Azure Arc-Enabled Servers

Table of Contents

  1. What is Arc-Enabled Servers?
  2. Prerequisites
  3. Onboarding Process and Architecture
    1. Installation Methods
    2. Architecture
  4. Security and Authentication
  5. Applying Azure Policy
  6. Monitoring and Compliance Reporting
  7. Update Management Capabilities
  8. Cost Model and Licensing
  9. Use Case Scenarios
    1. Scenario 1: Data Center Server Management
    2. Scenario 2: Multi-Cloud Governance
    3. Scenario 3: Compliance for Regulated Industry
  10. Best Practices
  11. Troubleshooting
  12. Next Steps

What is Arc-Enabled Servers?

Azure Arc-enabled Servers extends Azure management to Windows and Linux machines hosted outside of Azure - in your datacenter, at the edge, or in other clouds.

View Diagram: Arc-Enabled Servers Architecture 
graph LR
    subgraph Azure["☁️ Azure"]
        ARM[Azure Resource Manager]
        POL[Azure Policy]
        MON[Azure Monitor]
        DEF[Microsoft Defender]
    end

    subgraph OnPrem["🏢 On-Premises / Other Clouds"]
        AG[Arc Agent]
        SRV1[Windows Server]
        SRV2[Linux Server]
    end

    ARM <--> AG
    AG --> SRV1
    AG --> SRV2
    POL --> AG
    MON --> AG
    DEF --> AG

    style Azure fill:#e3f2fd,stroke:#0078d4
    style OnPrem fill:#fff3e0,stroke:#ef6c00

Key Capabilities:

  • Organize and inventory servers using Azure Resource Manager
  • Apply Azure Policy for compliance and configuration
  • Monitor with Azure Monitor and Log Analytics
  • Protect with Microsoft Defender for Cloud
  • Manage updates with Azure Update Management
  • Automate with Azure Automation runbooks

← Back to Azure Arc Introduction

Prerequisites

Server Requirements:

  • Windows: Server 2012 R2 or newer
  • Linux: Various distributions (Ubuntu 16.04+, RHEL 7+, SUSE 12+, etc.)
  • Internet connectivity (outbound HTTPS/443)
  • Minimum 2 GB RAM

Agent Requirements:

  • Connected Machine agent installation
  • Outbound connectivity to Azure endpoints
  • Local administrator/root privileges for installation

Azure Requirements:

  • Azure subscription
  • Permissions to create resources
  • Resource group for Arc servers

Onboarding Process and Architecture

Installation Methods

1. Interactive Installation (Single Server):

# Linux example
wget https://aka.ms/azcmagent -O ~/install_linux_azcmagent.sh
bash ~/install_linux_azcmagent.sh

# Connect to Azure
azcmagent connect --resource-group "myResourceGroup"   --tenant-id "tenant-id"   --location "eastus"   --subscription-id "subscription-id"

2. Service Principal (Scale Deployment):

# Windows PowerShell example
& "$env:ProgramW6432\AzureConnectedMachineAgentzcmagent.exe" connect `
  --service-principal-id "app-id" `
  --service-principal-secret "secret" `
  --resource-group "myResourceGroup" `
  --tenant-id "tenant-id" `
  --location "eastus" `
  --subscription-id "subscription-id"

3. At-Scale Deployment:

  • Configuration Manager for Windows
  • Ansible/Puppet for Linux
  • Group Policy for domain-joined Windows

Architecture

Components:

  • Connected Machine Agent: Runs on each server
  • Instance Metadata Service: Local endpoint (localhost:40342)
  • Extension Manager: Manages VM extensions
  • Guest Configuration Agent: Policy enforcement

Communication Flow:

  1. Agent authenticates to Azure AD
  2. Receives managed identity
  3. Reports status and inventory
  4. Receives configurations and policies
  5. Executes extensions and scripts

Security and Authentication

Managed Identity:

  • System-assigned managed identity per server
  • No stored credentials
  • Automatic token rotation
  • Least-privilege access

Certificate-Based Authentication:

  • X.509 certificate for authentication
  • Stored securely in OS keystore
  • Automatic renewal

Network Security:

  • Outbound HTTPS only (no inbound)
  • Proxy support available
  • Private Link support for isolated networks

Applying Azure Policy

Policy Capabilities:

  • Audit configuration compliance
  • Deploy missing extensions
  • Enforce security baselines
  • Tag management
  • Location restrictions

Example Policies:

  • Require anti-malware extension
  • Enforce disk encryption
  • Audit password policies
  • Require monitoring agent
  • Enforce naming conventions

Implementation:

1. Create policy assignment
2. Assign to resource group or subscription
3. Policy evaluates every 24 hours
4. Non-compliant resources reported
5. Optional auto-remediation

Monitoring and Compliance Reporting

Azure Monitor Integration:

  • Performance metrics (CPU, memory, disk, network)
  • Event logs and syslog
  • Custom metrics and logs
  • Alert rules and action groups

Log Analytics:

  • Centralized log collection
  • KQL queries for analysis
  • Cross-server correlation
  • Long-term retention

Compliance Dashboard:

  • Real-time compliance status
  • Policy compliance reporting
  • Remediation recommendations
  • Historical compliance trends

Update Management Capabilities

Azure Update Manager:

  • Assess update compliance
  • Schedule update deployments
  • Pre and post-update scripts
  • Update exclusions
  • Reporting and auditing

Update Assessment:

  • Automatic scanning for missing updates
  • Security vs. non-security classification
  • CVSS scoring for vulnerabilities

Update Deployment:

  • Maintenance windows
  • Phased rollout
  • Reboot control
  • Rollback capability

Cost Model and Licensing

Arc-Enabled Servers:

  • No charge for Azure Arc itself
  • Charges for Azure services consumed:
    • Azure Monitor: ~$2.30/GB ingested
    • Microsoft Defender: ~$15/server/month
    • Azure Automation: ~$0.002/minute
    • Update Management: Included with Azure Automation

Licensing:

  • Windows Server: Requires valid license
  • Linux: Follows distribution license
  • Azure Hybrid Benefit: Available for Windows

Use Case Scenarios

Scenario 1: Data Center Server Management

Challenge: 500 Windows/Linux servers across 3 data centers with inconsistent management.

Solution:

  • Onboard all servers to Azure Arc
  • Apply Azure Policy for security baseline
  • Centralized monitoring with Azure Monitor
  • Unified update management

Results:

  • 100% visibility across all servers
  • 60% faster patch deployment
  • Unified compliance reporting
  • Reduced management overhead by 40%

Scenario 2: Multi-Cloud Governance

Challenge: Servers in Azure, AWS, and on-premises with fragmented governance.

Solution:

  • Arc-enable servers in all environments
  • Apply consistent Azure policies everywhere
  • Deploy Microsoft Defender uniformly
  • Centralized security dashboard

Results:

  • Unified security posture across all clouds
  • Consistent compliance reporting
  • Reduced tool sprawl
  • Single pane of glass management

Scenario 3: Compliance for Regulated Industry

Challenge: Healthcare provider needs HIPAA compliance for 200+ servers.

Solution:

  • Azure Arc with HIPAA initiative policies
  • Microsoft Defender for vulnerability scanning
  • Log Analytics for audit logging
  • Automated compliance reporting

Results:

  • 95% compliance score
  • Passed HIPAA audit with zero findings
  • Automated monthly compliance reports
  • Reduced audit preparation time by 70%

Best Practices

1. Use Service Principals for Scale

  • Automate onboarding with service principals
  • Store secrets securely (Azure Key Vault)
  • Rotate credentials regularly

2. Organize with Resource Groups

  • Group by environment (prod, dev, test)
  • Group by location or business unit
  • Use tags for additional metadata

3. Implement Gradual Rollout

  • Pilot with small group first
  • Validate monitoring and policies
  • Gradually expand to production

4. Monitor Agent Health

  • Alert on agent disconnection
  • Regular connectivity validation
  • Document troubleshooting procedures

5. Leverage Automation

  • Use ARM templates for consistency
  • Automate policy assignments
  • Script repetitive tasks

Troubleshooting

Agent Won’t Connect:

  • Verify internet connectivity to Azure endpoints
  • Check firewall rules
  • Validate Azure subscription and permissions
  • Review agent logs

Policy Not Applying:

  • Wait for evaluation cycle (24 hours)
  • Force policy scan: Start-GuestConfigurationAssessment
  • Check for policy conflicts
  • Verify resource group assignment

Monitoring Data Missing:

  • Verify Log Analytics agent extension installed
  • Check workspace configuration
  • Validate network connectivity
  • Review data collection rules

Next Steps

External Resources:

Last Updated: October 2025