What Is Cloud Identity Management and Why It Is Important

As remote work becomes the new norm, cloud-based tools and work environments are following suit. But as a business and security leader, how do you ensure the right people have access to the right resources–all while keeping your data safe? That’s where cloud identity management comes in. 

As businesses move their operations to the cloud, employees need to access critical resources from anywhere, at any time, without the need for re-authentication multiple times. This shift is especially crucial with the increasing use of Software as a Service (SaaS) tools.

This has led most businesses to adopt cloud IAM solutions and cloud directory services for managing identity processes. These services store and manage information about who can access key resources, making cloud identity management an essential component of modern IT infrastructure.

Why is cloud identity management important?

As organizations move more workloads into the cloud, the volume of users accessing cloud-based resources increases. Managing user permissions through traditional, on-premises IAM solutions quickly becomes inefficient and prone to errors. as it was typically handled through manual processes, requiring IT teams to manually grant or revoke access, which led to significant challenges. On-prem IAM systems were often siloed, security controls were network-centric, and scaling these systems to accommodate a growing workforce was costly and complex.

Traditional IAM methods also relied heavily on directory services like Microsoft Active Directory, which were designed for on-prem environments but lacked the flexibility and scalability needed for cloud-based systems. This led to:

• Slow and cumbersome permissions management: Manual granting of access to cloud resources created production bottlenecks, while rapid permission processing left security gaps.
• Access limitations for remote work: Employees working remotely faced delays or roadblocks in accessing necessary resources due to rigid, network-centric access control policies.

Cloud identity management resolves these issues by providing a scalable, automated solution that centralizes user access control across both on-prem and cloud environments. It enables organizations to:

• Automate access management: By automating user provisioning and de-provisioning, cloud IAM reduces the time spent on manual processes, improving productivity and security.
• Enhance security: With features like multi-factor authentication (MFA), single sign-on (SSO), and role-based access control (RBAC), cloud IAM strengthens security, ensuring that only authorized users gain access to the right resources.
• Support scalability and flexibility: As businesses grow, cloud IAM systems easily scale without requiring heavy IT investments, unlike traditional on-prem solutions.

By centralizing identity management, cloud-based IAM not only makes access control more efficient but also provides a unified and streamlined approach to managing user identities across diverse platforms. This scalability and automation are critical as businesses embrace the cloud, enabling them to take full advantage of its benefits without compromising security or operational efficiency.

How does cloud identity management work

Cloud identity management centralizes the management of user identities, access, and permissions across cloud environments, ensuring secure and efficient control over who can access resources, applications, and data. Here’s how cloud-based IAM works:

Centralized identity management

Cloud IAM uses a centralized repository to manage user identities and access policies, streamlining user permissions across cloud platforms and on-prem systems. This repository can be powered by cloud directory services (CDS), identity providers (IdPs), or cloud identity platforms. These systems streamline user permissions across cloud platforms, on-prem systems, and hybrid environments, ensuring consistent and secure access to resources.

Authentication

Verifying someone’s identity marks the first line of defense against any unauthorized users who try to access business information. While authentication isn’t a new idea, shifting it to a cloud-based system has made new processes necessary. The most popular options for this are explained here.

• Multi-factor authentication (MFA) requires two or more factors before a user can access data beyond a login point. The factors could be a combination of a password, a phone number, a one-time code, or biometric information like fingerprints or face recognition. Both factors must be verified before a user moves past the sign-in screen.
• Single sign-on (SSO) is typically used with MFA to give users the ability to sign into their account with a single credential. IT teams can set it up so that users who frequently access the cloud data from a known IP address get to bypass some of the MFA requirements. This setup “times out” after a set time interval, or if a user logs in from a new IP address. At this point, the user has to go through the full MFA process to log in again.

Authorization 

Once users have gained access to the cloud, they may only be able to view or make edits to certain assets. The IT team sets authorization levels in advance, sometimes down to the granular level for specific documents or assets using access control policies.

Administrators working with cloud identity management often apply the principle of “least privilege access,” which means that employees are granted just enough access to do their work and nothing more. This goes a long way toward minimizing the possibility of a security breach.

The most commonly used access control policy is role-based access control. RBAC assigns permissions based on user roles (e.g., Administrator, Manager). This ensures users access only the resources necessary for their role, improving security and efficiency.

With centralized policy enforcement, organizations can also generate compliance reports, which are essential for meeting regulatory requirements like the Health Insurance Portability and Accountability Act (HIPAA) and  General Data Protection Regulation (GDPR), by documenting who accessed what data, when, and why.

Integration with cloud applications and APIs

IAM systems integrate with cloud applications and application programming interfaces (APIs) using protocols like OAuth, Security Assertion Markup Language (SAML), and System for Cross-domain Identity Management (SCIM), ensuring seamless authentication and authorization across various platforms.

These integrations ensure seamless access to both cloud-based and on-premises resources, whether a user is accessing an application or cloud storage.

Also, cloud identity management is highly scalable. It adapts to an organization's growth by easily accommodating more users, devices, and applications while supporting multi-cloud and hybrid environments.

Key features of cloud identity management

With a better understanding of how Cloud IAM centralizes user identity and access management, let's explore the key features that make this technology essential for modern businesses:

• Multi-factor authentication (MFA) protects user accounts and company data with a variety of MFA methods, including push notifications, authentication apps, security keys, and using mobile devices as security keys.
• Single Sign-On (SSO) simplifies access to thousands of cloud and on-prem applications with SSO. Enable employees to sign in once and access a wide range of apps securely.
• Endpoint management enables organizations to manage and secure devices across a variety of platforms, including Android, iOS, and Windows.
• Integrating cloud and on-prem systems allows businesses to extend their on-premises Active Directory or legacy systems to the cloud, ensuring seamless access to traditional apps while managing user identities across cloud environments.
• RBAC assigns permissions based on user roles, ensuring users have access only to the resources they need. This simplifies access management and enhances security by following the principle of least privilege.
• Automated user provisioning and de-provisioning streamlines the process of creating, updating, and removing user accounts across various systems. This ensures that employees have the correct access while minimizing administrative overhead.
• Compliance and auditing provides built-in audit logs and reporting tools to track user activity, ensuring organizations can comply with regulatory requirements (e.g., GDPR, HIPAA).
• Self-service capabilities empowers users to manage their own accounts by resetting passwords or updating personal details, which reduces the burden on IT teams and enhances the user experience.

Industries using cloud access management tools 

A number of industries have made the switch to cloud access management due to the stronger security features the systems offer. For businesses that hold and share sensitive data or operate under the governance of compliance regulations, cloud identity management effectively protects private information.

The following fields are making good use of cloud IAM.

• Healthcare. Some of the most personal and private data we have relates to our health, which explains why businesses in this field must abide by multiple compliance regulations. Healthcare providers who operate under HIPAA standards find that cloud IAM tools make managing access to patient data more straightforward and secure.
• Finance. Personal financial information should be kept private, especially because of its appeal to cybercriminals. Many legacy systems no longer have security features that can withstand cyber attacks, making data vulnerable to theft. Cloud IAM tools help secure customer data, which builds trust between the company and their customers. These platforms also simplify compliance for audits and loss prevention regulations.
• E-commerce. For online shoppers, having a quick and simple way to access their accounts with vendors makes the user experience better. On the business end, cloud IAM organizes customer data in efficient ways that allow companies to process orders, reorder inventory, and manage e-commerce stores. Customer data stays protected in cloud-based systems and customers stay happy knowing their data is safe.

Benefits of cloud identity and access management 

Cloud access management brings businesses numerous, particularly when compared to traditional and legacy systems that operate primarily using on-premises hardware. From day-to-day functionality to overall system security, cloud IAM’s advantages can transform the way companies work.

Enhanced security 

Individuals and businesses switch to cloud IAM primarily because of the added layer of security these platforms provide. For instance, using authentication options like MFA makes it more difficult for cybercriminals to bypass and threaten data security.

Many cloud IAM processes also have strong password policy enforcement, like a minimum character requirement or an automatic reset notification to users after a certain period of time. 

Simplified user experience 

For employees, SSO capabilities and access to data across multiple devices means that, in many cases, they only need to remember one password or login, particularly when an auto-generated code is sent to their device for MFA. 

Administrators can also manage users in the whole system more efficiently from a centralized identity management dashboard. As employees come and go from the company, updating authorization levels stays simple and accurate.

Improved scalability and flexibility 

Cloud identity management tools are built with growing organizations in mind. As the needs and size of the business grow, admins can adapt the procedures to suit the company’s new requirements.

The same is true for businesses that want to scale back. Cloud IAM tools offer licensing models that allow organizations to find the most cost-effective solution for their business size and data access requirements. In particular, they help businesses transitioning to remote or hybrid work models, as The cloud can support a change in the number of employees who need remote access.

Greater regulatory compliance 

Data-sensitive industries can avoid large fines and possible data breaches by using compliance applications. On top of their robust user management practices, cloud tools provide an audit trail and extensive reporting capabilities. Cloud-based IAM is one of the best ways for businesses to ensure that they meet industry-specific and government-ordered compliance regulation every day.

Integration options with existing applications 

As more cloud-based applications are developed specifically for business use, the need for integration at all levels becomes more important. Customer relationship management (CRM) tools need to connect to point-of-sale (POS) systems to share customer data at the end of each day. Or medical applications may need to link with cloud platforms to better support the needs of healthcare providers.

Using cloud IAM often means that both existing infrastructure and new applications can work together for a smooth, cohesive experience that benefits employees, clients, and patients. 

Reduces storage costs 

Growing organizations often need a larger suite of applications and devices connected to their data. By implementing a cloud-based system, your business can save money on on-premises storage costs. This includes storage devices like servers, along with the salaries of the employees who maintain these large-scale systems. 

Legacy servers also become more costly to manage as they age, with more frequent repairs and maintenance needed. Cloud IAM removes these fees.

Software and services related to cloud identity management 

Implementing cloud identity and access management involves using a variety of software solutions that work together to manage user identities, secure access, and ensure compliance across cloud environments. Below are the key software categories that play a crucial role in modern Cloud IAM systems.

• Identity and access management solutions 
• Cloud directory services 
• Customer identity and access management software
• MFA software
• Passwordless authentication software 
• Privileged access management (PAM) software
• User provisioning and governance tools 

Show us your ID, pal!

With their numerous benefits and highly-rated usability, cloud identity management platforms have become the gold standard among IT professionals in numerous industries around the world. By taking advantage of this technology, you can reduce the risk of cyberthreats to your business and make cost-efficient decisions that support your team’s daily work.

Want to explore the future of identity? Read about decentralized identity solutions and know why its making waves in the identity and access management market.