Azure Data Factory accounts do not use system-assigned managed identity authentication, which may lead to use of insecure credentials such as passwords or connection strings.
Microsoft has provided detailed guidance on how to create and use Managed Identities with Active Directory for Data Factory. To learn how to create the appropriate prerequisites, then launch the services you require, see the Azure documentation below. Once the identity prerequisites are configured, you can also use Terraform.
In Azure Console -
In Terraform -
References:
https://learn.microsoft.com/en-us/azure/data-factory/data-factory-service-identity
https://learn.microsoft.com/en-us/azure/active-directory/managed-identities-azure-resources/overview
https://registry.terraform.io/providers/hashicorp/azurerm/latest/docs/resources/data_factory#identity