
Identity management is no longer just about employees. The B2B IAM – The Hidden Value of Third-Party Identities research revealed that more external identities interact with an enterprise’s cloud, network, and devices than traditional employees. While internal employees remain the largest single group accessing corporate networks (29%), non-employee external identities now represent nearly half (48%) of total users.
Source: S&P Global Market Intelligence (2024). B2B IAM – The Hidden Value of Third-Party Identities.
Yet, despite the growing importance of managing external identities, the industry lacks a unified definition of B2B IAM. Some call it third-party identity management, others bundle it under CIAM or workforce IAM, while some see it as federated identities or delegated administration. Very recently, Gartner introduced the term partner IAM during their North American Identity & Access Management Summit in December. The lack of consensus makes it difficult for businesses to evaluate solutions and compare their value effectively.
There are several reasons why B2B IAM remains a fragmented category:
Instead of arguing about terminology, let’s focus on what matters, the capabilities that define a strong B2B IAM solution. Here’s what businesses should look for:
Identity Federation is a method that allows users to access multiple systems using a single set of credentials, typically managed by an external identity provider (IdP). It is often implemented through standard Single Sign-On (SSO) protocols, such as SAML or OpenID Connect, to enable authentication across different organizations, without requiring each party to maintain separate user accounts.
Identity Federation is one of the few identity terms we have a consensus on, but it is not the solution for all B2B relationships needs. Many vendors claim they provide B2B capabilities simply because they support federation. The reality is:
While federation is useful, a true B2B IAM solution must do more than just connect to an IdP. It must onboard users not only to your platform but also to your policies because your security posture is only as strong as your weakest link.
Delegated management allows organizations to distribute administrative control over user access and permissions, reducing the burden on central IT teams. It enables designated individuals—such as business managers, team leads, or external partners—to manage users within their own scope without requiring IT intervention.
Delegated management is a must for B2B IAM, but not all delegation models are created equal. Many vendors claim to offer delegation, but often, it’s limited to IT administrators. This limitation forces IT teams to manually manage external users, defeating the purpose of delegation.
A robust B2B IAM solution should:
Externalized authorization allows organizations to manage access policies outside of individual applications, ensuring centralized, scalable and consistent enforcement across different systems. Unlike traditional role-based access control (RBAC), externalized authorization enables dynamic, real-time access decisions based on attributes, risk signals, and contextual factors.
Most vendors rely on RBAC, which assigns users predefined roles with static permissions. While effective for broad access control, RBAC alone often results in over-provisioned accounts, granting users more access than they require. This can increase security risks by expanding the attack surface and limiting the ability to enforce more granular, risk-based access policies. Instead, organizations need fine-grained authorization that allows them to:
Privacy and consent management is often seen as a consumer IAM concern, but businesses must comply with privacy regulations just like they do for consumer data. Whether dictated by General Data Protection Regulation (GDPR) in Europe, California Consumer Privacy Act (CCPA) in North America, or industry-specific mandates, companies must:
With the rise of identity-based attacks, verifying that the person behind the keyboard is who they claim to be is non-negotiable. We’ve seen high-profile breaches where attackers exploited weak identity verification processes to gain unauthorized access.
A strong B2B IAM solution should support:
Yes and no.
No, because organization just want their problems solved.
At the end of the day, whether we call it B2B IAM, third-party identity management, or delegated administration, the goal remains the same: enabling secure, seamless access for external users at scale.
Yes, because clarity helps decision-making.
Without a clear category, organizations struggle to compare solutions, and vendors waste time explaining what they do instead of focusing on why they solve the problem better.
Rather than obsessing over labels, we should focus on solving real challenges in external identity management:
Maybe it’s time we stop treating B2B IAM as a rigid category and instead focus on the key capabilities that matter whether we call it B2B IAM, partner or third-party identity management, or something else.
Much like how there’s no one "true" recipe for noodle soup, whether it’s ramen, pho, or pasta, B2B IAM may never have a single definition. And that’s fine. The real focus should be on making external user access work, as seamlessly and secure as possible without overwhelming your IT teams, no matter what we call it.