Federation vs. consolidation: IAM modernization strategy

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Executive Summary

Identity and Access Management (IAM) modernization has become a critical imperative for organizations navigating increasing cybersecurity threats, regulatory requirements, and digital transformation demands. As enterprises grapple with identity sprawl across multiple systems, two primary architectural approaches have emerged: federation, which maintains distributed identity sources while establishing trust relationships between them, and consolidation, which centralizes identities into unified platforms.

This whitepaper examines both strategies through the lens of 2025's technological landscape, where AI-driven identity analytics, zero-trust architectures, and passwordless authentication are reshaping how organizations approach IAM. Our analysis reveals that while pure federation or consolidation strategies each have merits, most successful organizations are adopting hybrid approaches that leverage federation for external partnerships and legacy system integration while consolidating core workforce identities for enhanced security and operational efficiency.

Key findings indicate that organizations implementing thoughtful IAM modernization strategies report 40-60% reductions in security incidents related to compromised credentials, 30-50% decreases in IT operational costs, and significant improvements in user satisfaction scores. However, success requires careful consideration of organizational context, existing technical debt, and regulatory requirements.

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