What Is Identity and Access Management and Why Do Companies Need It?

Business applications have long ceased to operate only within a single closed network. Some systems are in the cloud, employees work from different locations, suppliers access selected services, and applications automatically exchange data. In such an environment, it is not enough to know which network a request comes from. A company needs to understand:

• who or what is requesting access,
• which system or data it wants to access,
• what it may do there,
• under what conditions access should be granted,
• how long the permission should remain valid.

These are precisely the questions addressed by Identity and Access Management, or IAM.

What Is Identity and Access Management?

Identity and Access Management is a set of processes, rules, and technologies through which a company manages digital identities and decides who or what may access its systems, applications, and data. IAM is not only about signing in. It covers the entire identity and access lifecycle, from account creation and the assignment of permissions to their modification or revocation.

In practice, it helps answer questions such as:

• Does a new employee have the access needed to do their job?
• Were their old permissions removed after they changed positions?
• Does an external supplier have access only for the duration of the project?
• Who approved access to sensitive data?
• Which technical accounts are used by the company’s integrations?
• Can we determine retrospectively who performed a specific operation?

A well-configured IAM system connects technical measures with real job roles, processes, and responsibilities.

Identity, Authentication, and Permission Are Not the Same

When managing access, terms that refer to different parts of the process are often confused.

Term	What It Means
Identity	A person, application, or process recorded in a digital environment
Authentication	Verification that the entity is who or what it claims to be
Authorization	A decision about what it may access and what it may d
Permission	A specific authorization, such as reading, modifying, or approving

 

A user may therefore sign in successfully, but should still have access only to the data and operations needed for their work. A large part of the risk arises after sign-in. A compromised account or overly broad permissions can allow an attacker to move through the environment in a way that initially appears to be normal activity.

Why Identities and Access Are a Significant Security Risk

For an attacker, it is often easier to obtain a user password, active session, access token, or API key than to technically break into an entire system.

After obtaining valid access, an attacker may:

• read or modify company data,
• access other connected services,
• use the permissions of the compromised account,
• create new accounts or authentication methods,
• perform operations that appear legitimate.

Account misuse may not produce the traditional signs of a technical intrusion. Detection often depends on evaluating context, permissions, and unusual behavior.

Warning signs may include:

• a sign-in from an unusual location or device,
• activity outside normal working hours,
• bulk data downloads,
• use of systems that the user does not normally access,
• unexpected changes to permissions,
• creation of a new authentication factor.

IAM is therefore not only a preventive tool. It also provides the data needed to monitor and investigate suspicious activity. If you suspect that an account has been compromised, see also the article What to Do If Your Login Credentials May Have Been Leaked.

Four Core Areas of IAM

Identity and access management can be broadly divided into four main areas.

Area	Main Task
Authentication	Verify the identity of a user or system
Authorization	Determine the permitted systems, data, and operations
Lifecycle	Change access in line with a role or engagement
Audit and oversight	Record and regularly review access

 

These areas must work together. Strong sign-in security alone is not enough if a user has excessively broad permissions after signing in or if their account remains active after the engagement ends.

Authentication: More Than a Password

A password is still a common method of authentication, but on its own it does not provide sufficient protection.

Users work with many accounts, which often leads to:

• reusing the same passwords,
• choosing short or predictable passwords,
• sharing login credentials,
• storing passwords insecurely,
• keeping a password even after a suspected leak.

One of the basic protective measures is multi-factor authentication, or MFA. It does not rely on a password alone, but requires an additional independent factor.

This may be, for example:

• a mobile device,
• an authentication app,
• a security key,
• biometric data,
• cryptographic data stored on a device.

However, not all MFA methods provide the same level of protection. For sensitive and administrator accounts, phishing-resistant authentication, such as passkeys or hardware security keys, should be preferred.

Modern authentication can also take context into account:

• the device being used,
• location,
• time,
• the sensitivity of the requested operation,
• the user’s previous behavior.

Additional verification is then required mainly in higher-risk situations, rather than for every routine activity.

Authorization: Everyone Should Have Only the Permissions They Need

After a successful sign-in, the system must decide what the user or application may do. The basic rule is the principle of least privilege. Each identity should have only the level of access needed for a specific task.

In practice, however, permissions are often created in the opposite way:

• they are assigned “just in case”,
• new ones are added when a person changes positions, but the old ones remain,
• temporary access has no end date,
• exceptions are created manually and no one reviews them later.

The result is a gradual accumulation of permissions. After several years, an employee may have access to systems and data that are no longer related to their work. Privileged accounts, such as administrator accounts, require particular attention. They can change configurations, manage users, or access large amounts of sensitive data.

For privileged access, it is advisable to use:

• a separate administrator account,
• stronger authentication,
• approval of sensitive operations,
• time-limited permissions,
• detailed activity logging.

Identity Lifecycle: Onboarding, Change, and Departure

An identity should not be managed as an account created once and then left unchanged. It must reflect the entire lifecycle of the user’s relationship with the company.

Onboarding

When an employee joins or an engagement begins, it should be clear:

• what role the person will perform,
• which systems they need,
• who approves access,
• which permissions are assigned automatically,
• how long temporary access should remain valid.

Change of Position

When a role changes, it is not enough to add new permissions. It is also necessary to check which existing access rights are no longer needed.

Otherwise, so-called permission accumulation occurs: the user gradually retains access from all previous positions and projects.

Departure

When employment or an external engagement ends, access must be revoked in a coordinated manner.

The review should not be limited to the main company account. It may include:

• cloud services,
• enterprise applications,
• VPN and remote access,
• shared storage,
• development tools,
• administrator accounts,
• physical access systems.

Forgotten accounts are especially risky because they remain technically valid, often retain their permissions, and are not actively used or monitored by anyone.

IAM Is Not Only About Employees

In a modern IT environment, many access requests are made by applications, integrations, and automated processes.

They may use, for example:

• service accounts,
• API keys,
• OAuth clients,
• certificates,
• access tokens,
• application passwords and secrets.

These machine identities also need a clear owner, a defined purpose, and limited permissions.

For each technical identity, it should be clear:

• which system uses it,
• who is responsible for it,
• what it may access,
• where its authentication credentials are stored,
• how long they are valid,
• how they are changed or revoked.

Technical accounts are particularly risky when they remain in use for years, have broad permissions, and their login credentials are stored directly in source code or configuration files. If your applications communicate through APIs or automatically exchange data, the article What Software and Systems Integration Means may also be useful.

SSO, IGA, PAM, and CIAM: What the Individual Terms Mean

IAM covers several related areas. When selecting a solution, it is useful to understand the basic differences.

Area	What It Addresses
SSO	Single sign-on to multiple applications
IGA	The lifecycle, approval, and review of permissions
PAM	Privileged and administrator accounts
CIAM	Customer identities in digital services

 

This article focuses primarily on the identities of employees, external contractors, partners, and technical accounts in a corporate environment.

In a specific project, however, a company may need a combination of several areas. For example, single sign-on can simplify users’ work, while IGA ensures that permissions are properly approved and reviewed regularly.

How IAM Supports Zero Trust

Zero Trust does not assume that a user or device is trustworthy merely because it is located on the corporate network. Access is evaluated based on the specific identity, device, requested resource, and current context. IAM provides several core capabilities needed to apply this principle:

• reliable identity verification,
• least-privilege access,
• context-based decision-making,
• regular access reviews,
• auditable activity records.

However, IAM is not a complete Zero Trust solution. Modern security must still protect devices, applications, networks, workloads, and the data itself. More detailed principles can be found in the article Zero Trust Security: Why the Traditional Security Perimeter Is No Longer Enough for Companies.

The Most Common Identity and Access Management Mistakes

1. Access Is Granted Too Broadly

Users receive more permissions than they need because it is administratively simpler or intended to avoid future requests.

2. Old Permissions Are Not Removed

When a person changes positions, new access is added, but the original access remains active.

3. External and Temporary Accounts Have No Expiration Date

A supplier’s or project worker’s account remains active even after the engagement ends.

4. Technical Accounts Have No Owner

The company does not know which application uses the account, who may modify it, or what impact its removal would have.

5. Access Is Managed Manually in Each System

Different applications use different procedures, which increases the risk of errors and slows the response during onboarding, role changes, or departure.

6. Technology Is Selected Before Processes Are Mapped

The company starts by purchasing an IAM platform without having a clear understanding of roles, responsibilities, critical systems, and approval rules.

What to Prepare Before Implementing IAM

Implementing IAM is not only a technical project. It changes how a company assigns responsibility for accounts, systems, and data.

Before selecting a technology, the company should therefore prepare at least a basic overview of its environment.

Area	Basic Question
Identities	Who uses our systems?
Access	Who has access to critical data?
Lifecycle	What happens during onboarding, role changes, and departure?
Systems	Which applications should be integrated first?
Responsibility	Who approves and reviews access?
Risk	Which accounts and operations are the most sensitive?

 

Preparation should also include mapping:

• internal employees,
• external contractors and partners,
• privileged users,
• technical and service accounts,
• critical applications,
• sources of employee and role data,
• existing approval processes.

You do not need perfect documentation of every permission. However, you need a sufficiently accurate overview to set priorities and design a realistic approach.

How to Get Started with IAM in a Small or Medium-Sized Company

IAM does not have to begin as a large-scale project covering every system at once.

A more sensible approach may look as follows:

1. identify critical applications and data,
2. introduce MFA for sensitive and administrator accounts,
3. remove shared and inactive accounts,
4. establish a process for onboarding, changes of position, and departure,
5. assign owners for systems and permissions,
6. centralize sign-in for priority applications,
7. introduce regular access reviews,
8. gradually include technical identities and additional systems.

The highest priority should be given to measures that reduce significant risk while remaining feasible without disproportionate complexity. For example, introducing MFA, removing unused accounts, and establishing a reliable employee offboarding process can deliver value more quickly than the immediate implementation of a complex platform.

IAM in the Development and Modernization of Business Software

Identity and access management should be addressed when a new application is being designed, not only after it has been completed.

When developing or modernizing a system, decisions must be made, for example, about:

• whether the application will connect to the company’s existing sign-in system,
• which user roles it will support,
• who will approve permissions,
• which operations must be logged,
• how technical accounts and APIs will be managed,
• how access will be revoked after a user leaves,
• which activities require additional verification.

If identities are addressed only at the end of development, it may be necessary to change the architecture, data model, and method of integration with other systems. Security and access scenarios should therefore be included in the initial software analysis.

Start with an Overview, Not by Selecting Technology

IAM is not merely a sign-in screen or a standalone security product. It is a long-term capability that enables a company to manage identities, permissions, and accountability across systems.

Well-configured identity and access management helps to:

• reduce the risk of account misuse,
• speed up onboarding and changes in job roles,
• reliably remove unnecessary permissions,
• protect sensitive data,
• simplify auditing and oversight,
• securely connect users, applications, and automations.

The first step should therefore not automatically be selecting an IAM platform. A company must first determine which identities it manages, which systems are critical, how permissions are currently assigned, and where the greatest risks arise.

Frequently Asked Questions