Introduction

In today’s business environment, securely exchanging data with external partners is essential. Azure Blob Storage with native SFTP support offers a scalable, secure solution, while Microsoft Entra ID provides robust identity management. Together, these tools help organizations share data with external users while ensuring security and compliance.

This go-to guide will walk you through configuring Azure Blob Storage for SFTP, managing user access with Entra ID, and showcase three real-world use cases—payment reconciliation, logistics data sharing, and healthcare data exchange.

Why Use Azure Blob Storage with SFTP and Entra ID?

Azure Blob Storage with native SFTP support simplifies secure file transfers without the need for third-party SFTP servers. Integrating Microsoft Entra ID enhances security by enforcing multi-factor authentication (MFA), conditional access, and role-based access control (RBAC).

Benefits at a Glance

• Scalable and Cost-Effective: Pay only for the storage you use.
• Secure File Transfer: Use the SFTP protocol for encrypted data transfer.
• Centralized Access Management: Use Entra ID to control and monitor external access.
• Automation and Integration: Seamless integration with tools like Azure Logic Apps and Power Automate.

Step 1: Setting Up Azure Blob Storage with SFTP Support

Follow these steps to set up Azure Blob Storage for SFTP access.

1.1 Create an Azure Storage Account

1. Sign in to the Azure Portal.
2. Go to Create a Resource and select Storage Account.
3. Configure the storage account:
   • Subscription and Resource Group: Choose your existing or create new ones.
   • Storage Account Name: Must be globally unique.
   • Region: Select the region closest to your users.
   • Performance: Choose Standard for general use or Premium for high-performance workloads.
   • Replication: Choose Locally Redundant Storage (LRS) or Geo-Redundant Storage (GRS) based on your redundancy needs.
4. Under the Advanced tab, enable SFTP Support (Preview).
5. Click Review + Create, then Create the storage account.

Step 2: Configuring SFTP Access for External Partners

1. Navigate to your newly created storage account.
2. Under Data Transfer, select SFTP Settings.
3. Click Add Local User to create an SFTP user:
   • Username: Use a descriptive name like partner1.
   • Authentication: Choose SSH Key-based authentication for enhanced security.
   • Home Directory: Assign a specific container (e.g., /transactions).
   • Permissions: Grant appropriate permissions (Read, Write, List).
4. Generate an SSH Key if you don’t have one:
   • Use ssh-keygen (Linux/Mac) or PuTTYgen (Windows).
5. Save the configuration and take note of the SFTP endpoint.

Step 3: Integrating Microsoft Entra ID for Access Control

To ensure only authorized users access your SFTP service, use Microsoft Entra ID to manage identity and access.

3.1 Conditional Access Policies

1. Go to the Azure AD Portal.
2. Create a new Conditional Access Policy to enforce MFA and restrict access based on location.

3.2 Role-Based Access Control (RBAC)

Assign roles to external users to limit their access to only the relevant Azure Blob containers.

Step 4: Real-World Use Cases

Case 1: Payment Reconciliation – Mastercard Data Exchange

A retail company needs to securely exchange Mastercard transaction data with an external payment processor for daily reconciliation.

Workflow:

1. The payment processor uploads transaction data to the SFTP endpoint.
2. Azure Blob Storage receives and stores the files.
3. Business Central or an ERP system processes the data for reporting and reconciliation.

Security Measures:

• Use MFA and Conditional Access for external user authentication.
• Configure audit logging to monitor access and activity.

Case 2: Logistics Data Sharing – Real-Time Inventory Updates

A manufacturing company needs to share real-time inventory data with its logistics partner.

Workflow:

1. The logistics partner downloads inventory files and uploads shipping updates to the SFTP server.
2. An Azure Function processes these updates and integrates them into the company’s ERP.

Security Measures:

• RBAC ensures the logistics partner only accesses relevant files.
• Data encryption protects information in transit and at rest.

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Case 3: Healthcare Data Exchange – Secure File Transfers with External ClinicsA hospital exchanges patient data with external clinics, ensuring compliance with GDPR and HIPAA regulations.

Workflow:

1. Clinics upload test results and patient data to the hospital’s SFTP endpoint.
2. An Azure Logic App validates and integrates the data into the hospital’s EMR system.
3. Doctors receive automatic notifications for new updates.

Security Measures:

• Conditional Access restricts access by IP and enforces MFA.
• Data masking during processing protects sensitive information.

Step 5: Automating Data Processing

Azure Logic Apps

Automate file processing with Logic Apps to trigger workflows when a file is uploaded.

Azure Functions

Run custom code to process files and integrate them with external systems.

Power Automate

Create simple automation workflows for notifications and approvals.

Step 6: Security Best Practices

1. Enforce Multi-Factor Authentication for all external users.
2. Use Conditional Access Policies to limit access by device and location.
3. Encrypt Data at Rest and in Transit.
4. Rotate SSH Keys Regularly.
5. Audit and Monitor Access Logs for unusual activity.

Conclusion

Azure Blob Storage with SFTP support and Microsoft Entra ID provides a powerful and secure platform for exchanging data with external partners. Whether you are exchanging financial data, inventory files, or healthcare records, this setup ensures security, compliance, and scalability.

By following this step-by-step guide and using the real-world use cases as inspiration, you can create a secure, reliable solution for your organization’s external data exchange needs.

Further Reading:

• Azure Storage Documentation
• Microsoft Entra ID Documentation