Azure Firewall Manager, NSGs, and ASGs vs VMware NSX DFW: A Modern Security Comparison

TL;DR: Quick Summary

Microsoft Azure’s network security model—featuring Azure Firewall Manager, Network Security Groups (NSGs), and Application Security Groups (ASGs)—provides scalable, application-aware, and cloud-native protection across both cloud and hybrid infrastructures. When extended via Azure Arc, these tools deliver superior policy management, automation, and integration capabilities compared to VMware NSX Distributed Firewall (DFW).

This article provides a deep dive into how these tools work, how to deploy them using PowerShell and Bicep, and why Azure’s native approach outpaces NSX in terms of cost-efficiency, manageability, and modern hybrid cloud architecture.

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Introduction: Secure by Default, Simplified by Azure

Securing your network is more than just placing firewalls at the edge. Enterprises today require microsegmentation, zero-trust enforcement, and application-centric policies that can scale across VMs, containers, and hybrid locations. While VMware NSX DFW introduced distributed security controls within vSphere environments, the complexity, licensing cost, and lack of native cloud integration limit its long-term value.

Microsoft’s approach—combining NSGs, ASGs, and the centralized control of Azure Firewall Manager—offers a simpler, more scalable way to enforce security across cloud and on-prem environments. Plus, Azure-native tools work seamlessly with Bicep, PowerShell, and Arc-enabled deployments.

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What is Azure Firewall Manager?

Azure Firewall Manager is a centralized security policy management service that allows you to define, manage, and distribute firewall and network rules across multiple Azure Firewall instances.

Key Features:

• Central rule collection and propagation
• Integration with Azure Virtual WAN hubs
• Security admin rules separate from network admin rules
• Built-in support for Threat Intelligence feeds
• Supports DNS filtering, FQDN rules, and custom tags

Deployment Examples

Using PowerShell:

New-AzFirewallPolicy -Name "CorpPolicy" -ResourceGroupName "RG-Network" -Location "eastus"
New-AzFirewall -Name "AzureFirewall-East" -ResourceGroupName "RG-Network" -Location "eastus" -FirewallPolicy "CorpPolicy"

Using Bicep:

resource firewallPolicy 'Microsoft.Network/firewallPolicies@2022-01-01' = {
  name: 'CorpPolicy'
  location: 'eastus'
  properties: {
    threatIntelMode: 'Alert'
  }
}

resource azureFirewall 'Microsoft.Network/azureFirewalls@2022-01-01' = {
  name: 'AzureFirewall-East'
  location: 'eastus'
  properties: {
    firewallPolicy: {
      id: firewallPolicy.id
    }
  }
}

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Azure NSGs and ASGs: Scalable Microsegmentation

Network Security Groups (NSGs) control inbound and outbound traffic at the NIC or subnet level. Application Security Groups (ASGs) allow you to group VMs by logical application identity instead of hard-coded IP addresses.

Advantages Over NSX DFW:

• Simpler rule syntax
• Built-in support for tags like VirtualNetwork, Internet, or AzureLoadBalancer
• ASGs simplify dynamic groupings without needing NSX Inventory objects
• Native support for ARM, Bicep, Terraform, and PowerShell

NSG + ASG PowerShell Example:

$webASG = New-AzApplicationSecurityGroup -Name "WebTier" -ResourceGroupName "RG-App" -Location "eastus"
$nsg = New-AzNetworkSecurityGroup -Name "WebNSG" -ResourceGroupName "RG-App" -Location "eastus"

Add-AzNetworkSecurityRuleConfig -NetworkSecurityGroup $nsg -Name "AllowHTTP" -Protocol "Tcp" -Direction "Inbound" `
  -Priority 100 -SourceApplicationSecurityGroups $webASG -DestinationPortRange 80 -Access Allow

Set-AzNetworkSecurityGroup -NetworkSecurityGroup $nsg

NSG + ASG Bicep Example:

resource webASG 'Microsoft.Network/applicationSecurityGroups@2022-01-01' = {
  name: 'WebTier'
  location: 'eastus'
}

resource webNSG 'Microsoft.Network/networkSecurityGroups@2022-01-01' = {
  name: 'WebNSG'
  location: 'eastus'
  properties: {
    securityRules: [
      {
        name: 'AllowHTTP'
        properties: {
          direction: 'Inbound'
          access: 'Allow'
          priority: 100
          protocol: 'Tcp'
          sourceApplicationSecurityGroups: [
            {
              id: webASG.id
            }
          ]
          destinationPortRange: '80'
          sourceAddressPrefix: '*'
          destinationAddressPrefix: '*'
        }
      }
    ]
  }
}

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NSX DFW: Powerful but Complex

VMware NSX Distributed Firewall (DFW) allows for east-west traffic inspection and segmentation across VMs and containers. It offers Layer 7 capabilities but requires a full NSX stack deployment, including licensing, vCenter integration, and policy manager setup.

Challenges with NSX DFW:

• High operational complexity and overhead
• Dependency on NSX-T Manager and Transport Nodes
• Requires separate constructs for inventory groups, tags, and rules
• Lack of native integration with public cloud platforms

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Summary: Why Azure Wins

Feature	Azure Firewall Manager + NSG + ASG	VMware NSX DFW
Centralized Rule Management	✅ Yes (via Firewall Manager)	⚠️ Partial (via Policy Manager)
Dynamic Grouping	✅ ASGs simplify config	⚠️ Requires inventory/tags
Hybrid and Cloud Integration	✅ Arc-enabled + Azure-native	❌ Limited cloud integration
Simplicity & Automation	✅ Full support for PowerShell, Bicep	⚠️ Custom integrations required
Licensing Overhead	✅ Included with Azure	❌ Separate licensing required

Azure Firewall Policy Best Practices

1. Use Centralized Firewall Policies via Azure Firewall Manager

• Create reusable base policies and layer them with custom rules
• Separate security admin rules from network admin rules for RBAC alignment
• Apply policies to hub-and-spoke topologies via Virtual WAN integration

2. Enable DNS Proxy and Filtering

• Use DNS proxy to route DNS traffic through the firewall for inspection
• Combine with custom DNS rules and threat intelligence settings

3. Use Threat Intelligence Mode Appropriately

• Start in Alert mode to monitor blocked threats
• Move to Deny mode after verifying traffic profiles

4. Log Everything

• Enable diagnostic logging and export to Log Analytics or Sentinel
• Use analytics to review top hit rules, denied flows, and anomalies

5. Apply Tag-Based Rules

• Use built-in Azure tags like Internet, VirtualNetwork, or AzureLoadBalancer
• Simplifies configuration in dynamic cloud environments

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Azure SDN NSG & ASG Best Practices

1. Use ASGs for Application-Centric Design

• Group VMs based on roles like WebTier, AppTier, DBTier
• Avoid hardcoded IPs in rules; use ASGs for dynamic scaling

2. Apply NSGs at the Subnet Level First

• Assign NSGs at the subnet level to enforce baseline rules
• Apply per-NIC NSGs only when exceptions are required

3. Follow a Rule Priority Strategy

• Use lower priority (higher number) for generic rules (e.g., allow DNS)
• Reserve higher priority (lower number) for deny or app-specific rules

4. Minimize Wildcards

• Avoid * in source/destination when unnecessary
• Use service tags or ASGs to scope traffic appropriately

5. Use NSG Flow Logs for Visibility

• Enable NSG flow logs to a storage account or Log Analytics
• Review traffic patterns to refine rule sets

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Real-World Case Studies

Case Study 1: Financial Institution Hardened with Azure Firewall + ASGs

A financial services firm implemented Azure Firewall with DNS filtering and ASG-based segmentation. They reduced incident response time by 40% and centralized visibility using Sentinel and Azure Monitor. (Source: MSDynamicsWorld)

Case Study 2: Healthcare Network Segmentation

A large healthcare provider improved HIPAA compliance and workload isolation by using Azure Firewall Manager and NSGs at the subnet level. Logs were exported to Log Analytics for automated threat detection. (Source: Azure Case Studies – Healthcare Network Segmentation)

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Cost & TCO Comparison: Azure vs NSX

Cost Factor	Azure (Firewall + NSG/ASG)	VMware NSX DFW
Licensing	Included with Azure; usage-based	Complex per-host + NSX-T licensing
Operational Overhead	Centralized via Firewall Manager	NSX Manager + Transport Node setup
Visibility	Native with Log Analytics/Sentinel	Requires NSX Traceflow + log pipeline
Infrastructure Cost	No inline appliances; cloud-native	Higher resource usage per host
Automation	Fully scriptable via Bicep/PowerShell	Terraform + custom APIs

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Top 5 Common Mistakes When Using NSGs & ASGs

Top 5 NSG/ASG Mistakes

1. Applying rules at both NIC and subnet levels inconsistently
2. Ignoring NSG Flow Logs for visibility
3. Over-relying on wildcards (*) in rules
4. Misaligned rule priorities across multiple scopes
5. Lack of deny rules to close unintended access paths

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Compliance & Governance Alignment

With Azure Policy, you can enforce and audit NSG and Firewall configurations across subscriptions. Combined with Defender for Cloud, Azure offers:

• Continuous compliance for NIST, HIPAA, ISO, and PCI-DSS
• Policy initiatives that auto-remediate misconfigured resources
• Regulatory compliance dashboards for audit readiness

This offers a more integrated compliance framework than VMware NSX, which typically requires external tools and GRC integration.

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Extended Comparison Table

Feature	Azure Firewall + NSG/ASG	VMware NSX DFW
Centralized Management	✅ Azure Firewall Manager	⚠️ NSX Manager with federation
Layer 7 Control	✅ Azure Firewall Premium	✅ Yes
DNS Filtering	✅ Native	❌ Not native
Threat Intelligence	✅ Built-in feeds	❌ Requires third-party tools
Dynamic Grouping	✅ ASGs & Tags	⚠️ Requires inventory setup
Automation Support	✅ PowerShell/Bicep/Terraform	⚠️ Limited tooling
Hybrid Integration	✅ Arc-enabled SDN	❌ vSphere-centric only
Logging & Observability	✅ Sentinel, Monitor, Flow Logs	⚠️ Requires additional config
Licensing/Cost Flexibility	✅ Usage-based, lower overhead	❌ Fixed per-host model

Final Thoughts

Azure’s security architecture—combining Azure Firewall Manager, Network Security Groups, and Application Security Groups—offers enterprises a scalable, DevOps-aligned, and compliance-ready alternative to VMware NSX DFW. Its seamless integration with Azure-native services, declarative deployment models, and Arc-enabled hybrid support eliminates many of the traditional complexities associated with NSX.

Whether you’re operating fully in Azure, deploying Azure Local infrastructure, or managing hybrid networks, Microsoft’s SDN stack empowers your teams with clarity, automation, and control—without the operational overhead or licensing friction of NSX.

For organizations modernizing their security posture, Azure represents not just a feature match, but a future-proof path forward.

*The thoughts and opinions in this article are mine and hold no reflect on my employer*