Calculating the ROI for an IAM project

Calculating the ROI for an Identity and Access Management (IAM) implementation project is of fundamental importance for companies. In many cases, such projects do not get off the ground because the economic return of an IAM system cannot be accurately estimated. What costs should be considered and how should they be compared? We explain this briefly in this article.

How can the ROI be calculated?

To calculate the ROI, various information and data are required. Annual cost data for current management needs to be compared with those that would incur with an IAM management system.

The annual costs involved in manual management are mainly five:

• Opportunity costs: the costs that are incurred for a certain economic choice. For example, the labour costs of manual IAM management that prevent people from performing other high-value-added activities for the company. They can be calculated as costs for missed revenues or estimated missed revenues or cost savings.
• Labour costs: the annual costs incurred for manual management of identity and access management activities. How long does it take to grant access to a file or application? How long does provisioning take? How long does it take to create a new user? How long does it take to restore credentials? The answer to these questions and the number of times these operations are performed in a year will provide the answer. Organizational and documentary production costs necessary for management can also be included here.
• Application costs: the annual costs incurred for applications and tools necessary for management.
• Training costs: personnel training costs to be able to work effectively with the current system. Comprised of hourly costs and courses.
• Financial costs for security breaches: both sanctions (related to GDPR violations), damages caused by the violation itself, and costs for validating data integrity. In this case, the costs are not easy to calculate and estimate, but they should at least be included as risk items.

Once all the necessary data is obtained, the same calculation can be done but assuming an automated IAM management instead of manual. Only necessary consulting costs need to be added. Starting an IAM project with a limited team or without know-how will only lead to a less effective and less efficient implementation.

With the total costs of both solutions, it will be possible to compare them, observe the differences, and choose the most advantageous one. This way, it will be possible to calculate the ROI.

ROI studies on IAM systems

IAM systems have led to many studies on the impact of the ROI. One of the most famous is that of Gartner. According to their study, “a company with 10,000 users can achieve a 300% ROI and save $3.5 million over 3 years with only automatic provisioning.” An internal study of our clients shows how you can go from managing 5,000 users with 5 dedicated people to managing 15,000 users with 4 people through an IAM system.

IAM software is not just a tool to work on process inefficiencies and generate cost savings. The benefits go far beyond, as they ensure greater security of sensitive company data and less frustration for IT sector operators who will no longer have to manually act on low-value activities.

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