization services with Azure AD. Where we needed to setup DirSync in the past we now need to install and configure the successor Azure AD Sync or the Azure AD Connect synchronization service. You can do this by downloading this tool or by downloading Microsoft Azure Active Directory Connect a really great job in simplifying the setup process. Let’s have a look.

Overview of AAD Connect

Azure AD Connect is a single wizard that performs following steps automatically

  • Install pre-requisites like the Azure Active Directory PowerShell Module and Microsoft Online Services Sign-In Assistant.
  • Install and configure Azure AD Sync, as the sync engine, and enable directory synchronization in the customer's Azure tenant
  • Configures either password sync or AD FS, depending on which sign-on option the customer prefers, and includes any required configuration in Azure

Different Synchronization Tools

With the release of Azure AD Connect we now have three tools that will provide directory synchronization to Azure AD / Office 365. 

  • Microsoft Azure Active Directory Sync tool (DirSync) – This sync tool will eventually retire but there is no ETA at this time.
  • Azure AD Sync – The “stand alone” version of this tool will retire when Azure AD Connect goes GA.
  • Azure AD Connect – This sync tool will be the only tool available once DirSync is retired. It includes Azure AD Sync as the synchronization engine.

Azure AD Connect with additional sync options, seamless migration from DirSync,

There will no longer be separate releases of Azure AD Sync and Azure AD Connect. And we have no future releases of DirSync planned. Azure AD Connect is now your one stop shop for sync, sign on and all combinations of hybrid connections.

When stating the setup the Microsoft Azure Active Directory Connect tool assist you by installing the prerequisites that are needed to be able to synchronize users and groups from your on premise AD to Azure AD. It will automatically install the following products if they do not exist;

  • Microsoft Online Services Sign-In Assistant for IT Professionals
  • Windows Azure Active Directory Module for Windows PowerShell
  • Microsoft Visual C++ 2013 Redistributable Package

Install the prereqs

After getting the prerequisites ready the Azure AD Connect synchronization service will be installed. Azure AD Connect synchronization service needs a SQL database, you can configure an existing one or a SQL Express version will be automatically installed. Next we need to provide the username of a Azure AD user that is a member of the Global Administrator role.



Connect to Azure AD

After the synchronization service installed and connected with Azure AD we are able to customize the configuration of Azure AD Connect synchronization service, and more  So if we do not choose to use the express settings as shown below we are able to
configure Single Sign On via Password Synchronization, Federation with AD FS.

 Use customize option


Custom options

I will choose Federation with AD FS and connect my Active Directory. Microsoft Azure Active Directory Connect allows you to synchronize more than one directory, which is really cool if you ask me.


Add your on premise AD

The next step is that you are able to filter users and groups by DN or Group Membership. So no hacking in FIM (which is not part of this solution anymore) anymore.


Filter or synchronize everything

Next you need configure how the user in on premise directories is identified. Is a user represented only once across multiple directories or does user identities exist across multiple directories. Based on attributes you are able to configure how a user must be matched. If you only use one Active Directory as a source, you can easily use the defaults as shown below.


Select the attributes

As you see the Microsoft Azure Active Directory Connect tool assist you heavily in setting up the synchronization service. But is does more, optionally you are able to configure the following features:

Exchange hybrid deployment

The Exchange hybrid deployment features allows co-existence of Exchange mailboxes on both on premises as in Azure by synchronizing a specific set of attributes from Azure AD back to your own Active Directory.

Password write back

If the password changes in Azure AD, it will be written back to your own Active Directory.

User write back

If a user is created in Azure AD, it will be written back to your own Active Directory.


  • Azure AD app and attribute filtering
  • Group writeback
  • Device writebrack
  • Device Sync
  • Directory extension attribute sync

Selecting two options as shown below allows us to configure the writeback location in the on premise Active Directory.


Additional options


Next you need to configure a new AD FS Farm Windows server 2012 R2. Specify the SSL certificate used to secure the communication between clients and AD FS. The certificate file should be in pfx.


Since ADFS leverages SSL, we need to have a SSL certificate.  You could try three options, but only one will work:

  1. Self-signed certificate
  2. Certificate issued from internal PKI
  3. Certificate from 3rd party public CA

Office 365 needs to see a valid Service Communication Certificate on your ADFS infrastructure, so you are going to have to buy a certificate from a public CA.  Office 365 will not trust a service communication certificate that is either self-signed or from your internal CA, which results in tears.  We can use self-signed certificates for the Token Decrypting and Token Signing Certificate.  These are separate from the service communication cert.

Please follow the documentation from your chosen CA to request, install and complete the certificate.  The steps required vary from vendor to vendor and also over time.  Make sure you are not missing any updated intermediate certificates!  How would you know?  Follow their process!!

For the purposes of this post we shall deploy the initial ADFS server, and in the future add another ADFS server for redundancy.


 Add Federation Servers On Windows Server 2012 R2, specify where to install AD FS services



Add Proxy servers On Windows Server 2012 R2, specify where to install Web Application proxy servers name


Next specify proxy trust credentials. The web application proxy requires credentials to request a certificate from federation server.


It is possible to use a GMSA as the ADFS service account.  GMSA will automatically update the service account’s credentials and administrators will also be oblivious as to its password.

In this case a standard service account was used.


 Select the Azure AD domain to federate with your on-premises Directory. The managed domain will be converted into a federated domain


 The Final step in the really great wizard is to install and configure the synchronization services, AD FS and WAP servers.



At this time please make sure that you have created DNS records that allow clients to resolve your federation services from both internal and external. 



All done,  

Additional Steps

This topic covers additional steps to configure AD FS after you install the first federation server, including:

For more information about how to deploy AD FS, see How to deploy AD FS in Windows Server 2012 R2.


Verify Federation Service Metadata

Open Internet Explorer and navigate to your ADFS server’s federation metadata URL.

This will be something like the below, just change the FQDN to match your environment.

The result should show this:

Verify ADFS Sign-In Page

Browse to the ADFS sign-in page and test that you are able to authenticate.

The URL will be similar to the below, again change the FQDN to match your organisation’s.