Thanks for a really quick response! Ths dbmanagedidentity, I have seen it in our resource group but not interacted with it in a long time. That would surely be for account level or workspace level permissions? I need permissions management per user/service principal, and it seems too be too "wide" permissions if I grant permissions to that identity.

Regarding creating a service principal, thanks, that is what I'm looking for. Do you know if that is possible for managed identities as well? Can we create user-assigned managed identity and store its secrets in key vault? I don't think our IaC guy wants to have many service principals that are not managed identities, but I will for sure ask him of the limitations.