Data security measures are table stakes for businesses today, especially software-as-a-service (SaaS) companies, whose entire business model relies on keeping customer data safe. To differentiate your SaaS business from your competition, meet contractual obligations and open doors to new sales prospects, you need to be able to prove the trustworthiness of your cybersecurity and technology controls with a System and Organization Controls (SOC) 2 report.
But don’t make the mistake of waiting until your customers ask for the report to begin the compliance process. Although there’s a widespread misconception that you can obtain SOC 2 compliance in a few weeks, that is simply not the case. It is an arduous, months-long process.
All too often, product security is an afterthought for SaaS startups and is not prioritized until a large enterprise prospect starts asking questions about security standards. When this happens, most companies begin a mad rush to answer customer questions, complete extensive security questionnaires and hurriedly implement customer-required cybersecurity controls to not lose the deal.
As a result, rushed and reactive SOC 2 examinations can quickly turn into a mess, leading to a SOC 2 report weakened by exceptions and qualifications. By taking a proactive approach to complete a successful SOC examination, you can avoid the mess and leverage the benefits of earning a clean SOC 2 report.
Unlike the SOC 1 report, which assesses an organization’s internal controls related to financial reporting, a SOC 2 report focuses specifically on an organization’s controls to secure and protect customer data. A SOC 2 examination reports on controls relevant to security, availability, processing integrity, confidentiality or privacy, making it particularly relevant for a SaaS organization.
If your organization is a service provider entrusted with handling customer data in any capacity, you could benefit from attaining a SOC 2 report.
Why is a SOC 2 report important for your company’s success? Earning the report enables you to:
Undergoing a SOC 2 examination allows your organization to implement a core group of controls to help mitigate security breaches, establish best practices for maintaining data integrity and obtain demonstrable proof of your organization’s cybersecurity effectiveness. By achieving SOC 2 compliance, your organization can provide tangible evidence to customers and prospects that you have put in appropriate and effective controls to protect their data.
A SOC 2 examination has become a “must have” for many customers. Securing a SOC 2 report simultaneously provides assurance to prospective clients and gives you an immediate edge over competitors who have not yet gone through the process. If a prospective customer is choosing between two different SaaS organizations, and one has achieved SOC 2 compliance and the other has not, that could very likely be the deciding factor between winning or losing the business.
By successfully completing a SOC 2 examination and achieving compliance, your organization is demonstrating a commitment to security and establishing itself as a trusted partner for current and future clients. This level of transparency allows you to build credibility among industry peers and strengthen your brand’s reputation.
SOC 2 compliance status can also be used as an effective marketing tool. Companies who successfully complete a SOC 2 examination can display a logo from the American Institute of Certified Public Accountants (AICPA) on their website to mark their SOC 2 certification status and issue a press release communicating the news. The ability to advertise SOC 2 compliance is a key way to position your organization as a standout security leader in your industry.
Achieving SOC 2 compliance is a key factor in finalizing sales opportunities and fulfilling contractual obligations. Most contracts, especially for large enterprise sales opportunities, include a SOC 2 reporting requirement. Contracts may include a compliance deadline that stipulates when an organization must reach SOC 2 compliance. If a company fails to meet that compliance deadline, they risk being terminated.
If your organization is left scrambling to achieve SOC 2 compliance on the back end, this could result in a qualified report, which indicates that one or more of your criteria were identified as ineffective in the design and/or the effectiveness of the control. With a qualified report, or no SOC report at all, you run the risk of delaying or losing out on the deal. By meeting SOC 2 reporting obligations right off the bat, you eliminate these risks.
Achieving SOC 2 compliance is a months-long journey, and a CPA firm can help you navigate these strenuous processes by assessing your business and performing a gap assessment to identify areas where you can strengthen your controls, pinpoint any controls that are missing altogether and recommend best practices for your organization’s controls moving forward.
Once a CPA firm has completed its readiness assessment of your control environment, you can start the process of implementing new or more robust controls so that your business will be in good shape to pass the examination and earn the SOC 2 report. (Note that only a certified CPA firm is qualified to perform a SOC examination.)
SOC 2 certification needs to be renewed on an annual basis, or whenever there is a change that significantly impacts an organization’s controls. A thorough SOC 2 examination the first time around will make SOC 2 renewal examinations much easier and more routine.
Taking the first steps toward securing SOC 2 compliance now can save your organization headaches and undue stress in the future. Proactively reinforcing your control system security through a SOC examination is the most effective way to ensure that you are remediating any issues in advance and giving your customers definitive proof that their data protection is your priority.
This will give you — and your future customers — some much-needed peace of mind.
To learn more about SOC 2 examinations and compliance, contact our Risk Assurance & Advisory experts.
