SOC 2 Compliance: What Businesses Need To Know
SaaS vendors often end up collecting and storing a lot of sensitive data from their customers. For any vendor that stores customer data, preventing data breaches with strong cybersecurity is key — and a SOC 2 audit is one way for these vendors to prove their security chops. According to research from the University of Maryland, a cyberattack occurs once every 39 seconds, so it's more important than ever for vendors to prove that they have strong data protection.
In this article, we'll explore everything you need to know about SOC2 compliance requirements, including the five trust service principles of SOC 2 compliance, the benefits of SOC 2 compliance, and how to acquire SOC 2 certification.
The 5 Trust Services Criteria to Earn SOC 2 Compliance
There are five trust services criteria or trust service principles commonly included in SOC reports. Earning SOC 2 certification requires service providers to prove compliance with some or all of these principles. These five trust service principles include:
1) Security
The first and arguably most obvious criterion for SOC 2 compliance is strong information security. Access controls (such as two-factor authentication) for preventing unauthorized access and firewalls for ensuring network security are just a couple of examples of the types of security controls that a SaaS provider will need to have in place in order to guarantee the security of its product.
2) Availability
The second most common principle for a SOC 2 examination is availability. When an organization relies on a third-party solution for core business functions, any downtime that the software experiences could prove incredibly costly. This makes it important for many SaaS vendors to prove their solutions' availability and reliability.
3) Processing Integrity
The processing integrity principle of SOC 2 compliance ensures that any system processing/data processing is accurate, complete, timely, and valid. It also ensures that all systems function as designed without any delays, vulnerabilities, errors, or bugs.
4) Confidentiality
If a service provider collects and stores any confidential data (such as a customer's financial information or confidential intellectual property), they need to prove that it will be protected. This typically entails encrypting confidential data and adhering to the principle of least privilege (PoLP) — designed to limit access to sensitive information by granting only the bare minimum permissions employees need to do their jobs.
5) Privacy
The privacy principle of SOC 2 compliance focuses on how personal information is collected, used, stored, disclosed, and disposed of. Any service provider that processes personally identifiable information (PII) must adhere to its published data usage and privacy policy, as well as the standards set by the Association of International Certified Professional Accountants (AICPA).
It's worth pointing out that not all SOC 2 compliance reports will include all five trust services principles. For example, a vendor that does not collect confidential or personally identifiable information may not be required to prove adherence to confidentiality or privacy principles. In contrast, a vendor that offers data storage but does not perform any data processing may not have to adhere to the processing integrity principle.
Who Should Be SOC 2 Compliant?
SOC 2 compliance is designed for service providers that collect and store customer data in the cloud, and is intended to help these vendors prove their security controls. Since almost every SaaS company collects and stores data from its users, SOC 2 compliance is something that applies to just about every SaaS vendor. While SOC 2 compliance is not a regulatory requirement for these vendors, it's still essential for earning customer trust.
What Is SOC 2 Compliance Not?
To help clear up some common confusion regarding SOC 2, let's look at what SOC 2 compliance is not.
Unlike regulatory requirements such as HIPAA (which certain organizations are required by law to adhere to), earning SOC 2 compliance isn't a legal requirement for SaaS vendors. External auditors, rather than the government, complete SOC 2 audit reports, and there's no penalty for not completing a SOC 2 audit.
Nevertheless, SOC 2 compliance is still a business necessity for most SaaS vendors. There might not be a formal penalty for failing to prove SOC 2 compliance, but there are definitely consequences — like the possibility that some businesses may be hesitant to partner with a vendor who doesn’t have their SOC 2.
Today, SOC 2 has become one of the most trusted frameworks for proving a SaaS solution's security and functionality. With this being the case, SaaS vendors that forgo SOC 2 compliance will likely face an uphill battle to win the trust of potential customers.
While we're discussing what SOC 2 compliance isn’t, it's also worthwhile to mention the differences between SOC Type 2 and SOC Type 1. The biggest difference between the two is that SOC 1 compliance reports provide an attestation to an organization's compliance at a specific point in time, while SOC 2 reports attest to an organization's compliance over a period of time (typically 12 months).
The Benefits of SOC 2 Compliance
Performing a SOC 2 audit is often a costly and tedious process. Since SOC 2 compliance isn't a legal requirement, what motivation do SaaS vendors have to complete this process? Does SOC 2 compliance provide enough benefits to make up for its expense? In most cases, the answer to this question is yes.
We've already mentioned how SOC 2 compliance is key to earning customer trust, but that's not the only benefit that SOC 2 compliance provides. Here are some of the reasons why most vendors should acquire SOC 2 certification:
Makes it Easier To Comply With Other Security Frameworks
Many of the requirements set forth by SOC 2 overlap with the requirements of other cybersecurity frameworks, such as HIPAA and ISO 27001. This means that organizations that earn SOC 2 certification can often get more impact from their effort.
For example, SaaS vendors that collect and store protected health information will likely be legally required to prove compliance with HIPAA. From there, acquiring SOC 2 certification wouldn't be much of a leap and would allow the vendor to enjoy the reputation-boosting benefits of both certifications.
Reduces the Likelihood of a Security Incident
By and large, SOC 2 audits are designed to prove an organization's existing security controls. In other words, if you already have strong internal controls in place, a SOC 2 audit itself won't do much to improve them.
With that said, achieving SOC 2 compliance provides organizations with a solid framework to follow for bolstering data security. If you take the steps necessary to earn SOC 2 compliance, you can rest assured that your likelihood of a costly security incident is as low as possible. This is why customers trust vendors that have earned SOC 2 certification, but it also benefits vendors directly since a data breach can be just as damaging to a vendor as it is to its customers.
Provides a Competitive Advantage
Most customers purchasing SaaS solutions these days are rightfully concerned about security and vendor risk management. If your company can show these security-conscious customers a SOC 2 report, it will have a strong competitive edge over vendors that are not.
Along with proving your solution's security, a SOC 2 report may also provide other marketing advantages, depending on the specific trust services principles it covers (i.e., proving the availability and overall functionality of your product).
How To Acquire a SOC 2 Certification
To acquire SOC 2 certification, you'll need to complete a SOC 2 audit with an AICPA-affiliated CPA. During this audit, the CPA will test and review your security controls to ensure they meet the SOC 2 standard and create a report detailing their findings.
You'll need to complete a few steps before undergoing a SOC 2 audit. First, you'll need to choose the trust service principles you want the audit to focus on. Next, you need to build a roadmap to SOC 2 compliance and self-assess your security controls to make sure that you're ready for a formal audit.
It typically takes anywhere from five weeks to three months to complete a SOC 2 audit — and that doesn't count the time spent preparing for it. Completing the numerous, lengthy security questionnaires needed to acquire SOC 2 certification is part of what makes the process so time-consuming. The good news for SaaS companies staring down the barrel of a lengthy SOC 2 audit is that this is something that HyperComply helps streamline.
SOC 2 Compliance Made Easy With HyperComply
HyperComply's industry-leading compliance solution enables SaaS vendors to complete security questionnaires in a fraction of the time by leveraging a combination of advanced AI and expert human analysis. With HyperComply, you can autofill answers to security questionnaires using AI with 90%+ accuracy. From there, HyperComply's experienced team of security experts manually checks each answer and flags any answers that need your review.
Acquiring SOC 2 compliance can be a massive undertaking, but its benefits to SaaS vendors are well worth the effort. This is all the more true when you can streamline the process with the right tools. To make SOC 2 compliance a little easier, get started with HyperComply now.
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