Analyzing the Identity-as-a-Service Market 

If you’ve spent any time in the corporate sector in recent years, you’ve likely heard the term Identity-as-a-Service, or IDaaS, thrown around. But, with so many acronyms like SaaS, IAM, and DaaS, it can be hard to keep them all straight. 

Once you’ve decoded the acronyms, understanding what the IDaaS market is, why it’s so relevant to today’s business environment, and who uses it takes even more time and research. Thankfully? We’ve done all of the heavy lifting for you.

In this article, we’ll define what IDaaS is and describe what today’s IDaaS market looks like. Then, we’ll explain what factors are leading so many companies to invest in IDaaS solutions, and where the industry is heading in the new year and beyond. 

Identity-as-a-Service Key Terms Defined

With all the “alphabet soup” that is tech acronyms, keeping them straight can be tricky. Before we get started, here’s a crash course in the key terms you’ll need to understand before you can understand IDaaS. 

Identity and Access Management (IAM) 

Identity and Access Management, or IAM, is a type of security model that, according to Gartner, enables “the right people to access the right resources at the right times, for the right reasons.” 

IAM is made up of two separate components: an identity is the user, while access is what resources — and how much of those resources — said user can utilize. 

IAM is the broad umbrella term describing how you manage and secure your user identities (both remotely and on-prem) on all platforms, policies, and systems. Many other terms — including IDaaS — fit under the heading of an IAM solution. 

X-as-a-Service 

XaaS is another broad term, where the X represents “anything.” In the context of current business technology, virtually everything, from customer management to accounting to security, can be offered as-a-service. 

The distinction between a Starbucks latte being CaaS (Caffeine-as-a-Service) and simply a coffee shop comes down to the mode of delivery. For something to be X-as-a-Service, it has to be connected over networks and delivered remotely. Remote service delivery has been gaining traction over the last decade, and saw exponential growth when COVID-19 stay-at-home orders caused many business models to go virtual. 

Software-as-a-Service (SaaS)

Drilling down from XaaS is Software-as-a-Service, or SaaS. SaaS was the first, and most common, type of X-as-a-Service business model. In fact, there’s entire companies and industries (JumpCloud included!) that work strictly within the SaaS sector. 

SaaS delivers software applications entirely remotely — think downloading a game from your phone’s App Store instead of purchasing a CD-ROM of yesteryear. SaaS’s great advantage over its on-prem counterparts is its mobility: anywhere you have internet connection (and often, even when you don’t), your SaaS applications can be used. 

Identity-as-a-Service (IDaaS)

Finally, now that you understand what identities are and how they can be delivered as-a-service using software, we can explain Identity-as-a-Service, or IDaaS. 

IDaaS is a type of SaaS that focuses on how to connect user’s identities (typically via login credentials) to the resources they need to do their job. It is the cloud-based version of IAM, where user access is provided over the internet instead of in a physical location. A MarketsandMarkets report identified six components to the IDaaS ecosystem: Single sign-on (SSO), advanced authentication, authentication and access management, password management, identity governance and administration, and multi-factor authentication (MFA). 

IDaaS is considered the gold standard of identity and access management for its convenience, mobility, ease of use and management, and greatly increased security options. 

The State of the Identity-as-a-Service Market Today 

The Identity-as-a-Service market has enjoyed rapid growth since its inception, and has grown even more quickly since 2020. 

While COVID-19 can account for a portion of the growth, the longer-term gain is largely attributed to government regulations of more stringent compliance requirements, the increased popularity of bring your own device (BYOD), and the need to combat ever-increasing cyber threats. 

Identity-as-a-Service Market Size

The MarketsandMarkets report gauged IDaaS market size from 2016 through 2027. The study determined the market would reach $5.6 billion by the end of 2022. A predicted 24.7% Compound Annual Growth Rate (CAGR) estimates it to balloon to a staggering $16.8 billion by 2027. 

Similarly, a study by Transparency Market Research, Inc. predicted a 22.7% CGAR, estimating the market valuation will reach $41.9 billion by 2031. 

Who’s Using IDaaS?

One of the factors influencing IDaaS’s current growth is the fact that nearly every company size and industry can benefit from its implementation. While most sectors will see an increase in IDaaS usage, MarketsandMarkets identified several leaders over the next five years: 

• By feature: SSO will be the feature the most IDaaS users implement due to its ease of use and increase in security and productivity, all while lowering IT expenses. There are many add-on SSO applications, as well as more comprehensive cloud platforms that offer it as part of a larger security package. SSO is typically quick to set up, makes user logins easier and quicker, and reduces the amount of password-related help desk tickets. It’s also an excellent deterrent against cyberattacks. 

• By hosting type: Between public, private, and hybrid cloud hosting, the public cloud will see the largest market increase. This is due to its accessibility — public deployment can be obtained affordably with a subscription, or even for free with open source software. 

• By industry: The government sector will see the largest growth in IDaaS usage. This is due to current events generating more targeted attacks for national data. Governments are also starting to adopt new mobile technologies, which increases their attack surface. 

• By location: North America is projected to have the largest IDaaS market size. This is thanks to new and increasing government compliance initiatives, the surge in popularity of remote work and BYOD, and the increase of U.S.-based cybercriminal activity. 

Key Factors Driving IDaaS Adoption 

In the previous section, we teased the factors in 2022 that are leading to such rapid IDaaS adoption. Now, let’s get into the details of these considerations. 

Cybersecurity Concerns

Unfortunately, cyberattacks are evolving just as quickly as legitimate business technologies. 

Microsoft’s Digital Defense Report 2022 estimated there’s now 921 password attacks every second — a 74% increase from 2021. Meanwhile, Red Canary’s Threat Detection Report 2022 named the biggest offender as ransomware — and Microsoft said that 93% of their ransomware incident response situations showed users with weak controls on privileged access. And if you think your company could financially recover from a data breach? Think again. IBM’s Cost of a Data Breach in 2022 report put the average cost of a cyberattack at $9.44 million.

The data is clear: human error is still the biggest security risk IT admins must face. To combat these threats, you need a twofold approach. First, you must train your staff on spotting phishing and other cyberattacks to make them less likely to divulge sensitive information. Then, you must back this education up with top-of-the line security solutions, like multi-factor authentication and single sign-on. 

In their report, Microsoft named a clear path forward: “the cloud provides the best physical and logical security against cyberattacks and enables advances in threat intelligence and end point protection.”

Data Protection Regulations

As security concerns heighten, many companies, industries, and governments are implementing and enforcing more stringent data protection and compliance laws. And compliance is a constantly moving target, especially in IT. New laws and regulations mean admins must be prepared to pivot at the drop of a hat. 

While nearly every organization must contend with some type of compliance issue, here’s a few of the most common ones. 

• General Data Protection Regulation (GDPR): Any global business that collects or processes the personal data of EU citizens must comply with GDPR laws. A company must utilize access controls in order to be GDPR compliant. 

• Health Insurance Portability and Accountability Act (HIPAA): Any business that offers employee benefits like health insurance, FSAs, or wellness programs must comply with HIPAA laws. Businesses that need to be HIPAA compliant must utilize tracking logs in order to detect cyberattacks promptly. 

• Payment Card Industry Data Security Standard (PCI DSS): Any business that processes or stores branded credit card data from Mastercard, Visa, or American Express must ensure the security of the transactions using access logs that auditors can reference in order to detect data breaches. 

While each policy has different requirements to remain compliant, in general these rules tend to revolve around securing and protecting personal data. In traditional non-IDaaS business environments, these compliance efforts and metrics can be challenging to organize and prove. That’s because the entire burden of auditing, reporting, and accounting for any security breach falls on the shoulders of the IT admin. 

Remote Work

Remote work is here to stay. McKinsey’s American Opportunity Survey polled employees from all industries, regions, and economies in April 2022 and found that 23% of workers can work from home part time, and 35% can work from home full time. And 87% of people offered the chance to work remotely are taking it. While the workforce is enjoying the flexibility and other benefits remote work offers, it also represents a significant logistical challenge for previously on-prem IT Admins. 

Admins must contend with helping remote employees troubleshoot their virtual communication tools like Google Meet or Zoom, and their Wi-Fi connections. Speaking of Wi-Fi, ensuring security on so many networks — especially those that may be accessed by other non-company users — can be daunting, especially if the company was relying on on-prem network security before remote work. 

They must also determine how to grant access to company applications and resources to remote employees, while balancing the need to only allow access from secure devices and verified users — and to keep their management software safe. Microsoft’s Digital Defense Report 2022 found a fivefold increase in attacks against remote management advice, with over 100 million attacks as of May 2022. 

Bring Your Own Device (BYOD)

According to ReportLinker, the BYOD market is set to grow by $69 billion by 2026. But the rising popularity of bring your own device policies has posed a security issue that has turned many organizations toward IDaaS solutions. BYOD popularity is on the rise partially due to employee preferences, and partially due to work from home opportunities. 

While BYODs are owned by employees as personal devices, when they’re used for work-related activities, they can pose a significant security risk. IT Admins must put protective policies in place to keep their company data safe, without infringing on employees’ personal privacy. Overseeing and protecting these devices can be a full-time job without a modern IDaaS solution in place to help manage them and enforce security policies. 

Solutions Fueling the Identity-as-a-Service Market’s Growth

While these current factors may seem daunting, IDaaS solutions are well up to the task of solving for them. IDaaS options like Directory Services and User Provisioning increase IT admins’ oversight, while decreasing their workloads. Single sign-on and MFA greatly increase security, while making compliance a breeze. 

Security: SSO and MFA 

Single Sign-On (SSO)

Single sign-on, or SSO, is an IDaaS feature that allows a user to access multiple applications and resources with just a single login. SSO greatly improves security and employee efficiency. 

Our research suggests that 68% of employees switch between 10 apps in any given hour. That’s 10 different attack surfaces for a cybercriminal to gain a foothold in. What’s more, employees use the same password across an average of 16 accounts, both personal and professional, which increases that attack surface even further. SSO creates just a single entry point — for both employees and bad actors. 

Having one login per employee gives IT admins much greater visibility into each account, reduces help desk tickets for forgotten passwords, and allows them to establish complex password requirements to decrease the risk of compromised credentials. 

Multi-Factor Authentication (MFA)

Multi-factor authentication, or MFA, is an additional credential security feature that is integral to a comprehensive IDaaS strategy. It’s perhaps the best way to prevent unauthorized logins, as it combines something an employee knows (usually, this is their login ID and password), with something they have (like a push notification to a personal device). 

We’ve found that 81% of security breaches are due to weak or stolen passwords, but 99.9% of unauthorized login attempts are successfully blocked by using MFA. That’s because while it may be easy for a bad actor to obtain login credentials, they rarely have access to the user’s biometric data or personal cell phone to obtain the second factor. 

MFA and SSO are arguably the cornerstones to a secure IDaaS strategy. When you combine them by having a single sign-on source protected by second-factor authentication, your organization’s security becomes virtually impenetrable. 

Data Protection: Compliance

Getting audited may be a single event, but ensuring compliance is a continual action. IDaaS ensures your organization remains compliant using push policies, monitoring, and streamlined auditing. 

Many comprehensive IDaaS solutions like JumpCloud allow you to push policies directly to your users’ devices, like frequent password changes with required complexity or urgent security patches. Since IDaaS is remote, these policy changes and updates can happen in real time, regardless of where your IT admins are working from. 

In the event you are audited or experience a security breach, IDaaS’s cloud nature means all your incident data and reports are kept in one centralized location to easily share information with auditors. In the event your organization shifts to a Zero Trust security framework, you can easily implement conditional access to ensure resources are only available to trusted users on trusted devices in trusted locations. 

Remote Work: Provisioning

IDaaS makes onboarding and offboarding employees easy. This cloud-native service allows IT admins to grant and revoke employee access remotely — and immediately. 

Gone are the days when a new employee meant an IT admin had to go to the Apple Store, purchase a new device, install the business software, and create numerous login accounts for each employee resource. With IDaaS user provisioning utilizing SSO, an admin only has to create one login per employee and assign them the required applications. Some IDaaS platforms even allow the bulk of these tasks to be automated.

Deprovisioning, or offboarding employees, is just as simple. Admins can remotely revoke privileges on the employee’s device to company applications and resources by simply decommissioning the user’s single sign-on credentials. 

BYOD: Mobile Device Management 

While BYOD policies can represent a cost savings and employee convenience, they’re also one of the most frequently compromised devices. We found that 74% of global enterprise IT leaders reported their company experienced a data breach due to mobile security problems. But IDaaS can solve for these issues. 

A modern IDaaS solution will let you manage mobile devices within the same application as all other company-owned computers and devices. If you choose to allow employees to use personal devices for work activities, you can ensure their security by installing a business manager. These apps allow you to enforce password requirements and conditional access policies before giving the device access to company resources — without compromising employee privacy on personal devices. 

The Future of the IDaaS Market

As our world is run more and more online, IDaaS adoption will rapidly follow suit. The industry’s projected $41.9 billion valuation by 2031 is sure to grow even further in later years. While adoption over the next few years may begin slowly, the benefits of IDaaS will make it another fact of life before long. 

The smartest thing you can do for your organization’s security and longevity is to choose IDaaS now, before it is mandated for you. While there are add-on IDaaS services and providers for every business need and size, we’re partial to JumpCloud. 

Identity-as-a-Service With JumpCloud

JumpCloud securely connects users to all of their IT resources, regardless of protocol, platform, provider, or location. IT admins can attain the benefits that come with a comprehensive IDaaS solution … with no added complexities or security risks. Instead, you’ll gain the agility, security, and efficiency that comes from being able to leverage a single pane of glass to manage identities and security for your entire IT environment. 

If you’re ready to give a best-in-class open directory platform a try for all your IDaaS needs, JumpCloud’s your solution. Drop us a note, or sign up for a free account and give it a try for yourself. It’s free for up to 10 users and 10 devices.