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Windows Authentication vs. SQL Server Authentication

Windows authentication is recommended by Microsoft as the most advanced method that is currently available for securing your data and preventing unwanted access. This approach streamlines granting the appropriate access level to client machines and ASPX pages, such as those used by Business Portal. Windows authentication grants access to SQL Server resources based upon requests from a security token that is assigned during a successful domain logon by a Windows account or a local server. Windows accounts must belong to the same Windows environment as the computer that is hosting SQL Server (any combination of trusted domains or local accounts). Also, in an Active Directory domain, an additional higher level of protection is provided by the Kerberos protocol, which governs the behavior of the Windows authentication mechanism.

SQL Server authentication provides the standard security level of data access protection. It relies on an internal database user list that is maintained by a computer that is running SQL Server and on which the Microsoft Dynamics SL data resides. When the database is configured, SQL Server authentication is activated through the connection. You must set up Microsoft Dynamics SL users before access can be granted. The Microsoft Dynamics SL logon screen validates the users, granting them access to the databases.
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