Why SOC 2 for SaaS Companies is the Need of the Hour

$4.87 million! That’s the average cost of a cloud-based data breach with a lifecycle of over 200 days. With a cyber attack happening every 39 seconds, cybersecurity has become a widely debated subject, with security, compliance, and risk management as the top priorities going forward.

That’s where SOC 2 comes in.

A SOC 2 SaaS framework lays the foundation to manage and reduce security risks while adding compliance mandates. And as a result, SaaS organizations with a SOC 2 certification are more likely to gain the trust of their customers. In this blog guide, we discuss the importance of SOC 2 for SaaS companies and how you can obtain your SOC 2 compliance report.

How is SOC 2 helpful for SaaS companies? 

SaaS companies are eager to grow. They spend hours building exceptional products, marketing them, and speaking to potential customers. And in a lot of cases, these efforts go to waste if they don’t meet certain compliance requirements. 

In more ways than one, not complying with frameworks like this can turn out to be a non-starter. And on the other hand, having a SOC 2 certification can open up new growth opportunities and can help gain customer trust when you pitch in unexplored markets. Other advantages of SOC 2 for SaaS companies include:

Data security: SOC 2 compliance aims to ensure that third-party service providers store and process client data securely based on five trust service principles: security, privacy, availability, confidentiality, and processing integrity.

Risk identification: A SaaS company with SOC 2 controls in place will be more equipped to detect security threats or potential risks much earlier while also bolstering its information security practices. 

Risk mitigation: SOC 2 helps in choosing the right risk strategy (risk acceptance, risk transference, risk avoidance, or risk reduction) to deploy a well-structured mitigation plan.

Minimize costly data breaches: Complying with SOC 2 requirements helps strengthen your security posture, which helps in avoiding costly data breaches and other security incidents.

New Business Opportunities: A SOC 2 certification helps SaaS companies land new deals and retain clients since many customers now demand the SOC 2 report before making a purchase.

What type of SOC 2 report would be suitable for SaaS? 

There are two types of SOC 2 reports – Type 1 and Type 2. Both types evaluate the effectiveness of the adherence of organizational controls with SOC’s Trust Service Criteria (TSC) – security, privacy, availability, confidentiality, and processing integrity.

The SOC 2 Type 1 and Type 2 differ in the assessment and the monitoring period of the internal security controls. The type 1 report generally comes to the frame when the certification (demanded by the client) halts a deal—clients may demand to see a certification or a commitment to get SOC 2 certified. And so, a SOC 2 type 1 certification helps assess the state of controls and a snapshot of compliance at a given point in time. 

On the other hand, the SOC 2 Type 2 report is periodical. It typically covers a monitoring period of 6 to 12 months and needs to be repeated on a yearly basis to ensure continued compliance. 

So to summarize… 

SOC 2 Type 1 – It checks the organization’s design and implementation of the security controls and systems at a specific date or point in time. The Type 1 report is generally used to quickly check the level of compliance or when the client demands it immediately.

SOC 2 Type 2 reports – It tests the operational effectiveness of the security controls over a specific period, giving a more comprehensive view. Usually, It could take 3-12 months, but six months is the most common. It is easier to run a SOC 2 Type 2 report if you’ve run a Type 1 report before.

This video gives a detailed comparison on the two types of reports:

So, if you’re a SaaS company just starting your compliance journey a SOC 2 Type I report will be more suitable for you. If you have the SOC 2 Type 1 report and want to express your commitment to SOC 2 standards, a yearly SOC 2 Type 2 report will help you do just that.

Looking to get SOC 2 certified quick? Let Sprinto do the heavy lifting.

Steps to Become SOC 2 Compliant for SaaS Companies

Becoming SOC 2 compliant gets easier for SaaS companies if there is a defined approach to follow. 

Below are the steps to become SOC 2 compliant effectively.

1. Define scope

One of the most important aspects of a SOC 2 audit is defining the scope. This demonstrates that you know what you are doing and are aware of the different data security requirements concerning the SOC 2 audit checklist. You can define the scope by selecting the TSCs (Trust Service Criteria) that apply to your business. You can choose this based on the industry you’re in and the type of data you store and transmit.

2. Conduct internal risk assessment

For your SOC 2 SaaS journey, you need to identify, assess, and mitigate risks. For that, conducting an internal risk assessment is the best option. Identify the risks associated with information security best practices, data location, growth, and more. Document the scope of these risks from the identified vulnerabilities.

Then, assign the impact score and likelihood score to the identified risks. As per the SOC 2 control checklist, deploy measures (controls) to mitigate the risks.

3. Perform gap analysis and remediation

After risk assessment, you need to identify your current security posture. Outline your processes, procedures, and practices and compare that with the SOC compliance requirements and best practices.

This will help you understand the policies and controls already in place and how they align with the SOC 2 requirements. Then, remediate the gaps by improving controls or creating new ones to meet the SOC 2 requirements.

4. Implement stage-appropriate controls

As per your chosen TSCs, deploy controls to demonstrate your compliance with SOC 2. Each TSC comes with a different set of individual criteria. So, you will have to implement the internal controls for your TSC.

Ensure that your controls are stage-appropriate, as the controls vary from one organization to another. The SOC 2 criteria are open to interpretation; hence, as per your business requirements, you should design and deploy relevant controls.

5. Undergo readiness assessment

A readiness assessment is like a pre-audit step. In this, an independent auditor will analyze your organization’s posture to see if it meets the minimum SOC 2 requirements so that you can proceed with the entire audit.

In this assessment, the auditor performs a gap analysis, lists the internal controls and their characteristics, and documents the complete testing procedures. Based on the findings, you can remediate the gaps and proceed with the final SOC 2 audit.

6. Conduct the SOC 2 audit

The final step to get your SOC 2 report for becoming compliant is going through the SOC 2 audit. For this, you have to authorize an independent certified auditor to perform the audit by completing the SOC 2 audit checklist.

You can expect a lot of questions from the auditor, and you will have to provide evidence of compliance. At the same time, be prepared for non-conformities. Based on the volume of corrections, the audit time may also vary from two weeks to six months for a SOC 2 Type 2 audit.

Each of these steps are time-consuming and tiresome. Your teams will typically spend hours on identifying gaps, penetration testing, and getting your controls in order. This is why you need a compliance automation solution like Sprinto. 

Not only do we help you simplify all your compliance related activities—from policy rollouts, mapping controls, conducting internal audits, and collecting evidence, we help you get things done in record time. 

Too good to be true? Click here to see how Sprinto helped Ripl get SOC 2 compliant while spending just a third of their expected effort. 

How much does it cost to obtain SOC 2 certification for Saas?

The actual costs to obtain SOC 2 certification for SaaS will depend on the organization’s size, audit readiness, complexity (of systems and controls), and the type of auditor chosen. In general, the SOC 2 Type 1 audit costs $5000 for up to 3 TSCs and can go up to $25000 in case of more TSCs.

The evaluation window for SOC 2 Type 2 audit is longer; hence, the SOC 2 certification cost for SaaS ranges between $7000 to $50000. The costs can increase when you include readiness assessments and other steps.

Read more: How much does SOC 2 certification cost?

The Smart way to get SOC 2 ready

In the digital landscape today, most clients look to deal with companies that can assure the security of their data. That’s where the SOC 2 certification comes as a sign of trust and credibility for organizations. However, it is easier said than done. With so many controls and processes involved, meeting the SOC 2 requirements can take quite some time. So, what’s the smart and quick way?

With Sprinto—a compliance automation platform, you can get a SOC 2 audit ready in weeks. We help you define controls and policies, automate evidence collection, simplify control checks, and more within an easy-to-use platform. Book a free demo here to see how Sprinto can help you sail through your SOC 2 journey.

FAQs

Is SOC 2 certification mandatory for SaaS companies?

No, SOC 2 certification isn’t mandatory for SaaS companies in a legal sense. However, SaaS companies should get SOC 2 certification because it is generally a requirement in vendor contracts and demonstrates your commitment to securing clients’ data.

Is SOC 2 the same as ISO 27001?

No, SOC 2 is not the same as ISO 27001. ISO 27001 is a universal set of standards with security requirements for implementing the ISMS. On the other hand, SOC 2 is an audit report customizable based on the goals and requirements of the organization.