3 Surprising Ways Identity Creates Business Value

This is the third blog in our series on building a business case for a new Identity and Access Management (IAM) solution.

In the first article, I described five steps that every business decision-maker should take to build a convincing case for an enterprise software and/or technology investment.

In the second, I took a deeper dive into the concept of the value framework – a method of describing in clear, quantitative terms how a proposed solution will benefit your organisation.

Now I’ll look at several key ways that modernising identity can drive business value. Some of these use cases may seem obvious to technology stakeholders but be less readily apparent to business leaders. For others, the opposite is true. And some might be things you haven’t thought about at all.

Confronting economic headwinds and historic labour shortages, today’s business stakeholders realise the make-or-break importance of eliminating unnecessary costs and maximising revenues. But not everyone understands all the ways that identity can help them achieve these objectives, while enhancing security and productivity along the way.

Want to know more about how a modern identity solution can reduce business risk, improve customer experience, and create new efficiencies? Read on.


#1: Software Licence Management

The vast majority of enterprise software in use today is consumed through familiar subscription-based Software-as-a-Service (SaaS) licensing models.

In most standard licensing agreements, companies pay a fixed monthly price per user (this is often referred to as per-seat licensing). Some pricing models also allow for usage-based pricing, with charges incurred for the number of transactions processed, reports run, or extra features accessed during a certain period.

Most companies give their employees access to a great deal of software. The average knowledge worker uses between five and 15 apps at least once a month, logging in to approximately 9 different software applications every day. And while the total number of apps available to employees varies dramatically across industries and different organisation sizes, it’s typically somewhere between 50 and 100. One report says that the average back-office worker has ongoing access to 90 different software solutions.

Providing access to all this software at enterprise scale gets expensive quickly. While the per-user licensing fee for each application may only be a few dollars each month, the sheer number of apps in use in the average company means that these costs are multiplied many times over. 

Of course, people do need access to apps in order to get their jobs done. But excess costs are incurred when large numbers of employees have ongoing access to many applications that they never – or almost never – actually use. - Businesses also waste money and incur security risks when they maintain software licences for users who have departed the organisation (or simply moved on to another role within it).

The Joiner, Mover, Leaver (JML) process offers a rich opportunity for saving time and money by introducing automation into existing workflows. Every business hires and sheds staff on an ongoing basis, but turnover rates in many industries and geographies have increased dramatically over the past few years, making it more important than ever for organisations to manage JML lifecycles in a cost-effective and efficient manner.

Typically, each new hire is given access to a set of applications upon joining the company (these are known as birthright apps).

As employees grow more senior within the organisation, it’s common for them to gain access to more and more software, as each promotion or shift in responsibilities brings the need to learn and use additional tools. Unless organisations are conducting audits on a regular basis, it’s common for employees to retain access to many enterprise software apps that they no longer use. 

Shutting down these orphan accounts takes time and effort, which translates directly into costs that the business must bear.

An IT administrator might earn $76,000 per year, with additional expenses for benefits, pension funding and other expenses effectively increasing the cost of that person’s salary to $102,000. This means that an IT administrator’s time costs the business around $52 per hour. If it takes about 20 minutes to manually deprovision each app, and the average employee has access to 15 apps, you can see how expenses associated with the JML lifecycle can compound rapidly.

Many organisations don’t deprovision access immediately upon an employee’s departure from the company, instead completing the task as part of an annual or even biannual audit process. Because of this, many enterprises are paying for months’ or years’ worth of licensing that no one is using. 

Such spending is wasteful, but the lag time between departure and removing access to enterprise software resources is also worrisome because of the significant security risks that it creates. Disgruntled former employees may be motivated by thoughts of “getting back” at the organisation, or may erroneously believe that intellectual property they created while working for the company is theirs to take. Needless to say, the costs associated with suffering a data breach are enormous (having reached a new all-time high of $4.35 million, on average, in 2022). 

Paying for software licences for departed employees is risky and wasteful, but many organisations are spending even more money on software that no one uses.

A modern IAM solution can automate the JML process to increase security and reduce administrative expenses, but it can also analyse utilisation logs, creating an alert when, for instance, an employee hasn’t accessed an app in six months. The solution can then start an approval flow, asking the user (or their manager) whether access to that resource is still needed. If not, an automated deprovisioning workflow can be set in motion. 

Automating the JML process, together with software licence utilisation management, has the potential to deliver outsized value, especially for a larger business. Not only can the organisation eliminate the unnecessary expense of licensing unused software, but it can also ensure that everyone – including third-party partners and contractors – has access to every resource they need, as soon as they need it.


#2: Customer Revenue

The impact of modernising identity extends far beyond the experiences of your workforce. Think about making a purchase from Amazon, Netflix, EasyJet, or even an online clothing boutique. In each of these examples, the customer needs to register to create an account before they can buy. 

This is, in essence, a self-provisioning event within an application.

Instead of having an IT administrator create the account, the customer can do it themselves. How smoothly this process goes can have a large impact on their propensity to buy – as well as their likelihood of returning to your site to purchase from your company again. In fact, 66% of users will abandon a website if they find the registration process to be too complex. 

It’s possible to offer guest checkout, which many consumers prefer. But doing so means that your business will miss out on valuable opportunities to learn about your customers – their purchase histories, shopping patterns, likes, dislikes – and personalise your offers and messaging in ways that can drive sales and profitability.

Instead, you can offer login options like social authentication (so that customers can use, say, their Facebook login to authenticate to your site), or progressive profiling, in which you gather information about users and their identities gradually over time.

This reduces complexity and friction, leading shoppers to have much more positive experiences. It can also lead to major increases in registration rates. In fact, research from Unbounce found that reducing the number of required form fields from 11 to four led to a 120% increase in conversions. 

What’s more, technologies like progressive profiling and using a single identity across multiple platforms can not only increase conversions (and revenues) but can also decrease customer support costs. 

Let’s say that a major airline has 66,000 customer registration events each month.

Approximately 10% of these might drop because of the registration process’s complexity, but 15% of them will go on to call the help desk. This means that customer service representatives are fielding an average of 825 additional calls each month because of the online registration process. Each of these calls might cost an average of $15 to handle, so that the company ends up spending nearly $150,000 per year on help desk services to manage failed registrations. Assuming that each customer would spend an average of $200 on plane fare each year, the airline is also losing over $1 million in annual revenues because of registration failures. 

Not only can a modern identity solution automate progressive profiling (so that your company can make the registration process simpler, easier, and even delightful) but it can seamlessly integrate with other marketing solutions, making it possible to drive coordinated email campaigns or make special offers tailored to customers’ behaviours and interests.

This way, an airline could offer its passengers a discounted rate on hotel rooms at their destinations, for instance. 

Coupling these personalisation efforts with smooth, streamlined registration and login experiences will enable your business to give its customers the digital experiences they want – so that it’s more fun to interact with your business online. In the end, these delightful experiences translate into greater profitability. According to research from the London School of Economics, a seven point increase in average net promoter score (NPS) is associated with a one percent increase in the business’s total revenue. 


#3: Mergers and Acquisitions

Companies buy other companies in order to accelerate growth, enhance their portfolio of offerings, or increase the value they can provide their customers. None of these things can happen if employees between the merging entities can’t communicate and collaborate seamlessly so that they can begin to work together.

The technical challenges involved in merging IT infrastructures are notoriously complex. They’re responsible for many failed mergers and, all too often, for delaying the realisation of the transaction’s full value. 

From an identity perspective, users from both organisations need to be incorporated into a single directory so that everyone can access all the software they need to be productive.

In many cases, this entails undertaking a multimillion-dollar professional services project, especially when legacy technologies are involved. But a modern identity solution can automatically federate between directories, read/write and bidirectionally sync directory data, and automatically clean the records. Once all the user records are together in one place, it’s possible to automate access provisioning, saving still more time and additional resources. 

Deploying a modern identity solution can accelerate M&A timelines by months if not years. It can also enhance individual user productivity throughout the entire process, while avoiding professional services costs. 

In addition, a modern identity solution can make it easier to consolidate customer databases, so that the new organisation can immediately identify – and create special marketing offers for – people who are already using both merging entities’ products. 

Taken together, these capabilities not only can make the merger happen more smoothly, but can also solidify the new brand’s identity – and strengthen its relationship with its customers – from the earliest stages of the process.

Okta's Identity Clouds can help you create great user experiences, increase customer sign-ups, improve employee productivity, and get apps to market faster. Discover how you could start building a business case for Identity by clicking here.