A Software Operations Guide to Entitlement Management vs. Identity and Access Management

In simple terms, the IAM process validates the authenticity of users via an Identity Provider (IdP). Essentially, when logging into applications, users are prompted to provide proof of identity before gaining access, ensuring a level of security and compliance. Additionally, an IAM strategy allows you to assign roles within your organization, ensuring those working in different departments, for example, can access the products and services necessary for their job. 

Identity and password information is securely stored within IAM systems, with changes efficiently handled and access blocked once users leave the organization. In short, IAM is very effective at managing group access to enterprise software. 

However, there are serious drawbacks when SaaS producers apply this method to assigning use rights for application-specific roles.

What Is Identity and Access Management (IAM)?

USER AUTHENTICATION

Validates the authenticity of users through Identity Provider (IdP) integration with:

• SSO - Single Sign-On
• 2FA - Two-Factor Authentication
• MFA - Multifactor Authentication

In conjunction with a Role-Based Access Control (RBAC) system, it’s possible for publishers to use IAM to define separate roles and permissions within applications, but there are three major shortcomings:

1. No feature tracking or usage insights, which restricts the ability to monitor churn risk and assess upsell/cross-sell opportunities.
2. Metered usage requires another system of record – either third-party or homegrown – so usage-based billing relies on additional development and maintenance costs.
3. Measuring overuse is complex, with limited visibility for both the buyer and supplier, and enforcement often requires manual intervention.

Ultimately, IAM/RBAC frameworks are not designed with software monetization in mind, as pricing and packaging models need to be managed separately and integrated manually. 

This somewhat basic approach to SaaS access management may work for some, but there is a more dynamic alternative.

A centralized entitlement management solution is agnostic to deployment models, allowing you to offer advanced pricing and packaging for SaaS, on-premises, and hybrid environments. For publishers with mature product portfolios spanning on-prem and SaaS, and perhaps with a history of acquired products through M&As, the complexity and cost of running siloed operations can be significant.

In this diagram, you can see how SaaS entitlement management works:

In this scenario, once an order is placed, use rights are auto-provisioned, i.e., immediately made available to the customer. Typically, an email is sent to a key contact at the customer, detailing how to log in and assign their users different capabilities within the application. The mapping of use rights is maintained and enforced within the entitlement system rather than the application – keeping track of assignments, when specific features have been used, reporting of metered components, etc. 

IAM still plays a role in this process, authenticating users at the customer’s end, but, again, the mapping and tracking of use rights is maintained within the entitlement system.

In terms of stimulating revenue growth, a centralized entitlement management solution can help you:

• Accelerate time-to-market for new products and features, with auto-provisioned use rights
• Increase renewal rates with actionable insights into usage
• Recover lost revenue by tracking overuse (both intentional and unintentional)
• Improve customer experience with consistent delivery across all product lines
• Boost channel sales and support with visibility into reporting, billing, and renewal data

Additionally, centralized entitlement management enables multiple operational efficiencies, including:

• Reduced need to build and maintain homegrown systems
• Future-proof technology that can easily adapt to new monetization models
• Streamlined processes to scale with your business
• Self-service for customers and channel partners
• Fewer support tickets due to standardizing on a single platform

In our experience, these streamlined operations can reduce your cost by up to 10% while freeing up resources for more strategic projects, so the ongoing ROI of an integrated entitlement management system is tangible.

As 61% of technology companies plan to increase SaaS delivery by 2026, it’s vital to consider what use rights management system is best suited to your future monetization strategy. 

If you’re in the process of a SaaS transition, it can be tempting to fall back on the IAM approach that may have served you well for on-premises products. However, many find the necessary development and maintenance drains resources from core competencies that could be focused on delivering customer value.

Additionally, IAM alone doesn’t allow usage data collection, which is crucial to monetization initiatives, and the operational overhead is multiplied when relying on disparate back-end systems. 

Entitlement management in conjunction with IAM, on the other hand, is a flexible solution that allows you to manage access rights and measure usage across multiple product lines, reconciling data into a single source of truth.