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What Is Identity as a Service (IDaaS)? Definition and How It Works

Identity as a Service delivers identity and access capabilities through a cloud service. Learn how federation works and what an organization still owns.
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Identity as a Service (IDaaS) is identity, credential, and access management delivered to customers as a cloud software service. It can provide capabilities such as single sign-on, multifactor authentication, and directory services, but the term does not describe one fixed set of features. An organization still has identity and application responsibilities even when it outsources some of the software operations.

What does Identity as a Service mean?

NIST defines IDaaS as a company offering identity, credential, and access management (ICAM) services to customers through a software-as-a-service cloud model. NIST’s definition appears in NISTIR 8335, Identity as a Service for Public Safety Organizations; that report focuses on authentication in public safety, so it is an authoritative example rather than a universal specification for every IDaaS product. NIST’s glossary entry for Identity as a Service also points readers to source documents for context.

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IDaaS is an informal industry term, not a standardized promise that every provider supplies the same capabilities. A typical identity provider may combine single sign-on (SSO), multifactor authentication (MFA), and directory services, as described in the government Cloud Identity Playbook. Some services may also include identity proofing or access-control functions, but those are not guaranteed by the label.

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How does IDaaS work?

In a common federated login, an identity provider (IdP) authenticates the user and sends an assertion to a relying party (RP), usually an application. The application verifies the assertion and establishes an authenticated session. The user can then access multiple separately administered applications through a trusted identity provider, rather than managing a separate authenticator for each one.

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  1. User starts a login: The user opens an application that trusts the organization’s identity provider.
  2. Identity provider authenticates: The IdP checks the user using the configured authentication method, which may include MFA.
  3. Provider sends an assertion: The IdP conveys information about the authentication to the application.
  4. Application verifies and grants a session: The relying party checks the assertion against its trust configuration and applicable policies, then creates a session if the checks pass.

SSO is a familiar user-facing result of this arrangement, but SSO and federation are not interchangeable terms in every deployment. Federation addresses a broader problem: identity silos are independently managed, so credentials in one domain do not automatically carry meaning in another. It connects those domains through agreed identity, trust, and access policies, as explained in NIST’s Cloud Federation Reference Architecture.

What does moving to IDaaS change?

A hosted provider can take on some or much of the work of creating, installing, and maintaining ICAM software. That does not transfer every identity duty to the provider. NISTIR 8335 identifies responsibilities that remain with the customer, including managing the authenticator lifecycle and maintaining the applications that depend on the identity service.

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In practice, treat IDaaS as a shared-responsibility arrangement. Define who owns account creation and removal, authenticator enrollment and replacement, application configuration, incident response, and continuity planning. The precise division depends on the service and contract; do not assume that hosting the identity platform makes the provider responsible for the organization’s dependent applications.

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How to evaluate an IDaaS provider

Start with the organization’s applications, users, and risks, then verify the service against them. NIST’s current digital identity guidance is the SP 800-63-4 series; its SP 800-63C volume covers federation and assertions. Federation involves multiple parties and has security and privacy implications that should be assessed in the actual deployment.

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  • WORKS WITH 1000+ ACCOUNTS: Compatible with Google, Microsoft, and Apple. A single Security Key NFC secures 100 of your favorite accounts, including email, password managers, and more.
  • FAST & CONVENIENT LOGIN: Plug in your Security Key NFC via USB-A and tap it, or tap it against your phone (NFC) to authenticate. No batteries, no internet connection, and no extra fees required.
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  • Application compatibility: Which applications are supported, and how are integrations configured, tested, and maintained?
  • Federation and trust: Which protocols and standards are supported? How are signing keys, assertions, trust relationships, and configuration changes managed?
  • Authentication choices: Which methods and assurance options are available, and do they match the risks of the services being protected? NIST’s Digital Identity Guidelines explain authentication as establishing control of authenticators and providing risk-based assurance about continuity of access; select methods according to the service’s risks, not a one-size-fits-all checklist.
  • Recovery and lifecycle: How are lost or compromised authenticators replaced, accounts recovered, and access removed when a user’s role changes or ends?
  • Privacy and attributes: What user attributes are sent to each application, for what purpose, and what controls limit or audit that sharing?
  • Operational resilience: What availability commitments, support routes, outage procedures, portability options, and exit arrangements are documented?
  • Responsibility boundaries: Which tasks remain with the customer, especially for dependent applications and operational response?

A hardware security key can be one optional authenticator when both the IDaaS provider and the application support it. Compatibility is not universal; check the relevant vendor documentation before choosing a key.

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  • WORKS WITH 1000+ ACCOUNTS: Compatible with popular accounts like Google, Microsoft, and Apple. A single YubiKey 5 NFC secures 100+ of your favorite accounts, including email, password managers, and more
  • FAST & CONVENIENT LOGIN: Plug in your YubiKey 5 NFC via USB and tap it, or tap it against your phone (NFC), to authenticate. No batteries, no internet connection, and no extra fees required
  • MOST SECURE PASSKEY: Supports FIDO2/WebAuthn, FIDO U2F, Yubico OTP, OATH-TOTP/HOTP, Smart card (PIV), and OpenPGP. That means it’s versatile, working almost anywhere you need it
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Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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