Businesses today understand the challenges that come with implementing SaaS solutions. The dangers of unmanaged third-party access, data exposure, obsolete security measures, and shadow IT are very real. So the importance of SaaS compliance is underscored by businesses’ need to ensure continuity as well as stay ahead of the curve. But compliance is often easier in theory than in practice.
This article aims to help you understand SaaS compliance, explain its importance, and set up a ramp to get you started.
What is SaaS compliance?
SaaS compliance refers to the complete set of regulatory standards and industry frameworks that SaaS companies are required to follow in order to ensure data security.
These compliance requirements are set out as per geographical differences in data protection laws, industry variations, as well as market requirements. The overarching objective however remains the same—protecting the confidentiality, integrity, and availability of any form of data they process.
Why is SaaS compliance important in 2023?
SaaS compliance is important because it assures the customers that sensitive data is being handled securely and regulatory requirements are being met. It also opens doors for market expansion and new funding rounds because of the rapport it helps build.
Here’s why you should care about SaaS compliance:
Helps align with industry standards
The digital world has no boundaries. This allows SaaS providers to sell across the map. Some countries and regions have therefore made SaaS compliance a legal requirement. An example of one such legal requirement is the GDPR—a regulation that comes into effect for companies handling sensitive personal data of EU citizens.
Grants market access
SaaS compliance is often a key deciding factor especially for large enterprises. And so, ensuring SaaS compliance essentially unlocks greater access and better opportunities.
Improves funding qualification
Proving the organization’s security stance through compliance is a requirement for businesses looking for funding opportunities. SaaS compliance significantly increases the chances of qualification.
Sidesteps legal ramifications
Non-compliance can have very serious consequences. This can range from large fines, legal ramifications, penalties, lawsuits, negative publicities and the like. SaaS compliance helps avoid any legal ramifications by showcasing a strong security posture.
Check out more on GDPR compliance
What are the types of SaaS compliance?
From financial regulation adherence to ensuring data security and privacy, there are a number of compliances that SaaS businesses must keep at the top of their minds. The applicability of these could be industry-specific, service specific, a contractual need or a general mandatory regulation. For better compliance management, it is important to understand the types and specific requirements.
Here are the three major types of SaaS compliance that SaaS businesses need to take care of:
Financial compliance is the adherence of regulations that apply to the financial, banking, and capital markets. This ensures the integrity and safety of transactions and financial reporting. Examples of the types of financial compliance that are relevant to SaaS businesses include:
PCI DSS is a globally accepted standard for organizations storing, processing or transmitting sensitive cardholder data to prevent theft of information or digital fraud. The regulatory standard lists a number of security requirements that need to be implemented to meet its key requirements.
IFRS are a set of accounting standards that outline rules relating to the reporting of specific types of financial transactions. It is required in 167 jurisdictions currently and applies to SaaS businesses operating in multiple geographical locations.
Security compliance involves the implementation of information security measures to safeguard the confidentiality, integrity and availability of sensitive data. The following are a few examples of security compliance:
SOC 2 is a voluntary standard for service organizations to evaluate the strength of controls for security, availability, processing integrity, confidentiality and privacy of data. SaaS businesses store and process a lot of personal information. A SOC 2 compliance helps demonstrate the company’s commitment to security.
Looking to get SOC 2 compliant quickly? Speak to our experts.
ISO 27001 is an international standard that sets guidelines on the formation, deployment, and usage of an ISMS (Information Security Management System). SaaS businesses need to be ISO 27001 compliant in order to manage security risks and ensure the highest standards of data security.
Related: Sprinto helps risr / boost trust and increase sales. Read the case study.
Data privacy compliance
Data privacy compliance refers to the rules that govern the privacy and protection of personal data and implementing appropriate security measures. The following are two essential compliance standards for SaaS businesses:
GDPR is a data privacy protection law that organizations in and outside the EU must abide by while collecting and processing personal data of EU citizens. SaaS businesses that have a physical presence in the EU or wish to expand their digital presence in the region need to be GDPR compliant.
HIPAA is a federal law in the United States that outlines standards that apply to covered entities and business associates that pertain to security and privacy of Protected Health Information (PHI). SaaS businesses handling PHI by the way of providing services to healthcare organizations are considered their business associates and need to be HIPAA compliant.
SaaS compliance checklist: How to get started?
A SaaS compliance checklist brings clarity on where to begin the compliance journey and acts as a baseline for guiding throughout the implementation phase.
The following checklist will help you get started:
Identify compliance framework applicability
The first action step is to determine which compliance requirements must be met by your business. For this step:
- Recognize the type of data handled by the business
- Research about the regulations that are relevant to the data handled, the location of business, the industry and the customer base.
- Seek help of a compliance professional for better understanding of applicability.
Assess the risk landscape
This involves identifying the potential threats to the organization, the likelihood of occurrence and severity of each risk. Focus on the most critical risks first. Examples of types of risks that must be assessed include:
- Compliance risks: Like an industry standard adherence failure
- Security risks: Any risk that could be exploited by hackers
- Operational risks: Faulty systems, processes, personnel
- Financial risks: Risks related to financial frauds
Conduct compliance readiness review
Assessing the current compliance level of the business is necessary to implement posture-appropriate measures. This involves reviewing existing policies and systems to find out the work required to be done for achieving desired compliance levels. Spot the following during gap analysis:
- Insufficient policies and protocols
- Missing documentation
- Gaps in training and skills
- Controls not implemented
- Third-party risks
Design a compliance strategy
The purpose of the above-mentioned steps is to have enough material to chalk out a detailed compliance strategy. This roadmap must cover everything from remediation steps to timelines to resources and budgets required to employee training and surveillance steps. The process and frequency of compliance status reporting must also be included in the tactical plan to avoid any misfires.
Deploy measures aligned with risk profile
This involves implementing controls commensurate with the identified risks and appropriate to the current compliance levels.
For example, if the business has basic password policies and anti-virus software, there will be implementation of advanced controls like encryption, multi-factor authentication etc.
This ensures optimisation of compliance management efforts and drives better and quicker results.
Evaluate compliance preparedness
After the implementation phase, the best way to cross-check if you still fall short of the requirements is to get a readiness assessment. It could be an internal review by experts or by an independent auditor. This helps prepare better for the external audit because the organization gets another chance to work on improvement areas.
Conduct an external audit
For final and comprehensive review of the compliance, engage with an independent and qualified auditor. The audits can take weeks to months depending upon the frequency of necessary corrective actions or evidence production.
Best practices for SaaS compliance
For risk reduction and efficient implementation, a set of best practices comes in handy. Optimize your compliance efforts by:
- Staying up-to-date with compliance requirements and reviewing policies and protocols frequently for addressing any loose ends.
- Ensuring strict implementation of security controls like encryption, firewalls, access controls, etc and other such measures.
- Maintaining documents about compliance-related initiatives and their impact on the organization. Also note down details about any security incidents that occur and the remediation measures.
- Training your employees on compliance requirements, risks and addressing incidents of non-compliance.
- Having a security incident management plan in place for proactively responding to unusual network and system activities.
- Monitoring the effectiveness of controls in action through penetration tests, vulnerability scans, internal audits, and other relevant methods.
- Vetting third-party contractors, suppliers or service providers for ensuring their compliance with regulations to avoid any security risks.
- Automating compliance with tools like Sprinto for centralized risk visibility, accommodating various security scenarios, and ensuring the right compliance management behavior throughout the organization.
Accelerate SaaS compliance with Sprinto
SaaS compliance is no longer a matter of preference but a critical need. While this checklist can be a great place to start, the sheer complexities of compliance can feel overwhelming. The best way to stay perpetually vigilant is to automate SaaS compliance.
A compliance automation tool like Sprinto can become a single source of truth for compliance management. The platform doesn’t just automate key areas of compliance but gives you granular data security controls while fast-tracking your compliance journey.
Let’s show you how it’s done. Speak to our experts today.
When using third-party vendors, how can SaaS providers ensure compliance?
Make a list of all your vendors and identify the sensitive data involved. Perform vendor due-diligence before signing any contracts and employ a team for assessing any risks and ensuring compliance.
What’s the best way to stay updated about changes in SaaS regulations?
The best way to stay updated is by subscribing to industry newsletters, attending webinars or working with compliance experts like Sprinto.
What are some methods that can be employed for SaaS security?
SaaS security measures can include establishing access controls, firewalls, encryption, vulnerability scans, incident management programs and regular internal audits.