Build vs Buy: Enterprise Identity Management for SaaS Companies

WorkOS's 2024 analysis highlights the financial and strategic implications for B2B SaaS companies deciding between building in-house identity management systems, such as SSO and SCIM, or opting for managed platforms. The analysis estimates a three-year cost gap of approximately $2.98 million favoring the purchase of managed solutions over in-house development for growth-stage companies. Building an in-house system is recommended only when identity management is core to the product, or when specific regulatory or operational requirements exist, while buying is advantageous for most other scenarios due to reduced time-to-market and ongoing maintenance burdens. In-house systems require significant engineering resources and carry substantial compliance and maintenance responsibilities, making them less viable for companies without dedicated identity teams. Alternatively, self-hosting open-source solutions like Keycloak can offer flexibility but entail significant DevOps overhead. The choice thus hinges on factors like total cost of ownership, speed to enterprise revenue, and whether identity management is critical to the company's differentiation.

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