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Identity and Access Management vs Password Managers: What’s the Difference?

by Emily Heaslip Published Mar 22, 2021

Identity and access management best practices dictate that an organization provides one digital identity per individual. That identity can be maintained, monitored, and modified as needed while the user works on different projects and in different roles. However, strong IAM requires the use of tools and platforms, in addition to the principle of least privilege, to keep valuable information secure. 

[Read: 5 Identity and Access Management Best Practices]  

Many organizations believe that by requiring the use of a password manager, they are meeting the threshold for secure identity and access management. While a password manager is an important element of IAM, it’s part of a larger picture of security that includes other complimentary tools and practices. 

Here’s what to know about IAM vs password managers and how to build a system that meets your security needs.

Identity and access management basics

Identity and access management (IAM) is a broad category of practices, policies, and tools put into place to make sure the right people can access the right resources at the right time, and for the right reasons. Ideally, an organization will create one digital identity per employee or stakeholder to manage a person’s access to secure documents, PII, and other proprietary data. This single, unique identity makes it easier to track user permissions and access over a period of employment (or, in the case of a vendor or partner, during an agreement period). 

Fundamental security practices like the principle of least privilege are central to IAM; however, identity management also requires specific tools to manage user access. Most IAM solutions are part of one of three categories: privileged access management, single sign-on, and password management.

  • Privileged access management (PAM): tools and practices that restrict and monitor access to the organization’s most critical and sensitive systems. Compared to IAM, PAM is concentrated on granular control, visibility, and monitoring those with the most privilege and user access. 
  • Single sign-on (SSO): this tool enables users to log into multiple websites or cloud applications using one set of login credentials.
  • Password management: these tools enable a user to store all of their login credentials in one centralized, private, encrypted repository. 

Strong IAM requires a combination of all three of these categories — as well as multifactor authentication, the use of audit logs, and a directory of user access. 

How to use password managers

Password managers are both more secure and more convenient, especially for users that must log in to many different platforms and websites during the course of the workday. 

“A password manager is essentially an encrypted vault for storing passwords that is itself protected by a master password. In order to gain access to the passwords stored in the manager, a user has to know the master password; in many cases, a second authentication factor is required as well,” explained Tech Republic

Users only need to remember one password — the master password — in order to login to different websites. This is an immediate benefit for your coworkers, as the average employee must keep track of nearly 200 credentials. Plus, many password managers are able to generate passwords that are longer and harder to crack. 

Password managers for businesses allow teams to share passwords and provides IT teams with a way to secure every access point. The best password managers offer a way to share some passwords — for instance, share the password to your company’s Twitter account only among the marketing team — and keep others hidden. Others have different “safes”, meaning a user could have one safe for work passwords and a different safe for personal logins. 

Finally, the way you use your password manager will depend on whether the PM is cloud-based, browser-based, or stores passwords on a local drive. There are pros and cons to each, but generally speaking — given that many of us are working remotely for the foreseeable future — cloud-based password managers are the easiest to implement and use. 

Putting it all together: identity management software

A password manager is just one part of a comprehensive IAM approach. It must be layered with other IAM and security software, including two-factor authentication, SSO, PAM, and cloud data loss prevention. 

Critically, IAM doesn’t protect against insider threat — actions taken by users within an internal resource that compromises the security of an organization’s cloud systems. IAM and password managers can govern who has access to different platforms, but not what that user does once they get into the system. 

Cloud DLP provides that second layer of security following access management. Cloud DLP secures applications and cloud data services like Google Workspace or Slack, tools we’re using more frequently than ever. Nightfall, one of the leading cloud DLP solutions, monitors over 100 detectors to identify instances of improper data sharing, such as when credit card information or PHI is leaked in a SaaS or IaaS environment. Automatic notifications let users know when they share data in unsafe ways, so your IT security team can respond quickly. 

Learn more about cloud DLP and setting up your organization for secure remote work in our complete 2021 Security Playbook for Remote-first Organizations

Learn more about Nightfall by scheduling a demo at the link below. 

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