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Identity and Access Management (IAM)

Vangie Beal
Last Updated March 25, 2022 9:41 am

Identity and access management (IAM), also known as identity management (IdM), is a combined term used to create and manage digital and electronic user identities and regulate user access to on-premises and in-cloud assets of an organization.

What does IAM do?

IAM defines and manages the roles and access privileges of individual network users and the circumstances in which users are granted or denied those privileges. IAM is used to control user access to critical information within an organization. For any enterprise, IAM is crucial in order to become significantly more agile in supporting business initiatives and meeting ever-changing compliance requirements.

IAM centers on authentication and authorization processes and uses a range of authentication methods such as single sign-on (SSO), two-factor authentication (2FA), and multi-factor authentication (MFA).

With IAM in place, organizations can manage different types of identities, including people, IoT devices, and software, to ensure relevant data is accessed only by a particular user. It can be installed on-premises or through a cloud-based or hybrid cloud subscription model provided by third-party service providers. 

How does IAM work?

Identity and access management authenticates users and systems and sets controls and limitations for who can access enterprise systems. IAM and IAM tools work to secure systems and sensitive company data. They do this through:

One technology that plays a major role in IAM is artificial intelligence: it’s necessary for automating behavior analytics and monitoring users and networks. AI-based security and authentication tools, such as IAM, analyze network traffic and user behavior patterns and alert IT teams when anomalies arise. These anomalies can signal that a system has been breached or that data is being compromised. 

Enterprises have traditionally deployed IAM systems on-premises, but most organizations have made the move towards a cloud-based subscription or hybrid model. 

An IAM system should:

  • Capture and record user login information
  • Manage enterprise databases of user identities
  • Arrange assignment and removal of access privileges
  • Provide a central directory
  • Manage digital identities of devices and applications
  • Restrict access to subsets of data based on specific roles.

Before an IAM system is implemented, businesses should identify who will play a lead role in developing, enacting, and enforcing identity and access policies.

Read More: 8 Best Password Managers & Tools

History of identity and access management

IAM is not a new concept or solely a technology. In past decades and centuries, identity and access management would mean showing proof of identity through credentials to be able to enter a certain location or receive certain privileges.

Credntials could include:

  • Titles (such as king, countess, bishop)
  • Birth certificates, which were introduced to the United States in the 19th century
  • Driver’s licenses, which certify users to drive cars legally
  • Passports, which permit users to travel
  • Simple username and password controls, before the era of MFA and biometrics 

Identity verification started around when military factions used passwords to access secure areas around 2,000 years ago. The entry was denied for those who failed to provide the right response, and they were required to face brutal consequences. During the ancient and Middle Ages, seals were used to identify the sender and the authenticity of the messages.

A shift to cloud-based access management necessitated identity confirmation and access controls that were more secure than a simple username and password. 

In the early years of the 1990s, different types of identity documents and passports evolved to identify the right person and the data they present. With the advent of smartphones, biometric authentication like facial recognition and fingerprint authentication methods became common.

The late 90s and early 2000s have witnessed the development of software applications and different types of data, all with their own access needs. To handle this situation, a central repository is required to store the data of identities and manage authentication and authorization processes. Thus, IAM has evolved to provide secure access to the applications and information within an organization.

IAM components

Identity and access management helps secure physical premises, requiring identification to pass through enterprise doors, and requires authenticated, authorized users for all company applications.

Components of an IAM platform include:

  • Provisioning: When an IT team or organization sets up IAM, they must determine access levels and permissions for all users. Teams often perform automated provisioning through policies—when a user has a particular role label, they’re assigned access levels automatically based on that. 
  • Requests. When a user seeks to access a system, they send a request to the service (such as a web application). A request typically includes data such as IP address and tags attached to the request. 
  • Authentication. Users must have credentials to prove their access rights to the system. Authentication options include biometrics, real-time field validation, and email confirmation. 
  • Authorization. Users must be authorized to perform certain actions within a system, like viewing data or creating and deleting other users.

Before an IAM system is implemented, businesses should identify who will play a lead role in developing, enacting, and enforcing identity and access policies. This might be a particular department, commonly IT or HR, or a collaborative cross-departmental team.

Why is IAM important?

The shift to cloud computing makes network and account access much more flexible and streamlined for in-office and hybrid workforces. However, it also increases the opportunity for breaches and falsified identities. Because cloud-based systems and interconnected networks permit more lateral movement—movement between X and Y—the chances of attackers breaching multiple systems rise. 

Simple username-and-password based systems are no longer enough: stolen credentials and sophisticated attacks allow hackers to breach accounts. Man-in-the-middle attacks, brute-force attacks, and reused session keys are just a few methods of breaching enterprise accounts. IAM seeks to secure user accounts by requiring more stringent controls. 

IAM involves highly advanced security systems including biometrics, AI-powered security measures, and behavior analytics to ensure the security of corporate assets. It is able to encompass all areas of an enterprise like customers, partners, contractors, remote workers, marketing, data analytics, and more. IAM ensures the flawless functioning of enterprise digital systems and allows employees to work seamlessly by easily accessing the resources they need to do their jobs.

Data breaches can cost millions of dollars; in 2019, experts calculated that one data breach would set a business back by $200,000, enough to send a small company out of business. This doesn’t take into account the costs of large-scale breaches. The Identity Management Institute estimates that data breaches will cost companies $5 trillion by 2024; for most businesses, that’s much more money than they make in one year (or will ever make). Breaches also increase the likelihood of losing customers’ trust. Strict identity and access controls reduce the risk of breaches by limiting the ways attackers can breach systems and by managing legitimate users more closely.

Identity and access management are also crucial for maintaining compliance with data protection regulations. Regulatory standards like the GDPR expect organizations to know each person who has access to personal data and when they accessed it. IAM is important because it tracks data access, allowing enterprises to manage one aspect of their compliance.

See the top IAM providers: Best IAM Tools

Benefits and challenges of identity and access management

Before implementing, it’s essential to know the pros and cons of IAM systems to ensure the protection of enterprise resources. 


    • Enhanced security: IAM protects organizations from a range of cyberattacks, including identity theft, illegal access to confidential data, data breaches, hacking, and more.
    • Improved user experience: Users do not need to remember multiple passwords to access multiple resources through SSO.
    • Increased productivity: Employees can easily access the systems without entering multiple passwords to complete their duties.
    • Centralized access control: The centralized access control helps organizations to provide users with the right access privileges.
    • Advanced regulatory compliance: IAM systems are designed to meet constantly changing regulatory compliances like GDPR, SOX, HIPAA, etc.
    • Reduced IT costs: IT departments do not need to take care of every aspect of identification, authentication, and authorization, as IAM automates all these tasks without compromising the legitimacy.


  • A deep understanding of regulatory compliances and enterprise operations along with technical expertise is essential for implementing and utilizing the full potential of IAM systems. The lack of IT security professionals with experience in IAM is another significant disadvantage. Apart from this, small and medium businesses lack the resources that are needed to implement effective IAM system.
  • Incomplete deployment or failure to set up a thorough strategy or methodology results in ineffective IAM. IAM can be a strong security force, but it has to be planned and clearly laid out to truly benefit enterprises.
  • Some IAM solutions have security gaps or flaws, such as misconfigurations. Misconfigurations are one of the greatest threats to identity and access security: when policies and permissions get muddled, users’ privileges can be accidentally escalated. The resulting authorization increases the chance of data access being too widely distributed to too many users, which consequently increases the chance of a breach.

View the industry’s top eight IAM solutions for securing accounts and protecting systems.


This article was updated October 2021 by Jenna Phipps and in March 2022 by Siji Roy.