IAM-Definition
IAM stands for “Identity and Access Management”. An IAM platform combines rules, policies, processes, and technologies to allow authorized users to access IT resources (e.g., an application, a portal, an intranet, a device, etc.) The goal is to manage digital identities and give the right people access to the right resources. Often similar terms such as IdM (Identity Management) are used interchangeably.
Tasks of an IAM solution
Any IAM solution has at its core three tasks: to
- identify,
- authenticate, and
- authorize (control)
legitimate users.
Why Do You Need an IAM System?
Today, no company or business can survive without the secure management of data, whether it is the personal information of employees, customers, suppliers, or partners. Organizations must ensure that only authorized individuals and entities have access to this data. Unauthorized access can damage an organization’s intellectual property, reputation, and expose it to digital extortion and fraud. A well-functioning IAM system protects against such threats and ensures compliance and proper data security.
IAM and Compliance
Organizations store not only their own data, but also the personal data of others. They may even process data for other organizations. Such data may be subject to non-disclosure agreements, proprietary, or a trade secret. In all these cases, the data must be protected so that only authorized individuals can access it and use it for legitimate purposes.
General Compliance
Compliance is the task of adhering to applicable laws, rules, and regulations. When we think about digital Identity and Access Management this comprises of course data protection laws and regulations, but also laws protecting trade secrets and intellectual property, guaranteeing freedom of expression or freedom from surveillance. Another aspect is preventing information from leaking, such as insider information or other data that is not meant for the public.
GDPR-Compliance
The General Data Protection Regulation (GDPR) is the data protection regulation of the European Union (EU) and applies to all personal data as well as exchanges of data within, towards and from the Europe. One main focus of the GDPR is data transfers to third countries. Those are countries where the GDPR is not applicable. Such data transfers are only permitted if the third country ensures an adequate level of protection. According to the EU commission this is the case for countries like Japan, Switzerland, or Israel. The USA, for example, is not a country with an adequate level of protection.
Because password verification always requires a data transfer, the use of cloud-based IAM solutions using providers based in the USA is problematic. This is the case even if these providers store their data on servers in the EU. Because here, too, US security services have access to this data under the US Cloud Act. To address this situation and to enable data transfers between the EU and the US, both sides have agreed on an accord: the EU-US Data Privacy Framework (EU-US DPF). This is an agreement to align the different legal data protection requirements between the two regions. Whether this agreement will still be in place after the Trump presidency remains to be seen.
What is the Difference between Identity Management and Access Management?
Identity management is about identifying who the user is and what user groups they belong to, or what role or other characteristics they have.
Access management, on the other hand, is about what resources the user can access and what rights they have. This decision, in turn, is made based on existing policies about which role, group, or identity has access to an application or storage space and what they are allowed to do with it.
Identity and access are often lumped together: Identity and Access Management, or IAM.
What is Customer Identity and Access Management?
Customer Identity and Access Management (CIAM) is a subtype of IAM. It gives the user control over their identity. Typically, users can sign themselves up in CIAM-solutions by choosing their own username and password. They may also be able to reset and change their access credentials themselves. This gives them agency in administering their own digital identity. At the same time the organization using the CIAM system can eliminate manual processes like a password reset function. CIAM is used by any digital business with a customer-facing interface that requires end users to log in.
What Differentiates an Enterprise Identity and Access Management System from a Federated Identity Management Software?
Federated IAM solutions can manage an identity across multiple identity management systems. A user who has access to certain domains or systems can use his or her digital identity to access other domains or systems. In this way, federation makes an identity portable. Typically, federated IAM systems are offered by social login providers, such as Facebook or LinkedIn. In this case, the user can use their Facebook credentials to log into other third-party applications that support the Facebook federation. This is known as social login as the user can log in using their social network credentials.
In contrast to the widespread use of social logins in the consumer space, many enterprises find it important to retain control over credentials and not allow their employees to log in using social logins. However, it is important to them that their employees can access various enterprise applications (e.g. CRM, email, intranet) easily, simply and securely. An enterprise login or enterprise IAM allows you to do just that. From a technical perspective, multiple domains or systems can be integrated within a company or group, but such an access system does not usually extend to other organizations.
What are the Differences between a Cloud-Based, Cloud-Native and On-Premises Identity and Access Management Solution?
Identity and access management systems can be deployed in a variety of ways. The traditional way is to run the solution on-premises, or in other words, “in-house” or within a rented rack in a data center. However, this requires dedicated computers (servers), software that must be customized, installed and kept up to date. It also requires security and IT development engineers to manage the on-premises IT landscape. Finally, scaling on-premises solutions in an increasingly complex environment can become a challenge as the business grows.
The alternative to an on-premises solution is a cloud-based IAM solution. This is an application developed outside the cloud and adapted to operate in the cloud. In this case, a third-party provider typically offers its customers a scalable and secure platform with an identity solution that enterprises and organizations can deploy across their application landscape. The big advantage for enterprises is that they don’t have to worry about this highly specialized area and can always rely on a secure solution and the necessary user support. This is often referred to as Identity-as-a-Service (IDaaS).
Cloud-native solutions are applications explicitly designed to run in the cloud. Unlike traditional solutions that are simply optimized for the cloud, cloud-native applications are built from the ground up with the cloud in mind. This includes designing and packaging IAM applications so that they can be easily deployed across multiple servers anywhere. This, in turn, makes a cloud-based IAM solution extremely flexible, scalable, and resilient.
How does one authenticate themselves using an IAM system?
A standard authentication (IAM) system today typically offers a variety of different authentication methods, which are sure to be supplemented or evolved with additional new methods in the future.
The most basic case is simply verifying a combination of username (or e-mail) and password. More advanced features are Social Logins, Biometrics, Magic Links or Single Sign-On. As one factor authentication methods are more and more at risk to easily get exploited, multi-factor authentication (MFA) systems which require at least two factors, are today’s security standard. Unfortunately, multi-factor authentication is still underutilized because users are still not aware of the dangers and risks.
The first factor in multi-factor authentication is usually the username/password. A one-time password (OTP), received on a phone or generated by a separate device or app, or a biometric marker such as a fingerprint, is typically used as the second factor.
For non-digital people, such as the elderly, the sick and those in need of care, alternative authentication methods must be created as more health and care services are digitized. Biometrics are often no longer a reliable login method in old age, and remembering passwords becomes increasingly difficult. Possible alternatives could be to log in using the NFC (Near Field Communication) function of a health insurance card or an ID card. More information on such use cases can be found here.
What are the advantages of an identity and access management system?
Organizations that use an identity and access management system have many advantages.
- The assignment of accounts and rights is automated in modern IAM systems. Manual checks and support tickets are reduced because routine tasks such as resetting passwords or creating new accounts can be outsourced directly to the IAM system. This also makes it easier to change all access rights in an organization at once when security policies are updated. This reduces the burden on IT and saves money.
- With cyber-attacks continuing to be the number one threat to businesses, IAM systems ensure that access is only granted to users who have the appropriate rights and permissions. This reduces the risk of data leakage and unauthorized access, protects against hacking, and improves data security.
- Adherence to compliance policies is critical for organizations, as violations can result in fines or reputational damage. IAM systems help organizations comply with regulatory requirements by documenting permissions and access in a logical, traceable manner.
- Modern IAM systems make it easy for users to log on to a variety of systems. By using single sign-on (SSO) solutions, users can access a variety of systems with a single set of credentials. In addition, passwords can be independently reset in near real time. This saves time and improves productivity and employee satisfaction.
Are there any Identity and Access Management Challenges?
Like any complex system, IAM solutions have their own challenges that should be considered but are generally manageable.
Over time and in a dynamic environment, IAM systems can grow in cost and complexity. This is especially true for on-premises systems, which may not scale easily and may not be adaptable or upgradeable for future needs. More importantly, they are often difficult to keep compliant. This includes maintaining the platform with ongoing privacy assessments, penetration testing, and risk analysis.
Cloud-based IAM or IDaaS solutions can have their own compliance pitfalls. The most common challenges arise from data transfers from Europe to US providers that do not participate in the EU-US data protection framework, and may not be permitted under GDPR. The location of the server, or rather the server operator, often plays a significant role.
Note: This article was first published in April 2022 and last updated and corrected in April 2025.