As the digital economy continues to mature, the increasing requirement for secure, scalable, and user-friendly identity solutions has become a strategic imperative.
One of the most pivotal innovations in this space is Digital Identity as a Service, or IDaaS as it is more widely known. IDaaS is a cloud-based approach to identity management that supports businesses, users, and devices across an increasingly complex technological ecosystem.
Why IDaaS matters
The rise of remote work, cloud-native applications, data compliance laws, and consumer demand for seamless access has pushed traditional identity management systems to their limits. Enterprises now manage thousands, sometimes millions, of digital identities. Manual processes and legacy systems are no longer fit for purpose. A revolution is coming.
The primary drivers behind the coming IDaaS revolution include:
- Security concerns: Cybersecurity threats are increasingly identity-centric. Phishing, credential theft, and insider threats exploit weak authentication protocols. IDaaS mitigates this by providing centralised, policy-driven, and multifactor-secured access
- User convenience: Customers and employees expect frictionless digital experiences. IDaaS supports Single Sign-On (aka SSO), biometric access, and social login options, enhancing usability without compromising security
- Regulatory compliance: Regulations like GDPR, HIPAA, and PSD2 mandate strict controls on personal data access. IDaaS simplifies compliance through auditable access logs, consent tracking, and identity governance
- Scalability and cost efficiency: IDaaS shifts identity management from on-premises to the cloud, allowing rapid scale-up or scale-down based on demand. This reduces capital expenditure and frees up internal IT resources
Understanding how IDaaS works:
IDaaS is delivered via a cloud-based platform that manages the lifecycle of digital identities, creation, authentication, authorisation, federation, and governance.
Below is a brief list of its functional components:
- Identity provisioning and lifecycle management: Automates user account creation, updates, and deactivation. Ensures that users have the right access at the right time
- Authentication and multi-factor authentication: MFA, as it is sometimes known, verifies the identity of users via passwords, biometrics, one-time codes, or device-based authentication. MFA adds additional layers of security
- Single sign-on: SSO allows users to log in once and access multiple services without repeated credential input. Reduces password fatigue and improves user experience
- Federated identity management: Enables users to access external systems using their internal credentials. Supports standards such as SAML, OAuth 2.0, and OpenID Connect
- Access governance and role management: Defines and enforces user roles and permissions. Provides audit trails to support compliance and risk mitigation
- Self-service portals: Enables users to manage their profiles, reset passwords, and request access to applications, reducing IT support dependency
- Analytics and threat detection: Monitors user behaviour for anomalies. AI-driven engines flag unusual login attempts or permission escalations
Types of IDaaS solutions
Not all IDaaS offerings are identical, or even that similar. They vary based on deployment model, user focus, and functional depth. Broadly-speaking, IDaaS solutions can be categorised as follows:
- Workforce IDaaS: Focused on employees, contractors, and internal system access. Key use cases include onboarding, offboarding, and role-based access control (RBAC). Popular in large enterprises and government sectors. Examples include, Okta Workforce Identity, Microsoft Entra ID (formerly Azure AD), Ping Identity.
- Customer identity and access management (CIAM): Tailored for managing external users—customers, partners, and citizens. Prioritises user experience, personalisation, and consent management while maintaining data security. Examples include, Auth0, ForgeRock, Salesforce Identity.
- B2B identity solutions: Designed for complex partner ecosystems, such as supply chains and franchises. Enables secure collaboration across organisations with different identity systems. Examples include, IBM Security Verify, Azure AD B2B.
- Decentralised identity platforms: A new category where users control their identity through blockchain-based credentials. These solutions emphasise privacy, user autonomy, and interoperability. Examples include, Sovrin, Microsoft ION (based on Bitcoin), Veramo.
Benefits of IDaaS for businesses
- Reduced IT burden: Automated processes reduce the need for manual user provisioning and password management, freeing IT teams to focus on strategic initiatives
- Enhanced security posture: Unified policies across cloud and on-premises applications significantly reduce the attack surface and improve breach detection
- Improved user experience: Faster, frictionless access to apps enhances productivity for employees and loyalty among customers
- Faster onboarding and offboarding: Quick integration of new hires or contractors ensures timely access while immediate offboarding mitigates insider risks
- Cost efficiency: Membership/subscription-based pricing model aligns with usage. Avoids large upfront investments in infrastructure and ongoing maintenance
Key challenges and considerations
While IDaaS offers numerous advantages, it must also be be noted that it also comes with risks and challenges that businesses must evaluate before proceeding. These include, but are not limited to the following:
- Vendor lock-in: Deep integration with a single provider can create exit barriers
- Privacy concerns: Mismanagement of user data can lead to compliance violations and reputational harm
- Integration complexity: Legacy systems may require significant customisation to connect with IDaaS platforms
- Latency and reliability: Cloud-based authentication requires high availability. Downtime can halt business operations
- Ever-evolving threats: IDaaS solutions must constantly adapt to new security vulnerabilities and attack vectors
Timeline
We put our prognostication cap on for this article and came up with a projected timeline highlighting how IDaaS may evolve over the next decade, based on the existing industry landscape, current tech trends, and emerging technologies.
2025 – The widespread adoption phase
- Majority of large enterprises will have implemented IDaaS for workforce identity
- CIAM becomes a core differentiator for customer-facing apps
- MFA and SSO become default features across major platforms
2026–2028 – expansion and convergence
- Increased adoption in SMEs through simplified SaaS-based IDaaS offerings
- IDaaS converges with Zero Trust architectures for unified security
- AI-enhanced access analytics become standard for real-time threat detection
- Cloud-native identity governance becomes critical in regulated sectors
2029–2030 – The rise of decentralised and self-sovereign identities
- Pilot programmes for decentralised ID (DID) in education, finance, and public services
- Cross-border digital identity initiatives gain traction (for example, eIDAS 2.0 in the European Union)
- Digital identity wallets become available in mobile OS ecosystems (Apple, Google)
2031–2033 – AI-aware and quantum-resistant ID systems
- Use of behavioural biometrics and context-aware policies for adaptive authentication.
- Businesses begin adopting quantum-safe encryption in their IDaaS frameworks.
- Automated governance driven by artificial intelligence and machine learning for identity roles and access risk scoring.
2034–2035 – Universal digital identity frameworks
- Widespread implementation of interoperable, sovereign digital identities across public and private sectors
- Full legal recognition of digital credentials in contracts, healthcare, and banking
- Real-time identity reputation scores, much like credit scores, used for access and trust decisions
Strategic imperatives for the next decade (or so)
Digital Identity as a Service is not simply a convenience, it is becoming an essential layer of trust in a distributed, cloud-first, and mobile-driven world.
As identity becomes the new perimeter in enterprise security, businesses that invest in robust IDaaS strategies will be better equipped to:
- Secure digital assets
- Comply with global regulations
- Deliver seamless user experiences
- Enable secure collaboration across borders
For corporate leaders, IT professionals, and policymakers across the world, now is the time to develop frameworks that balance user control, data privacy, and operational efficiency.
