How does federated identity work? Benefits and tips

Access and identity management is a critical priority  for any modern business. With employees needing to tap into countless apps and systems, often from remote locations, ensuring the right people have the right permissions at the right time is no easy feat.

But there's a solution that can streamline this process while enhancing security: federated identity. This piece explores the concept of federated identity, how it works, real-world examples, and how it differs from a related concept—single sign-on (SSO). Let's jump in.

What is federated identity management (FIM)?

Federated identity management (FIM) is a system that allows users to access multiple applications across different organizations or domains using a single set of login credentials. Rather than creating separate user accounts for each app or system, federated identity establishes trust relationships between identity providers (IdPs) and service providers (SPs).

This means a user can authenticate with their primary IdP and then seamlessly access resources from other trusted SPs without having to log in again. The IdP vouches for the user's identity, and the SP accepts that assertion.

In a way, federated identity is like a passport. When you travel to another country, your passport serves as proof of your identity and citizenship. The foreign country trusts the issuing authority (your home country) and grants you entry based on that trust. Similarly, federated identity allows you to use your "home" credentials to access "foreign" applications, as long as there's a pre-established trust relationship.

Federated identity protocols

To facilitate these cross-domain trust relationships, federated identity relies on a set of standard protocols and frameworks. Some of the most common include:

• Security assertion markup language (SAML): An XML-based standard for exchanging authentication and authorization data between an IdP and SP. SAML assertions contain information about the user's identity and attributes, which the SP uses to grant access to resources.
• OpenID Connect (OIDC): An identity layer built on top of the OAuth 2.0 authorization framework. While OAuth handles authorization (granting access to resources), OIDC adds authentication (verifying user identity) and provides basic profile information about the user.
• Open authentication (OAuth): An authorization framework that allows a user to grant limited access to their resources on one site (the SP), to another site (the IdP), without having to expose their credentials. OAuth 2.0 is often used in conjunction with OIDC for authentication.

These protocols provide a standardized way for IdPs and SPs to communicate and exchange identity information securely. They define the format of the messages, the endpoints for sending and receiving them, and the cryptographic mechanisms for signing and encrypting the data.

How federated identity and authentication works

Now that we understand what federated identity is and the protocols that power it, let's take a closer look at how the authentication process actually works. We'll use SAML as an example, but the general flow is similar for other protocols.

Step 1. The user requests access to a domain/app that uses federated authentication

Suppose an employee, Alice, wants to access a cloud-based expense reporting app. She navigates to the app's URL in her web browser.

Step 2. The SP redirects the user to the IdP for authentication

The expense app (the SP) checks if Alice is already authenticated. If not, it looks up its list of trusted IdPs and finds Alice's employer. The app redirects Alice's browser to her employer's IdP login page, along with a SAML authentication request.

Step 3. The IdP authenticates the user

Alice enters her corporate username and password on the IdP login page. The IdP validates her credentials against its user directory (like Active Directory or LDAP) and performs any additional checks (like multi-factor authentication).

Step 4. The IdP issues a SAML assertion

Assuming Alice's credentials are valid, the IdP generates a SAML assertion containing her username and any other relevant attributes (like her email or role). The assertion is digitally signed by the IdP to prove its authenticity.

Step 5. The IdP redirects the user back to the SP

The IdP sends the SAML assertion to Alice's browser in a HTTP POST request, along with a redirect URL back to the expense app.

Step 6. The SP validates the SAML assertion and grants access

The expense app receives the SAML assertion from Alice's browser. It validates the IdP's digital signature to ensure the assertion hasn't been tampered with. Assuming everything checks out, the app extracts Alice's identity information from the assertion and creates a local session for her. Alice is now logged into the app and can start submitting her expenses.

This entire process happens in a matter of seconds, without Alice having to manage separate logins for each app. Federated identity allows her to use her existing corporate credentials to access external resources seamlessly and securely.

4 examples of federated identity management

Federated identity is used across many consumer and enterprise applications. Some common examples include:

• Google sign-in: Allows users to sign into third-party websites and apps using their Google account, without having to create a separate username and password. Developers can add a "Sign in with Google" button to their login page, which initiates the OAuth/OIDC flow with Google as the IdP.
• Facebook login: Similar to Google sign-in, Facebook login allows users to authenticate to other apps using their Facebook credentials. This is often used for social media integrations, like posting comments or sharing content.
• Apple sign in: Provides a privacy-focused way for users to sign into apps and services using their Apple ID. It includes features like "Hide My Email" which creates unique email aliases to protect user privacy while still allowing communication.
• GitHub authentication: Popular among developers and technical services, GitHub's OAuth implementation lets users sign into development tools, documentation sites, and other tech platforms using their GitHub credentials. It's commonly used for developer-focused services and open source projects.

These are just a few examples, but federated identity is used across many industries and use cases. Any time you see a "Sign in with..." button on a website or app, there's a good chance federated identity is working behind the scenes.

Benefits of federated authentication

Implementing federated identity can bring significant benefits to your organization, including:

1. Streamlined access and productivity

Federated identity simplifies the login process for users by reducing the number of usernames and passwords they have to remember. This can save time and frustration, especially for employees who need to access multiple apps throughout the day, while boosting productivity and reducing friction in the user workflow.

2. Enhanced security

Rather than spreading access controls across different systems, you get a single source of truth for authentication. This means stronger password policies, consistent MFA enforcement, and much better visibility into any suspicious login attempts.

3. Reduced IT overhead 

Instead of manually creating and removing accounts across dozens of systems, IT teams can automate the whole process. When someone joins or leaves, their access is handled automatically across all connected apps—no more tedious account management.

4. Improved compliance 

With everything flowing through one identity provider, you get a clear picture of who's accessing what and when. This makes audits much simpler and helps prove compliance, since all user activity is tracked in one place.

5. Better cost efficiency 

Beyond the obvious licensing savings, you'll spend less time and money on support tickets, password resets, and maintaining separate identity systems. The automated account management alone can lead to significant cost reductions.

How does federated identity support remote work?

The benefits of federated identity are particularly relevant in today's era of remote and hybrid work. With employees accessing corporate resources from home, coffee shops, and other unsecured networks, organizations need a way to ensure consistent and secure authentication across all their apps and services.

Federated identity allows remote workers to use their corporate credentials to access cloud-based apps and resources from anywhere, without the need for cumbersome VPNs or remote desktop protocols. This can greatly enhance productivity and flexibility, while still maintaining strong access controls and compliance policies.

For example: Suppose a sales rep needs to access a cloud-based CRM app while traveling to a client site. With federated identity, the rep can simply navigate to the CRM login page and click "Sign in with [company name]". This redirects them to their corporate IdP, where they authenticate with their usual username and password (plus any required MFA steps). Once authenticated, the rep is seamlessly logged into the CRM app and can start working, without any additional friction or delay.

Federated identity can also help organizations onboard remote employees more efficiently. Rather than manually creating accounts in each app and sending out multiple sets of login instructions, IT can simply provision the user once in the central IdP and grant them access to all necessary apps through automated workflows. This ensures new hires have everything they need to be productive from day one, regardless of their location.

Federated identity vs. SSO

Federated identity is often confused with SSO, as both technologies aim to simplify and streamline the user login experience. However, there are some key differences between the two:

• Scope: SSO operates within a single organization, allowing users to access multiple internal applications using one set of credentials. Federated identity, by contrast, enables authentication across different organizations or domains, letting users access services from multiple organizations using credentials from their trusted IdP.
• Protocol support: Both technologies may use protocols like SAML, OIDC, and OAuth. However, SSO can work with simpler methods like shared cookies within a domain, while federated identity requires protocols specifically designed for secure cross-domain authentication.
• Trust model: SSO relies on a central directory or IdP that all applications within the organization trust. Federated identity establishes trust relationships between independent organizations' IdPs and SPs through formal agreements and security measures like digital signatures.

In practice, FIM often includes SSO capabilities as part of its broader feature set, while SSO alone doesn't necessarily provide federated authentication across organizational boundaries. Think of SSO as one piece of the larger federated identity puzzle.

Rippling: Federated identity and authentication for your business

Managing federated identity and access control across a complex app ecosystem can be challenging, especially for businesses with limited IT resources. That's where Rippling comes in.

Rippling is an all-in-one HR and IT platform that unifies employee identity, device management, and access control in a single system. With Rippling's password federation feature, organizations can streamline authentication across corporate devices and apps, while enhancing security and compliance.

Here's how Rippling can help streamline identity and access management:

• Seamless SSO: Consolidate passwords and strengthen security by enabling SSO for device and app logins. Users can log into their managed devices with their Rippling credentials, reducing password fatigue.
• Unified directory: Rippling serves as a central IdP that connects your HR system with IT and security systems like MDM and endpoint management. This ensures consistent and secure access control across the organization.
• Device trust: Implement a zero trust approach by ensuring all device credentials are managed and trusted by Rippling. Admins can also set up automatic device enrollment.
• App extensibility: Create a seamless authentication experience for third-party apps by enabling Rippling's SSO extension through a configuration profile. This allows users to access web and mobile apps with their Rippling credentials.
• Automated deprovisioning: Automatically revoke access to devices and apps when employees leave the company, reducing the risk of orphaned accounts and data breaches.

With Rippling, IT teams can spend less time managing disjointed systems and more time driving strategic initiatives.

FAQs on federated identity

What are the disadvantages of federated identity?

While federated identity is powerful, it comes with some challenges:

• Setting it up can be complex, especially when dealing with multiple apps and organizations
• If your identity provider has issues, it could affect access to all your connected apps
• Users might get confused about which login to use, especially if you're working with multiple identity providers
• There's more setup work upfront to establish trust relationships and configure everything properly

How can federated identity help with compliance and regulatory requirements?

Federated identity makes compliance much simpler because everything runs through one system. You can enforce consistent security policies across all apps, track user access automatically, and easily prove compliance with standards like HIPAA, GDPR, and SOC 2. Plus, when regulations change, you can quickly adjust access controls across your entire system.

What are the best practices for implementing federated identity in a business?

Start by establishing clear policies about who gets access to what. Choose widely-supported protocols like SAML or OIDC, and make sure to implement strong authentication methods for sensitive data. Have backup authentication methods ready in case your primary identity provider experiences downtime, and most importantly, keep your documentation updated, and train your users properly.

This blog is based on information available to Rippling as of November 6, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.