Identity Federation

Identity Federation fulfills business processes without user logging to different applications or databases. It does have common set of policies and protocols to manage identity and sets up trusts between each federated organization. SSO is a subset of Federation which governs access across multiple services. 
Identity federation is the process of delegating an individual or entity’s authentication responsibility to a trusted external party.
It saves end-users from the burden of remembering multiple sets of credentials for every service application they consume. If the user needs access to 10 applications, they have to remember 10 different sets of credentials. Since it is not practical to keep a track of multiple sets of passwords, users tend to practice bad password practices like password reusing and hence we need to enable SSO where user gets access to multiple applications with a single password.