Explanation:

Microsoft Entra ID (formerly Azure Active Directory) supports group naming policies to automatically enforce consistent and compliant naming conventions for Microsoft 365 groups. The purpose of this policy is to standardize names, prevent conflicts, and include metadata such as department, location, or purpose.
According to the Microsoft Entra Administrator documentation and the AZ-104 official study guide ("Manage Azure Identities and Governance"), the steps to implement such a policy are:
Step 1: Create a Group Naming Policy
Navigate to:
Microsoft Entra admin center # Groups # Naming policy.
Here, you can define global naming conventions that apply whenever new Microsoft 365 groups or security groups are created.
Creating the policy allows you to specify prefixes and suffixes that automatically appear in group names based on attributes or fixed strings.
Step 2: Set Add Prefix to Attribute
Once the naming policy is created, select the Add prefix option.
You can choose between two prefix types:
String: A fixed word or phrase (for example, "Corp_")
Attribute: A user or group attribute dynamically pulled from Microsoft Entra ID (for example, Department or CompanyName).
To achieve the naming format <Department><Group name>, you must choose Attribute as the prefix type, since it will automatically insert the department value of the creator or group owner.
Step 3: Set Select Type to Department
After choosing Attribute as the prefix, you select which attribute will be used.
Choose Department to ensure the prefix dynamically reflects the department name of the group creator.
This results in an automatically generated group name like:
FinanceSales, HRRecruiting, etc.
If desired, you could later add a suffix (like "_Group"), but for this specific scenario, only the prefix (Department) is required.
Official Microsoft Documentation Extract (Summarized):
"A naming policy can consist of prefixes or suffixes that include fixed strings or user attributes, such as
[Department], [Company], or [Office].
To configure, create a group naming policy and add prefix or suffix elements based on attributes." (Reference: Microsoft Learn - Configure naming policy for Microsoft 365 groups in Azure Active Directory)