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Use of big-IP APM to replace an ADFS between on-premise and Azure AD Premium
To answer your first question, APM acts as a SAML IDP. It will generate SAML claims for you, which your users will be able to present as tokens to federated sites.
As for your second question, I think Azure AD has limitations compared to on-prem AD, and also, to have users in Azure AD I think you have to periodically sync them to Azure AD from your local on-prem AD, which is your source of truth. APM is nice because as a SAML IDP, when a user types in their username and password, APM will directly authenticate them against your local active directory servers, and then issue them their SAML claim. There won't be any need to synchronize users up to Azure AD, and Azure AD won't be needed by APM (now whether there are reasons to put users in Azure AD that don't involve APM, I can't advise you, but APM has no need of Azure AD).
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