Migrating to an Identity Cloud: What the Vendors Won’t Tell You

As you explore the possibility of migrating your on-premise IAM solution to the cloud, you’ve likely heard promises of lower costs, simplified deployment, improved security, and greater scalability. And in many cases, that’s true. However, there are critical considerations that often go unspoken—factors that can significantly impact cost, complexity, and long-term flexibility.

While cloud-based identity solutions offer many benefits, the migration process is rarely as straightforward as vendors claim. There are hidden complexities, trade-offs, and critical considerations that organizations must address before making the leap.  This isn’t to suggest cloud IAM isn’t the right path—it very well could be. But before making a decision, it’s essential to understand the full picture beyond the vendor pitch. Being informed is the key to ensuring your investment delivers the outcomes your business expects.

This article outlines the challenges, risks, and key considerations organizations should evaluate before migrating, along with a comprehensive list of questions to ask vendors and internal stakeholders to ensure a successful transition.

Why Migrate to an Identity Cloud?

Migrating to a cloud-based identity solution is more than a technical upgrade—it’s a strategic move that can unlock agility, reduce risk, and support long-term growth. Here are some of the key business drivers behind the shift:

• Scalability - As your organization expands—organically or through acquisition—so does the complexity of managing digital identities. Cloud IAM solutions are designed to scale seamlessly, allowing you to onboard users, applications, and devices across geographies without the burden of hardware constraints or manual configuration. Whether you're adding 100 or 100,000 users, cloud platforms can flex to meet demand in real time.
• Security Enhancements - Leading cloud providers make significant investments in security, often exceeding what most enterprises can support on-premise. This includes advanced threat detection, automated patching, built-in encryption, zero trust architectures, and continuous monitoring. In many cases, the move to cloud IAM helps modernize your security posture by reducing attack surfaces and improving identity-centric protection.
• Reduced Operational Overhead - Managing an on-premise IAM infrastructure is resource-intensive and often diverts valuable IT resources away from innovation. Migrating to the cloud removes the need for hardware procurement, maintenance, and upgrade cycles. It also simplifies lifecycle management, backup, and disaster recovery. The result? Leaner IT operations and more predictable costs.
• Improved User Experience - Cloud IAM platforms offer modern features like single sign-on (SSO), passwordless authentication, and adaptive access policies that enhance usability without compromising security. This results in a smoother, more intuitive experience for employees, partners, and customers—reducing friction and boosting productivity.
• Regulatory Compliance - Meeting regulatory requirements is a growing challenge across industries. Cloud identity solutions often include out-of-the-box compliance capabilities for standards like GDPR, HIPAA, SOX, and FedRAMP. Many platforms also offer detailed audit logs, access certification workflows, and policy enforcement to help demonstrate and maintain compliance more effectively.

However, migration is not without challenges. Vendors tend to highlight these benefits but often downplay or omit the complexities involved.

What Vendors Don’t Tell You About Cloud Identity Migration

While cloud identity vendors offer compelling capabilities there are crucial factors that are often downplayed or omitted entirely in sales discussions. Understanding these realities will help your organization plan more effectively and avoid costly surprises.

1. Migration is More Complex Than a Simple “Lift and Shift”

Transitioning to a cloud identity platform is not a matter of flipping a switch. In fact, trying to replicate your existing architecture in the cloud can introduce unforeseen challenges:

• Data Transformation & Validation: Legacy identity data often contains inconsistencies, non-standard attributes, or undocumented dependencies. This data must be meticulously mapped and transformed to meet cloud schema requirements.
  
  
• Protocol Compatibility Gaps: Older authentication protocols such as LDAP and Kerberos are not natively supported by many cloud IAM platforms, requiring re-architecture or hybrid models.
  
  
• Dependency Mapping: On-prem applications often have tightly coupled identity dependencies that must be re-integrated or re-engineered in the cloud.

2. Hidden Costs Beyond Licensing Fees

Cloud IAM platforms often tout predictable subscription pricing, but the total cost of ownership (TCO) can exceed expectations:

• Data Transfer Costs: Moving large volumes of identity data or syncing with on-prem systems can trigger egress fees from cloud providers.
  
  
• Integration Complexity: Connecting cloud IAM to legacy systems, third-party applications, and other platforms may require custom development and middleware.
  
  
• Professional Services: Vendors often charge separately for implementation, onboarding, oversight, and support—especially for complex use cases.
  
  
• Ongoing Compliance and Usage Fees: Some vendors meter access to advanced features like analytics, multi-factor authentication, or attribute-based access control, driving up recurring costs.

3. Vendor Lock-In Risks

Once embedded, switching identity providers is no small task—especially when vendor-specific tooling or proprietary APIs are involved:

• Limited Portability: Some cloud IAM providers make it difficult to export configurations, identity data, or workflows in a reusable format.
  
  
• Proprietary Architectures: The deeper your customization, the more tightly coupled your architecture becomes to that specific vendor.
  
  
• Proprietary APIs: Over time, your environment becomes increasingly reliant on the vendor’s APIs for critical business functions (e.g., lifecycle management, MFA orchestration, custom attributes). The cost to exit (both in terms of money and effort) rises as more systems and processes become entangled with the proprietary interface.

4. Performance and Latency Issues

Cloud-based authentication is only as fast as its network reach. For global enterprises, latency can become a performance bottleneck:

• Geographic Constraints: Not all vendors operate data centers in every region, which may introduce lag in authentication for remote users.
  
  
• Hybrid Overhead: If maintaining some on-premise systems (e.g., legacy apps, local directories), hybrid identity configurations require thoughtful network and caching strategies to reduce delays.
  
  
• High Availability Planning: Ensure your chosen vendor offers sufficient SLAs, failover options, and support for regional redundancy.

5. Security and Compliance Gaps

Despite vendor assurances, achieving full regulatory alignment may require significant configuration and due diligence:

• Data Residency & Sovereignty: Certain industries—such as healthcare, finance, and public sector—require data to remain in specific jurisdictions. Not all vendors guarantee regional hosting or data segregation.
  
  
• Custom Compliance Needs: Meeting GDPR, HIPAA, PCI-DSS, or FedRAMP may require advanced logging, encryption controls, and access reviews that aren’t enabled by default.
  
  
• Zero Trust Is Not a Default: While many platforms claim zero-trust readiness, implementing true least-privilege access and continuous validation typically demands additional configuration and policy tuning.

6. Customization and Integration Challenges

For organizations with mature IAM programs or unique workflows, cloud solutions may fall short without significant tailoring:

• Rigid Role Models: Some platforms have fixed role structures or lack support for fine-grained, attribute-based access control (ABAC).
  
  
• Limited Schema Flexibility: Custom identity attributes, entitlement hierarchies, and dynamic policy logic may not be supported out-of-the-box.
  
  
• Integration Gaps: Older applications, homegrown systems, and non-standard protocols may require custom adapters or federation bridges that vendors don’t supply.

Key Questions to Ask Before Migrating to a Cloud Identity Solution

Before deciding to migrate to an IAM cloud solution, organizations should ask the following critical questions:

Strategic Considerations

1. What are the primary drivers for moving to an identity cloud (cost, security, scalability, compliance, etc.)?
   
   
2. Does a full cloud migration align with our organization's long-term IT strategy?
   
   
3. Will a hybrid identity model (cloud + on-premise) better suit our needs?
   
   
4. What are the potential risks and downsides of cloud IAM adoption for our business?
   
   
5. Does the vendor support all of your requirements or will you require additional software or 3rd party tools?

Cost & Licensing

1. What is the total cost of ownership (TCO), including hidden fees, integrations, and maintenance?
   
   
2. How does pricing scale as users, applications, and API calls increase?
   
   
3. Are there extra fees for multi-region deployment, failover, or disaster recovery capabilities?

Security & Compliance

1. Does the vendor provide built-in support for our compliance requirements (e.g., GDPR, CCPA, HIPAA)?
   
   
2. What security certifications and attestations does the vendor maintain (e.g., SOC 2, ISO 27001, FedRAMP)?
   
   
3. Does the vendor allow full control over encryption keys, or do they manage them?
   
   
4. How does the vendor handle identity breaches and incident response?

Migration & Integration

1. What tools and professional services does the vendor offer for migrating users, credentials, and policies?
   
   
2. How does the solution integrate with our existing identity providers, directories (Active Directory, LDAP), and third-party apps?
   
   
3. Will existing authentication mechanisms (e.g., MFA, passwordless, SSO) be supported or require reconfiguration?
   
   
4. Can we test the cloud solution in a pilot or hybrid deployment before full migration?

Performance & Reliability

1. What is the vendor's audited uptime SLA, and what penalties exist for service failures?
   
   
2. Does the provider have global data center coverage to reduce authentication latency for users worldwide?
   
   
3. How does the cloud IAM solution handle failover, disaster recovery, and redundancy?

Vendor Lock-in & Future-Proofing

1. How easy is it to switch providers or migrate back to on-premise if needed?
   
   
2. Does the vendor use open standards (OIDC, SAML, OAuth2, SCIM) to ensure portability?
   
   
3. What level of customization and extensibility does the platform provide?

Final Thoughts

Migrating to a cloud identity solution promises numerous benefits—increased efficiency, elastic scalability, enhanced security, and reduced infrastructure overhead. It offers a path to modernize legacy systems, streamline user access, and align with zero-trust security models. But despite these advantages, the journey is far from simple.

This isn’t just a technology upgrade—it’s a foundational shift in how your organization manages identity across users, devices, applications, and environments. And with that shift comes a new set of decisions, trade-offs, and potential roadblocks.

By carefully evaluating vendor offerings, planning for both technical and business implications, and avoiding the common pitfalls of cloud migration, organizations can position themselves for long-term success with a future-ready IAM strategy.

Ready to Move to the Cloud? Make the Right Move.

Migrating your on-premise IAM to the cloud is a significant step—and one that demands the right strategy, the right timing, and the right partner.

At Identity Fusion, we help organizations cut through the noise with our IAM Cloud Readiness Assessments and Vendor Selection Services. We evaluate your current identity environment, identify potential risks and opportunities, and guide you toward the cloud solution that best aligns with your business goals, compliance requirements, and technical landscape.

Don't let hidden costs, integration pitfalls, or vendor lock-in derail your cloud journey. Let’s make your identity modernization secure, scalable, and future-proof.

Contact Identity Fusion today to schedule your Cloud Readiness Assessment and take the first step toward a smarter IAM strategy.