Federated identity involves the configuration of single sign-on (SSO) using Active Directory Federated Services (AD FS), as well as directory synchronization. The combination of these two technologies creates the most seamless experience for Lync Online users, because only a single set of credentials is required. However, federated identity is clearly the most complex option in terms of both implementation and ongoing management. Federated identity is also the only identity scenario that allows the use of two-factor authentication. Small organizations will likely find federated identity to be too complex, whereas for medium-to-large organizations this will be the most attractive option.