Identity-as-a-Service (IDaaS) – Everything you need to know


In recent years, enterprise applications have started moving from local hosting to cloud providers by setting up a business-to-business (B2B) relationship with one another.

In this new cloud model, users can keep their personally identifiable information (PII) in a cloud environment where cloud services can access and use it as needed. However, we can never guarantee that cloud services will adhere to their privacy policies and won’t (accidentally) transfer PII to a third party, even if they make this clear in their terms of service.

Let’s take Facebook, for example. Facebook is a public Identity Provider (IdP) that collects PII about users. After a user authenticates to Facebook, he can access an application in this domain. Facebook may also disseminate user identity to the application on demand. According to the Facebook data scandal in early 2018, an application was allowed to collect the PII of 50 million users for “academic” use but gave the collected data further to a company, Cambridge Analytica, for “analysis” purposes.

This example shows that users typically disclose their identities with a service provider over the front end. In the back end, the service provider may engage with another service provider in a B2B relationship by forwarding the PII without user control. This scenario raises serious privacy questions: How do we protect PII from an untrusted host? Here is where the role of Identity-as-a-Service (IDaaS) comes in.

What is Identity-as-a-Service (IDaaS)?

IDaaS only recently emerged as an example of SaaS compared to email filtering, web content filtering, and vulnerability management, which are more established as SaaS offerings. There are significant deficiencies in today’s identity and access management (IAM) capabilities concerning uses in cloud computing (e.g., scalability). IDaaS attempts to provide some IAM services in the cloud.

Identity-as-a-Service (IDaaS) refers to delivering identity management as a service. It is an approach to Identity Management in which an entity (individual or organization) relies on a cloud service provider that allows the entity to perform an electronic transaction, which requires identity data managed by this provider. In other words, IDaaS is a subscription model that allows businesses to outsource identity and access management tasks to a third-party provider.

Companies can track system usage, manage detailed logs, and manage permissions without having to manage on-premises IAM software, thanks to IDaaS providers. Additionally, IDaaS solutions enable businesses to implement security features that integrate with all internal systems, such as single sign-on (SSO) and multi-factor authentication (MFA). With the help of these tools, a business can strengthen its security posture while giving employees access to the proper materials at the appropriate times.

How does IDaaS work?

Through an Application Programming Interface, IDaaS platforms offer security services for applications, networks, and systems (API). Users can enter their credentials on a standard login page across the organization’s IT infrastructure using that API gateway.

When users enter their credentials on this login page, the API sends an authentication request to the identity provider (IdP). To confirm a user’s identity and determine whether they have access to the service they are attempting to use, the IDaaS system consults a user directory that contains access controls and permission data.

Following the user’s identification by the system, the API sends a security token to the application along with details about the user, such as which parts of the application the user is permitted to access. The user has access to the application thanks to this security token.

Every user interaction with the API is logged by the IDaaS provider, who also creates detailed logs for auditing, reporting, and metrics through a dashboard on the identity as a service platform.

Benefits of IDaaS

No matter how many users or applications a business has, IDaaS solutions make IAM technology available to them. Organizations can fully control which users have access to which resources using IDaaS technology without paying for on-premises software.

Companies can use the subscription model to gain access to more cutting-edge technology with a lower initial outlay and reasonable monthly cost per user. They can easily increase usage by adding more users and integrations as their businesses expand. Additionally, by utilizing automation and having access to numerous IAM tools on a single platform, security teams can use IDaaS to reduce their time on administrative tasks.

With IDaaS, businesses can more effectively support remote and hybrid work arrangements. For employees using various devices and applications, IDaaS SSO, for instance, can offer a streamlined user experience. Ensuring the security of their IT infrastructure allows businesses to enable remote work by outsourcing IAM software security to device IDaaS vendors.

Some notable benefits of IDaaS

  • Eliminates cost and complexity: IDaaS solutions help companies cut down on equipment costs, streamline IT operations, and free up time and resources for other projects.
  • Accelerate time-to-value: Without the need for on-premises technology to acquire, install, or configure solutions, businesses can quickly and easily deploy IDaaS solutions.
  • Minimizes risks: By eliminating risky password practices, reducing vulnerabilities, and decreasing the likelihood of data breaches and attacks, IDaaS solutions provide strong security measures.
  • Enhances user experiences: By reducing password misuse and facilitating simple access to all applications using a single set of credentials, IDaaS solutions improve user satisfaction and experience.
  • Streamline operations: Key market players have created cutting-edge goods and services thanks to the rising demand for IDaaS solutions to streamline operations, quicken time to value, and support digital transformation.

Limitations of IDaaS

When outsourcing software, you must believe that the vendor will protect your company’s data. IAM technology handles private employee data like passwords, security question and answer sets, and biometric information. This data may be exposed during a data breach at an IDaaS provider. While on-premises IAM solutions are more expensive and difficult to maintain, they let businesses manage their security and keep sensitive data in-house. Additionally, since many internal IAM strategies use different tools, such as a separate MFA solution and SSO tool, businesses that maintain internal IAM may expose less sensitive data during a cyberattack.

Key features of IDaaS solutions

Several user authentication services and identity management tools are available from IDaaS providers. They typically come with necessary components like single sign-on, multi-factor authentication, easy customer registration, and self-service user account management.

Multi-factor Authentication (MFA)

Multiple authentication factors are used in multi-factor authentication to confirm user identity. It is a strong method of confirming user identity and typically uses factors like knowledge, possession, and inheritance. The network is more secure than single-factor authentication because users must provide multiple factors to access it. A second layer of security is added by multi-factor or two-factor authentication, which reduces the likelihood of unauthorized access. Google 2-step Verification and Microsoft Authenticator, which use the Time-based One-Time Password (TOTP) algorithm, are two prominent examples of multi-factor authentication.

Single Sign-On (SSO)

Users who use single sign-on can access all of their SaaS applications by logging in just once to a single portal. Additionally, it gives businesses and organizations a central location to manage the applications that each user can access. Users can log into multiple websites and applications using just one credential. By minimizing insecure password management techniques and security gaps, the service improves security and streamlines IT operations while lowering the likelihood of attacks and data breaches.

Identity Management

An identity provider (IdP) effectively manages and stores user identities and authenticates data using various authentication methods, including username-password combination.


Most businesses prefer integrating IDaaS with their current infrastructure, but they can also support clients and partners using a cloud directory. To ensure that only users with the proper credentials and security permissions can access sensitive and restricted data, IDaaS serves as the enterprise user directory.