The company is looking for a solution that provides single sign-on (SSO) across multiple AWS accounts while continuing to manage users and groups in their on-premises Active Directory (AD). AWS IAM Identity Center (formerly AWS SSO) is the recommended solution for this type of requirement.

AWS IAM Identity Centerprovides a centralized identity management solution, enabling single sign-on across multiple AWS accounts and other cloud applications. It can integrate with on-premises Active Directory to leverage existing users and groups.

By configuring a two-way forest trust relationship between AWS Directory Service for Microsoft Active Directory and the company's on-premises Active Directory, users can be authenticated by their on-premises AD and still access AWS resources through IAM Identity Center. This solution allows centralized management of AWS accounts within AWS Organizations.

The two-way trust allows mutual access between the on-premises AD and the AWS Directory Service. This means that users and groups in the on-premises AD can be used for authentication in AWS IAM Identity Center while maintaining the existing identity management system.

AWS References:

AWS IAM Identity Center Documentation

AWS Directory Service for Microsoft Active Directory Trust Relationships

AWS Directory Service Integration with IAM Identity Center

Why the other options are incorrect:

A. Create an Enterprise Edition Active Directory in AWS Directory Service: This would require setting up a new directory and managing it in AWS, which adds unnecessary overhead. The requirement is to continue using the existing on-premises AD, making this option unsuitable.

C. Use AWS Directory Service and create a two-way trust relationship: While this approach establishes a trust between on-premises AD and AWS Directory Service, it does not address the single sign-on (SSO) requirements across multiple AWS accounts through IAM Identity Center.

D. Deploy an identity provider (IdP) on Amazon EC2: This is more complex than necessary and introduces more management overhead. AWS IAM Identity Center natively supports integration with on-premises Active Directory without requiring a custom IdP.