diff --git a/test/e2e/config/azure-dev.yaml b/test/e2e/config/azure-dev.yaml
index 5cace2dfd84..b89ed3fb755 100644
--- a/test/e2e/config/azure-dev.yaml
+++ b/test/e2e/config/azure-dev.yaml
@@ -83,32 +83,32 @@ providers:
   - name: azure
     type: InfrastructureProvider
     versions:
-    - name: v1.20.2 # latest patch of earliest minor in supported v1beta1 releases; this is used for v1beta1 old --> v1beta1 latest clusterctl upgrades test only.
-      value: https://github.com/kubernetes-sigs/cluster-api-provider-azure/releases/download/v1.20.2/infrastructure-components.yaml
+    - name: v1.20.4 # latest patch of earliest minor in supported v1beta1 releases; this is used for v1beta1 old --> v1beta1 latest clusterctl upgrades test only.
+      value: https://github.com/kubernetes-sigs/cluster-api-provider-azure/releases/download/v1.20.4/infrastructure-components.yaml
       type: url
       contract: v1beta1
       files:
       - sourcePath: "../data/shared/v1beta1_provider/metadata.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.20.2/cluster-template-prow.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.20.4/cluster-template-prow.yaml"
         targetName: "cluster-template.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.20.2/cluster-template-prow-machine-and-machine-pool.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.20.4/cluster-template-prow-machine-and-machine-pool.yaml"
         targetName: "cluster-template-machine-and-machine-pool.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.20.2/cluster-template-aks.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.20.4/cluster-template-aks.yaml"
         targetName: "cluster-template-aks.yaml"
       replacements:
       - old: "imagePullPolicy: Always"
         new: "imagePullPolicy: IfNotPresent"
-    - name: v1.21.0 # latest patch of latest minor in supported v1beta1 releases; this is used for v1beta1 latest --> v1beta1 current clusterctl upgrades test only.
-      value: https://github.com/kubernetes-sigs/cluster-api-provider-azure/releases/download/v1.21.0/infrastructure-components.yaml
+    - name: v1.21.1 # latest patch of latest minor in supported v1beta1 releases; this is used for v1beta1 latest --> v1beta1 current clusterctl upgrades test only.
+      value: https://github.com/kubernetes-sigs/cluster-api-provider-azure/releases/download/v1.21.1/infrastructure-components.yaml
       type: url
       contract: v1beta1
       files:
       - sourcePath: "../data/shared/v1beta1_provider/metadata.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.21.0/cluster-template-prow.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.21.1/cluster-template-prow.yaml"
         targetName: "cluster-template.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.21.0/cluster-template-prow-machine-and-machine-pool.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.21.1/cluster-template-prow-machine-and-machine-pool.yaml"
         targetName: "cluster-template-machine-and-machine-pool.yaml"
-      - sourcePath: "../data/infrastructure-azure/v1.21.0/cluster-template-aks.yaml"
+      - sourcePath: "../data/infrastructure-azure/v1.21.1/cluster-template-aks.yaml"
         targetName: "cluster-template-aks.yaml"
       replacements:
       - old: "imagePullPolicy: Always"
@@ -254,8 +254,8 @@ variables:
   AZURE_CNI_V1_MANIFEST_PATH: "${PWD}/templates/addons/azure-cni-v1.yaml"
   OLD_CAPI_UPGRADE_VERSION: "v1.9.11"
   LATEST_CAPI_UPGRADE_VERSION: "v1.10.7"
-  OLD_PROVIDER_UPGRADE_VERSION: "v1.20.2"
-  LATEST_PROVIDER_UPGRADE_VERSION: "v1.21.0"
+  OLD_PROVIDER_UPGRADE_VERSION: "v1.20.4"
+  LATEST_PROVIDER_UPGRADE_VERSION: "v1.21.1"
   OLD_CAAPH_UPGRADE_VERSION: "v0.1.0-alpha.10"
   LATEST_CAAPH_UPGRADE_VERSION: "v0.4.1"
   CI_RG: "${CI_RG:-capz-ci}"
diff --git a/test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-aks.yaml b/test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-aks.yaml
similarity index 100%
rename from test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-aks.yaml
rename to test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-aks.yaml
diff --git a/test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-prow-machine-and-machine-pool.yaml b/test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-prow-machine-and-machine-pool.yaml
similarity index 100%
rename from test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-prow-machine-and-machine-pool.yaml
rename to test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-prow-machine-and-machine-pool.yaml
diff --git a/test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-prow.yaml b/test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-prow.yaml
similarity index 100%
rename from test/e2e/data/infrastructure-azure/v1.20.2/cluster-template-prow.yaml
rename to test/e2e/data/infrastructure-azure/v1.20.4/cluster-template-prow.yaml
diff --git a/test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-aks.yaml b/test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-aks.yaml
similarity index 100%
rename from test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-aks.yaml
rename to test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-aks.yaml
diff --git a/test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow-machine-and-machine-pool.yaml b/test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow-machine-and-machine-pool.yaml
similarity index 98%
rename from test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow-machine-and-machine-pool.yaml
rename to test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow-machine-and-machine-pool.yaml
index b6a7ea6fc39..bcc2a40d072 100644
--- a/test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow-machine-and-machine-pool.yaml
+++ b/test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow-machine-and-machine-pool.yaml
@@ -160,7 +160,7 @@ spec:
         osType: Linux
       sshPublicKey: ${AZURE_SSH_PUBLIC_KEY_B64:=""}
       userAssignedIdentities:
-      - providerID: /subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
+      - providerID: azure:///subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
       vmSize: ${AZURE_CONTROL_PLANE_MACHINE_TYPE}
 ---
 apiVersion: cluster.x-k8s.io/v1beta1
@@ -316,7 +316,7 @@ spec:
         osType: Windows
       sshPublicKey: ${AZURE_SSH_PUBLIC_KEY_B64:=""}
       userAssignedIdentities:
-      - providerID: /subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
+      - providerID: azure:///subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
       vmSize: ${AZURE_NODE_MACHINE_TYPE}
 ---
 apiVersion: bootstrap.cluster.x-k8s.io/v1beta1
diff --git a/test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow.yaml b/test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow.yaml
similarity index 98%
rename from test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow.yaml
rename to test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow.yaml
index cf6259f3121..874ad7e66b9 100644
--- a/test/e2e/data/infrastructure-azure/v1.21.0/cluster-template-prow.yaml
+++ b/test/e2e/data/infrastructure-azure/v1.21.1/cluster-template-prow.yaml
@@ -138,7 +138,7 @@ spec:
         osType: Linux
       sshPublicKey: ${AZURE_SSH_PUBLIC_KEY_B64:=""}
       userAssignedIdentities:
-      - providerID: /subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
+      - providerID: azure:///subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
       vmSize: ${AZURE_CONTROL_PLANE_MACHINE_TYPE}
 ---
 apiVersion: cluster.x-k8s.io/v1beta1
@@ -258,7 +258,7 @@ spec:
         osType: Windows
       sshPublicKey: ${AZURE_SSH_PUBLIC_KEY_B64:=""}
       userAssignedIdentities:
-      - providerID: /subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
+      - providerID: azure:///subscriptions/${AZURE_SUBSCRIPTION_ID}/resourceGroups/${CI_RG:=capz-ci}/providers/Microsoft.ManagedIdentity/userAssignedIdentities/${USER_IDENTITY:=cloud-provider-user-identity}
       vmSize: ${AZURE_NODE_MACHINE_TYPE}
 ---
 apiVersion: bootstrap.cluster.x-k8s.io/v1beta1