Azure API Management and Dynamics 365 Web API

When you have SaaS systems and custom systems all over the place in your organization, there is a need for unification. The more systems you have over a long period of time, the less standardization you have among them. Other factors include different technologies and different architectural styles. If those system expose any kind of API that is needed internally (by your developers) or externally (by your customers), then a need to give those API’s a consistent look and feel along with a set of unified policies becomes important.

Azure API Management (APIM) is one solution to this problem. APIM is an Azure resource that you can provision and have it sit between your API consumers and the APIs exposed by your systems.

Azure API Management

My focus here is on one example: D365 Web API. First question that comes to mind is why do we need to expose D365 APIs through APIM even though the API is modern and well documented? Here are few reasons:

  1. The Common Data Model have API limits. If you have systems that read data from your Dynamics 365 instance through APIM, you can cache the results and save on some API calls. APIM comes equipped with a built in cache but if you need a bigger cache then you can attach an external cache system like Redis.
  2. Because of the imposed CDS per user limits, with APIM you can limit the number of API calls by a your consumer systems. As of this time, Microsoft provides a 25,000, 50,000 or 100,000 API calls per application or non-interactive user based on your licencing model (see details here).
  3. With APIM, you can set the authentication to your D365 Web API using an Azure AD application instead of a licensed user. Anyone who calls the API doesn’t need to have a user setup in D365 or given a security role. This basically ease things for user management. This ties back to number 2 above, the API calls here don’t count as part of a user quota because we are not using a licensed user authentication. The type of user we will use is called Application User, and this type doesn’t need a licence.
  4. If the systems that talk to D365 Web API expect an XML format result, you can transform the JSON output of D365 API into an XML output. Other transformations are also supported by APIM.
  5. APIM provides so many other policies that you can put in place between your consumers and the D365 API, to mention a few, you can change headers, add more data to the request/response etc.
  6. D365 API is extensive and it is time consuming for the its consumers to learn about it quickly. In APIM, you can have end points to what is needed only by your API Consumers.
  7. Analytics on who is calling your API’s and how many requests for each end point.
  8. You can package your APIs endpoints in products (group of API that serve some defined purpose), and you can provide your consumers with subscription keys to track who is calling what API endpoint.

To this point, we haven’t done any real work. In summary, here is what we want to do:

  1. Provision an APIM instance.
  2. Create a simple API in APIM that calls our D365 Web API.
  3. Setup the Authentication between APIM and D365 Web API using Azure AD and without consuming a Dynamics licence.
  4. Add a send-request policy for token generation to implicitly obtain a token and send it to D365 API.
  5. Call the APIs from APIM.

Provisioning an APIM Instance in Azure

Azure APIM comes in different pricing tiers flavors. In this blog, I opted out for the developer plan, the steps below should work on all other tiers including the consumption plan. Head to Create a new Resource in Azure, search for API Management and create it as below. The name needs to be globally unique. With the developer tier, expect a wait time of 30 minutes at least for this resource to provision, if you want a much faster provisioning, select the consumption plan. Once you provision the APIM instance, it will be accessible https://{Name of your APIM resource}, this URL will server as the base URL for all the API’s the are behind this APIM resource.

Create A simple APIM API that Calls D365 API

We can create API’s in APIM in different ways. If your API has an open api file, previously called Swagger, then you can import that file and APIM will create the operations for you. Unfortunately, with Dynamics API we don’t have that luxury and we need to create the API manually starting from an empty API.

In your provisioned instance, click APIs on the left navigation, and click on Blank API.

In the dialog that appears, fill in a friendly name for your API and add the base URL for Dynamics API. If you have many APIs that you want to hide behind an APIM resource, give each API a prefix, in my case, I call it d365api. So now, calling https://{your crm org} is equivalent to calling your APIM instance at the URL

Once an API is created, we need to add the operations to our API. Assume that your ESRI maps team at your organization wants to draw all of your contacts and accounts on a map and they need their data. You can easily expose two operations like this:

The way to do this is by Adding an operation as shown below, you need to specify the path of the operations. In Dynamics 365 and because it is a REST API, you can just have all the accounts by appending “contacts” to the base URL, same for accounts. Of course, if you want to only return specific data about those contacts or accounts, you can pass the OData filters in the query part of the operation being created.

At this point, we have a fully non-functional API :). The reason is Dynamics 365 still doesn’t know about APIM and doesn’t trust any request that comes from it. Next, let’s see how we can implement a server to server authentication without any intervention from the API caller.

Set the Authentication between APIM and D365

Note: Application and Client are used interchangeably in Azure AD terminology

APIM is very flexible from the API authentication/authorization point of view. It allows you to add an OAuth2.0 or OpenID connect authentication servers as part of its configurations to get access tokens that you can later supply to your API calls . As you may know, D365 API uses OAuth2.0 to Authenticate, this happens by calling an authorization end point that provides you with an access token, then you pass this token in a header called “Authorization” to any call you make to D365 API. Here we have two options, the first is letting the APIM consumers be responsible for calling the authorization endpoint, getting the token and provide as a header or making their life easy and abstract the authorization from them completely. I prefer the latter option because it is less headache for end users of your APIM.

In the case we are tackling now, I have my Dynamics 365 and my APIM in the same tenant, that means they both operate under the same Azure Active Directory. To let the APIM authenticate with Dynamics API, we need to create an Application Registration in Azure AD, give it permission to Access Dynamics 365 and let Dynamics 365 organization know about it. This App Registration is like a user identity that APIM uses to authenticate with D365 API.

To create an Application Registration in Azure AD, click on App Registration, New Registration.

Give the Application Registration a friendly name and select Web as its type. In the redirect URL, fill in any value as this is not important, for example, use https://localhost

Take a note of the application ID and the tenant ID as we will need them later.

To complete the credentials, we need to generate a secret that will behave like the password for the app registration. In a production environment, try to have this secret stored in the key vault, but for now, just create a secret, set its expiry and copy its value as well (This is your only chance to copy the secret, after that it will be masked forever, If you lose the secret, you need to generate a new one).

Our App Registration is created, but two things are missing, the permission to access Dynamics APIs from this app registration and letting the Dynamics system know about this app registration. To give the app registration a permission, Click on API permissions, add Dynamics CRM

Select the User_Impersonation permission and click Add Permission.

To make Dynamics 365 aware of this app registration, you need to create what is called an Application User (you need to be a Dynamics administrator to do this). The Application user is the representative of Dynamics 365 that talks with the App Registration. Navigate to Settings->Security->Users. Switch to the Application User View and click New User. You only need the Application ID of the App Registration that you collected earlier. Fill in the other required fields and save, if everything is successful, the Application ID URL and the Object ID should auto populate. Give this user a security role to access only the needed data by your API consumers and nothing more. For our example to work, at least give a read access on the account and contact entities.

The last piece of information we need from the Azure AD is the token generation URL, this URL is what the APIM will call to get a token that will be used to authorize a request to D365 API. In the overview section of either Azure AD or your app Registration, Click on Endpoints in the command bar and select the token URL

By now, you should have the application ID, tenant ID, secret value and the token generation URL.

Add a send-request Policy For Token Generation

To make things easy for the APIM consumers, we need to implicitly authenticate with D365 API using the App Registration and Azure AD. One of the most amazing features of APIM is the ability to do almost anything in between receiving a call and before we forward it to the back-end service (D365 API). In our case, we need to issue a call to the Token generation URL with the proper App Registration credentials, get a token and insert it into a header called “Authorization”.

Click on APIs, select the API we created above and click on all operations. and in the Inbound Processing designer, click on the little edit icon. The reason we want to do this on all operations is because D365 requires a token on any operation, so here we will do it once and it will apply to each individual operation after that.

By default, your inbound processing looks like this, this means that do nothing on inbound calls, nothing in the back-end and nothing with the outbound results. In our case, we want to add a request to the inbound stage to get us a token.

Policies in APIM are so flexible and you can do so many things with them to manipulate the call pipeline. In our case, we want to to send a request to the token URL and thats done by a send-request policy. You will need most of the values you collected before in the App Registration step. Notice that the send-request policy stores the result in a variable called bearerToken and just after the send-request policy, we use a set-header policy that create a header called “Authorization” and populate it with the value of the access token. (Note: The send-request returns a bearerToken object that among other things, contains the access token that needs to be in the authorization header, that explains the casting logic you see in the set-header policy).

        <base />
        <send-request mode="new" response-variable-name="bearerToken" timeout="20" ignore-error="true">
            <set-url>{your tenant guid here}/oauth2/token</set-url>
            <set-header name="Content-Type" exists-action="override">
              return "client_id={your client secret guid}&resource=https://{your org name}{your secret here}&grant_type=client_credentials";

        <set-header name="Authorization" exists-action="override">
            <value>@("Bearer " + (String)((IResponse)context.Variables["bearerToken"]).Body.As<JObject>()["access_token"])</value>

Call The API from APIM

Now is when the hard work “should” pay off. Open a browser tab (since we are doing a GET request, a browser should be enough, otherwise, use Postman), paste this URL

If you see the list of contacts returned to you, then you have done everything right, if you don’t, check the returned error, most of the time, it is security related and a review of all the values in the app registration and the send-request policy is a good start for debugging.

Subscription Keys and Products

APIM comes equipped with two powerful features, Products and Subscriptions. Products is a way to group specific APIs together to manage them as a unit. Subscriptions are basically a method of tracking API consumers by asking them to provide a subscription key with each request. You can control the API limits and analyse them by subscription keys, rate limiting and throttling policies are very common policies in APIM (more on that here). This adds a simple layer of security and tracking capability in your APIM, for example our call to get contacts will be something like this &subscription-key={some key}

Each subscription has a primary and secondary key that you can provide to your APIM consumers and if they are compromised, you can regenerate them again. Also, subscription keys can be passed as a header if you don’t want to expose them in the URL.


We have created an APIM resource between your D365 API callers and the API itself. APIM provides a lot of control over what happens to the request over its lifetime. We showed the important of authenticating/authorization using an app registration and an application user and how this way saves us from consuming the licensed users CDS API limits. We also saw how we can incorporate policies to to politely hijack the request and issue a call to the token endpoint and set the authorization header with its response. This post is in no way an extensive post about APIM, to know more about its wide feature set, visit the official documentations here.

13 thoughts on “Azure API Management and Dynamics 365 Web API

  1. Hi Omar

    I have followed your steps on my tenant and seem to be getting a 401 response on the authentication policy even tho i take the same send request parameters and test on postman and get the token.

    Any idea what im missing.

    Kind regards,


    1. Thank you David! I’m just reviewing my steps, I may have missed a minor one. In your app registration, go to permissions and click on grant Admin permission button. Please let me know if this fixed your problem.


  2. Hi Omar,

    Thank you for this informative post. Do you have any additional information about caching capabilities within Azure API Management? I like the idea you’ve presented as a mitigation for the rate limiting of the Dynamics Web API, but would like to learn more about how to cache certain API calls in Azure API Management in order to minimize the amount of API traffic sent to Dynamics. In addition, are there capabilities to programmatically invalidate the cache in Azure API Management?



    1. Hi Greg,
      Thanks and I’m glad the article was of some use to you. For invalidating, I know of the out-of-the-box time limit invalidates after X seconds that you can set. I’m not aware of a coding approach to invalidate the cache. Now, that being said, you can decide based on your data on what things change less frequently, for example if you have a product list that is being read by a E-commerce website, that website queries the product every-time someone opens the product listing page, you can cache this for a long amount of time (hours) and that will save a lot of requests to CRM.

      Now, depending on you API, if you API allows posting or updating a resource, then you can use a policy to invalidate the cache (see the policy “cache-remove-value” ) on Post/Put/Delete. To our example above, if some partner adds a product to your product list using the API, then you clear the cache at that time. I know this is a simplistic example, but your specific needs must be considered and an adhoc cache invalidation might be needed.

      Just FYI,
      APIM built-in cache starts from 10 Mb for developer pricing to 50Gb for premium(as you go up in the pricing tier, the cost of APIM becomes crazy expensive), a standard pricing will have around 50 MB which is reasonable, External cache is recommended for larger data (something like


      1. Omar,

        Thanks for all this great additional information. For our use case, we are specifically focused on wrapping around the Dynamics API to create a data layer for a high volume website. The thought is we could hook Dynamics record adds/edits/deletes into a cache validation call to Azure API Management so we have up-to-date API data whenever changes are made within Dynamics, but also still have a highly cached API that mitigates against the fairly strict rate limits in place with the Dynamics API.



      2. That’s actually a fitting use case. On create and delete api request, make sure that you invalidate the cache then on get request, use the cached data. In theory, reads are way more than creates/updates/deletes which will make a reasonable rate reduction on the read or get requests.


  3. Hi Omar,

    Thanks, really helpful and well explained article.
    However I am getting a 401 error on testing the API, I have granted admin privillges as well for the app. But am getting token from POSTMAN using the same client ID amd key, any idea what I am missing

    Liked by 1 person

    1. Thanks! Have you checked the trace of the API Management? the send-request policy doesn’t generate a token in the trace? if so, there is nothing different from this send-request policy than your postman call. I’m open to have a quick Teams chat if you like to go over it together.


      Liked by 1 person

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