Unpacking the SSO Tax: A Deep Dive Into Costs and Implications for Businesses

The Single Sign-On (SSO) Tax has become a significant financial and operational burden for companies, particularly as the number of SaaS applications used by businesses continues to grow. This blog post aims to provide a detailed analysis of the SSO Tax, its origins, and its financial impact on companies of varying sizes.

The SSO Tax Explained

The SSO Tax refers to the additional costs imposed by software vendors for integrating SSO capabilities into their services. This practice originated from the early days of SSO technology, when it was primarily a feature demanded by large enterprises with complex security and compliance needs. Vendors justified the SSO Tax as a way to recoup the costs associated with the development, maintenance, and support of SSO integrations, which involve complex security protocols like SAML (Security Assertion Markup Language) and OIDC (OpenID Connect).

However, as SSO has become a critical security requirement for businesses of all sizes, the justification for such high costs has come under scrutiny. Despite this, many vendors continue to charge exorbitant fees for SSO, leveraging it as a tool for profit maximization rather than a facilitator of enhanced security.

The Financial Impact of the SSO Tax

The SSO Tax charged by different SaaS vendors ranges between 5% to more than 2500%. To understand the financial impact of the SSO Tax, it's essential to consider the average number of SaaS applications used by companies. According to recent statistics, small businesses use around 16 SaaS applications, medium-sized businesses use about 24, and large enterprises may use upwards of 177. Each of these applications potentially incurs an SSO Tax if the vendor charges extra for SSO capabilities.

Example Calculations:

Small Business (16 applications, 10 users): If we shoot for the most conservative calculations, the SSO Tax is an additional $5 per user per month per application, and a small business has 10 users, the annual SSO Tax would be:

16 × 5 × 10 × 12 = $9,600.

Medium-Sized Business (24 applications, 200 users): With the same per-user cost and 50 users, the annual cost escalates to:

24 × 5 × 200 × 12 = $288,000.

Large Enterprise (177 applications, 1000 users): For a large enterprise with 1000 users, the figures become staggering:

177 × 5 × 1000 × 12 = $10,620,000

These calculations intentionally include the lowest bar possible; the SSO Tax is almost always more than 5$ addition per user per app, and a large enterprise almost always has more than 1000 users per app. Despite this, the above example calculations effectively illustrate the substantial financial strain the SSO Tax can impose across different business sizes, significantly affecting IT budgets and potentially hindering other strategic investments.

UNIXi: A Solution to the SSO Tax Dilemma

In the landscape of SSO solutions, UNIXi stands out by offering a unique value proposition that addresses the core issues associated with the SSO Tax. Unlike traditional SSO solutions that impose additional costs for integration, UNIXi provides a solution that enables SSO for 100% of applications without any integration time or effort required. This innovative approach not only simplifies the process of implementing SSO but also eliminates the hefty fees associated with traditional SSO solutions. By choosing UNIXi, companies can avoid the SSO Tax entirely, leading to substantial cost savings and enhanced security compliance.?

Conclusion

The SSO Tax represents a significant challenge for businesses striving to maintain robust security protocols without inflating their budgets. As the demand for SSO grows across all business sizes, the pressure on vendors to justify or eliminate these extra charges will likely increase. Companies must critically assess the value they receive from their SaaS investments and consider the long-term implications of the SSO Tax on their cybersecurity posture and budget health.