What are Identity Federation Services?

Written by Kelsey Kinzer on November 28, 2022

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Updated on January 29, 2024

As more and more disparate IT resources come to market, traditional identity federation services are breaking down.

With every new cloud-based SaaS application comes a new flavor of identity federation services in an Active Directory (AD) environment. And although teams have created their own patchwork solutions, managing a complex web of identity federation services and their extensions is time-consuming and potentially dangerous. One misstep could cause an outage, breach, or major data loss.

But before we can solve this problem, we have to go back to the basics. In this post, we’ll explain what identity federation services are and how they work, then dive into modern strategies for federated identity management (FIM) and their benefits.

Identity Federation Overview

Identity federation services refer to a category of identity management solutions focused on extending users’ digital identities to various IT resources such as web applications, cloud servers, and multiple other back-end systems. Some popular examples of identity federation services include single sign-on (SSO) solutions, privileged identity management, and directory extensions.

Identity federation services are usually layered on top of legacy identity management solutions — Microsoft Active Directory (AD) — to extend traditional user identities to non-Windows or cloud-based IT resources.

How Did Identity Management Get Here?

The modern concept of identity federation services emerged in the early-2000s, as web applications such as Salesforce and Google Workspace came to market. As cloud-based applications became widely adopted, many long-standing Microsoft products like the on-prem Office suite became defunct.


Securely connect to any resource using Google Workspace and JumpCloud.

Unsurprisingly, Microsoft wasn’t interested in offering AD support for competing platforms. So IT admins using Active Directory to manage on-prem or Windows-based resources had to find a new solution.

First-generation SAML-based identity federation services, otherwise known as Identity-as-a-Service (IDaaS) or SSO, emerged to bridge the gap. Add-ons like RADIUS and SSH also appeared, but then IT managers faced an assortment of add-ons and full-blown FIM tools — and a hodgepodge of solutions can only go so far. 

Modern IT teams are shifting to comprehensive cloud identity providers rather than a slew of third-party add-ons.

How Does Identity Federation Work?

Identity federation is based on mutual trust between an identity provider (IdP) and a service provider (SP). Let’s outline each of these in some more detail:

  • Mutual trust – In the context of identity federation, mutual trust basically means authentication. The service provider needs to know that the user attempting to access a protected resource is who they say they are and are approved to use it. Identity providers perform that spot check and authenticate users.
  • Service provider (SP) – Service providers are web-based solutions. They could be anything from an email platform to a CRM, to an ERP, or more privileged resources like remote servers, databases, and network equipment. SPs are connected to identity providers in order to validate the user’s identity and permissions.
  • Identity provider (IdP)Identity providers create and manage user identities. IdPs verify the user’s identity, authenticate the user, and send the user’s data to the SP.

When someone attempts to access a service provider, the SP looks to the IdP to confirm the user’s identity, establish mutual trust, and then send the appropriate user information to finalize the login process.

Federated Authentication vs. Delegated Authentication: What’s the Difference?

Delegated authentication occurs when an external IdP verifies account credentials on behalf of an SP. The SP accepts a user’s login credentials or authentication token, but passes the token to the external IdP for validation. For example, you can configure a SP like Salesforce to use an LDAP server for validating login credentials. If the output is true, Salesforce allows you to access its resources, but it will display an error message indicating invalid credentials if it isn’t.

Whereas, federation involves establishing a trust between IdPs for authentication and authorization purposes. The SP is only involved in controlling authorization to resources once the IdP passes on an assertion. The SP trusts the IdP to authenticate the identities.

Is Identity Federation the Same as SSO?

SSO and FIM are very similar. Both enable users to use one set of credentials to access many different company tools. But SSO only allows users to access multiple applications within the same enterprise or domain.

FIM takes this concept to the next level, allowing users to access applications across multiple domains, depending on the federated configuration. FIM uses SSO technology to authenticate those users. So implementing FIM means you’re also using SSO, but implementing SSO doesn’t mean you’re using FIM.

Is Identity Federation Secure?

Overall, identity federation greatly improves security. A holistic, centralized mechanism for controlling access to various systems makes it more challenging for cyberattackers to penetrate the domain.

Of course, FIM is only as secure as the permissions it sets. IT is still responsible for creating and updating security mappings for different types of employees or contractors. And that task becomes even trickier when balancing multiple federations. Any mishaps during implementation or maintenance can lead to data leaks.

Identity Federation Benefits

Identity federation confers numerous advantages, mostly in terms of security.

Without FIM, users have to remember their login credentials when accessing every single application every single time. As you can imagine, this is a hassle, which causes users to reuse passwords or create ones that are easy to hack, opening the door to cyberattacks.

But there are other benefits to identity federation as well, including:

  • Improved user experience – With FIM, users can type in their credentials once to access multiple applications instead of memorizing multiple passwords. They can also feel confident that they are securely sharing information with other colleagues — those peers must be federated to access it.
  • IT cost reduction – Rather than trying to manage a long list of different add-ons, IT teams can use one FIM solution to set and update permissions. It saves IT from paying for several add-ons and frees up their time to work on other strategic initiatives.

The Future of Identity Management

Fortunately, a next-generation cloud identity federation service can securely manage and connect users to virtually any IT resource — and it’s not Microsoft Active Directory.

The JumpCloud Directory Platform® gives you all-in-one access control from within the cloud, federating user identities from one centralized location. With JumpCloud in place, IT can easily manage user access to devices and IT resources through Windows, Mac, and Linux authentication and direct integrations with Google Workspace, Microsoft 365, and HRIS platforms. And with no on-premises hardware, JumpCloud setup is a breeze.

Want to get rid of your outdated third-party identity federation services? Consolidate all of your identity federation services into our open directory platform and drastically reduce IT costs. Sign up for a trial of JumpCloud today.


See more of JumpCloud’s capabilities and its overall pricing structure.

Kelsey Kinzer

Kelsey is a passionate storyteller and Content Writer at JumpCloud. She is particularly inspired by the people who drive innovation in B2B tech. When away from her screen, you can find her climbing mountains and (unsuccessfully) trying to quit cold brew coffee.

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