What is SaaS Compliance?

SaaS compliance is the practice of operating cloud-based solutions according to industry laws and standards regarding customer data.

Fully compliant software is essential to establishing customer trust and securing databases against breaches. Compliance evidence, such as a SOC 2 report or an ISO 27001 certificate, may also be a requirement for conducting business in certain B2B contexts.

No single, uniform regulatory body oversees all SaaS businesses. Regulations normally differ based on customer demographics and associated data privacy laws, as well as the industry your software covers.

SaaS regulations also depend on any contractual agreements the organization enters into with clients.

The most common compliance frameworks for SaaS providers are:

• SOC 2: An auditing standard used to assess data security practices.
• ISO 27001: An international standard for managing information security
• PCI DSS: A compliance mechanism for any business that stores, processes, or transmits cardholder data (PCI SSC).
• HIPAA: Data protection laws for healthcare information in the United States; a SaaS provider that handles healthcare information of patients on behalf of a healthcare organization is deemed a “business associate” (HIPAA definitions, eCFR).

SOC 2 is not mandatory for all SaaS companies, although it offers guidelines for safer processes.

A SOC 2 report, issued after a CPA firm’s examination, describes the security measures used by the service organization for handling user data. It covers controls that are related to security, availability, processing integrity, and confidentiality (AICPA).

This standard is also essential when working with clients and their sensitive information.

Both clients and SaaS providers should contribute significantly to ensuring data security during interactions. The SaaS company should provide a secure infrastructure and data handling methods for customers.

The level of data sensitivity determines the type of compliance your SaaS needs. Other considerations to make include the type of industries you serve, as well as your business goals. To create a detailed compliance strategy, you may need to consult a legal professional.

Use these questions to judge whether your business requires SaaS compliance.

Internal Audit: 

• Does your business handle confidential customer data?
• Do you operate in a regulated industry?

External factors:

• Cost of compliance against risks of non-compliance
• Legal requirements for ensuring compliance
• Security expectations from clients