A Comprehensive Guide to Federated Identity Management

Published on: March 22, 2023
LicenseSpring Guide
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Federated identity management has become an increasingly important aspect of modern digital systems as organizations seek to improve the security and efficiency of their user authentication processes.

By leveraging a centralized identity provider, organizations can simplify the management of user identities, reduce the risk of data breaches, and provide a seamless user experience across multiple services and applications.

In this article, we will explore the concept of federated identity management, its benefits, and how it can be used to improve the security and efficiency of modern digital systems.

Whether you are a developer, security professional, or business executive, this article provides a comprehensive overview of the importance of federated identity management and its role in modern digital systems.

What Is Federated Identity Management?

Federated identity management refers to a system that allows users to access multiple services and applications with a single set of login credentials.

This approach reduces the need for users to remember and manage multiple usernames and passwords, as well as improving the security and privacy of personal information.

In a federated identity management system, a central identity provider authenticates a user and then issues a digital identity token that can be used to access services provided by other organizations. The organizations that provide these services are referred to as service providers.

Federated identity management can be implemented using various technical standards and protocols, such as SAML, OAuth, and OpenID Connect.

This approach can be particularly useful for organizations that need to provide access to many services and applications, such as those in the education, healthcare, and government sectors, as it streamlines the authentication process and reduces the risk of data breaches.

What Are the Benefits of Federated Identity Management for Software Applications?

Identity federation offers several benefits for software and web applications, including:

Improved User Experience:

With identity federation, users only have to log in once to access multiple services, reducing the burden of remembering multiple usernames and passwords.

Enhanced Security:

Federated identity and access management also provide a higher level of security by centralizing authentication and authorization, reducing the risk of weak passwords, and reducing the number of authentication points.

Increased Privacy:

By storing personal information with a trusted third party, users can maintain more control over their personal data and reduce the risk of data breaches.

Single Sign-On (SSO):

Identity federation provides a single sign-on solution, allowing users to access multiple services and applications with a single set of credentials.


Federated identity management solutions can help organizations to scale their services and applications without the need to manage multiple authentication systems.

Reduced IT Costs:

By centralizing the management of user identities, organizations can reduce the need for IT resources and simplify the administration of their services and applications.

Improved Compliance:

Federated identity management can help organizations to meet regulatory and compliance requirements by using federated identity solutions to provide a secure and centralized authentication and authorization solution.

How Does Identity Federation Work?

Single Sign-On (SSO) is a key component of identity federation and refers to the process of allowing a user to log in once and access multiple services and applications without having to enter their credentials again.

Here's how SSO works with identity federation:

  1. User attempts to access a service or application: The user navigates to a service or application and is prompted to log in.
  2. User is redirected to the identity provider: The service or application redirects the user to the identity provider, which is a centralized system responsible for authenticating the user.
  3. User authenticates with the identity provider: The user enters their credentials and the identity provider verifies their identity.
  4. Identity provider issues a digital identity token: If the user is authenticated, the identity provider issues a digital identity token that contains information about the user's identity and authorization.
  5. User accesses the service or application: The user is redirected back to the service or application with the digital identity token, which is used to grant access to the user without requiring additional authentication.

The digital identity token is typically based on a technical standard such as SAML (Security Assertion Markup Language), OAuth, or OpenID Connect. This allows different service providers and identity providers to communicate and exchange information securely.

With SSO, users only have to log in once to access multiple services and applications, improving the user experience and reducing the burden of remembering multiple usernames and passwords.

This also enhances the security and privacy of personal information, as user credentials are only stored with the trusted identity provider.

What Types of Independent Software Vendors Benefit From Using Identity Federation?

Identity federation can bring significant benefits to a wide range of use cases, but here are a few areas where Independent Software Vendors (ISVs) are likely to see the most benefit:

Cloud-Based Applications:

ISVs that offer cloud-based applications can leverage identity federation to allow their customers to use their existing corporate identity to access their services, streamlining the authentication process and improving the user experience.

Multi-Tenant SaaS:

For ISVs that offer multi-tenant SaaS (Software as a Service) applications, identity federation can simplify the administration of user identities and improve security by centralizing the management of user credentials.

Enterprise Applications:

ISVs that offer enterprise applications can benefit from identity federation by providing a secure and centralized solution for managing user identities, reducing the risk of data breaches, and improving compliance with regulatory requirements.

Mobile Applications:

ISVs that offer mobile applications can use identity federation to simplify the authentication process for users and enhance the security of user credentials, as well as provide a single sign-on solution for accessing multiple services.

Educational Institutions:

ISVs that offer services to educational institutions can leverage identity federation to provide students, faculty, and staff with a single set of credentials for accessing multiple services and applications, reducing the burden of remembering multiple usernames and passwords.

Is Identity Federation the Same as SSO?

Identity Federation and Single Sign-On (SSO) are related but not identical.

Identity Federation establishes trust between different identity systems, enabling users to access resources across domains using their own credentials.

SSO simplifies the login process by allowing users to authenticate once and access multiple services without repeated logins.

While SSO is a specific use case within Identity Federation, the latter encompasses broader aspects like attribute sharing and cross-domain authentication protocols.

Is Identity Federation Secure?

Identity federation significantly enhances security by providing a centralized mechanism to control access to various systems, making it more difficult for cyber attackers to breach the domain.

However, the security of identity federation relies on the permissions it establishes.

IT departments are accountable for defining and updating security mappings for different employee or contractor roles, which can become more complex when managing multiple federations.

Any mistakes made during implementation or maintenance can result in data leaks.

Kyle Brandon
Kyle BrandonSystems Engineer - LicenseSpring Software
Kyle Brandon is a Systems Engineer at LicenseSpring Software, based out of Vancouver, Canada. With over two years experience, Kyle helps current and prospective customers with ensuring successful implementation of all LicenseSpring has to offer. Specializing in Computing Science, Kyle uses that experience to assist with troubleshooting user-reported bugs and provide helpful guides.