SaaS platforms and providers must each adhere to standards relevant to their business and industry, such as data protection laws, industry regulations, security guidelines, and contractual agreements to achieve Software as a Service (SaaS) compliance. For example, this includes protecting user data, maintaining customer privacy, and following any requirements that set industry norms. SaaS compliance is crucial for building customer trust, avoiding liability, and ensuring service integrity.

SaaS Compliance FAQs

What is SaaS Compliance?

Typically, SaaS compliance involves implementing several key organization controls to ensure adherence to legal and regulatory standards:

Identify and understand relevant regulations. Data protection laws, industry-specific compliance requirements, and other international standards may all be relevant to SaaS compliance.

Develop comprehensive compliance policies. These should outline how the SaaS platform will handle user data, ensure data privacy, and meet legal obligations.

Implement robust security measures. Protect user data with encryption, access controls, and regular security assessments. Monitor and audit the platform regularly to ensure continued compliance.

Establish clear practices for data privacy. Always obtain consent from users, allow them to exercise their privacy rights, and handle their data transparently.

Include contractual agreements. Customer and third-party vendor agreements should outline the data protection and security responsibilities and expectations for each party.

Implement an incident response plan. It should address and mitigate any security breaches or incidents promptly, and include communication strategies and notification procedures.

Train the team on compliance best practices. A compliance culture is one that fosters a sense of shared responsibility for these best practices at all levels of the team.

Stay aware of the newest industry standards. Adapt the SaaS platform itself and all policies accordingly to remain compliant.

Types of SaaS Compliance

Three common types of SaaS compliance frameworks define the field: they are focused on data, finance, and security.

Data security and compliance

General Data Protection Regulation (GDPR)

The GDPR was enacted by the European Union (EU) to protect data protection and privacy. GDPR grants users rights to their own personal data, and therefore creates new duties for anyone who handles that information.

Users of SaaS platforms have the right to access, correct, and delete their own data under the GDPR. SaaS platforms and services must get explicit, informed user consent before they can process any personal data—and they must disclose how they will use it, and who else will have access or be using it.

SaaS providers must also secure personal data with appropriate organizational controls and mitigate any risks associated with the data processing they engage in. They must respond to security incidents quickly, within a specified timeframe, and promptly notify both data subjects and supervisory authorities of data breaches.

Health Insurance Portability and Accountability Act (HIPAA)

SaaS providers that handle PHI are covered entities under HIPAA, and may also be business associates. HIPAA sets standards that keep sensitive patient health data secure. The specific focus of the regulation is protected health information (PHI): health information that is individually identifiable.

Under US federal law, SaaS providers must securely handle, store, and transmit PHI using strong encryption. Access controls are also required; authorized personnel only should access the minimum PHI necessary for their roles.

SaaS entities must identify and minimize risks to PHI. According to HIPAA, this includes using audit trails to track access and monitor for suspicious activity. SaaS platforms are also required to conduct regular security risk assessments.

HIPAA covered entities must promptly report and mitigate unsecured PHI breaches. Business associates must also explicitly detail their responsibilities and compliance measures in agreements.

California Consumer Privacy Act (CCPA)

CCPA grants consumers in the State of California the right to access and request that personal information be deleted. SaaS providers must respond to such requests within specified timeframes.

Like the GDPR, the CCPA requires SaaS providers and other businesses to inform consumers about their data collection and processing practices. They must disclose how they handle their data, why they collect it, and any third parties involved with user data.

SaaS providers must protect consumer information with robust security measures. If they process personal information for other businesses, they must outline the terms and conditions of their data processing activities in writing.

The CCPA includes a “Do Not Sell My Personal Information (DNSPI)” provision. This gives consumers the right to opt out of having their personal information sold and requires SaaS providers that sell data to provide a clear and accessible opt-out mechanism. It is illegal to discriminate against consumers who opt-out under the CCPA; all users should receive equal access to services.

Finally, SaaS platforms that knowingly collect personal information from minors must obtain the consent of either the minor (if aged 13-16) or the parent/guardian (if under 13).

While both HIPAA and CCPA recognize the importance of training in ensuring compliance with their respective requirements, HIPAA provides broader directives for training all members of the workforce on privacy and security practices related to PHI. CCPA’s training requirements are more specifically targeted towards those handling consumer privacy inquiries and data processing activities in line with CCPA compliance.

Financial compliance

There are also several frameworks that are mainly used in finance and financial reporting that influence SaaS security. The International Accounting Standards Board (IASB) ASC 606, also called IFRS 15, is a set of accounting standards used for financial reporting worldwide. The analog used in the United States is the Generally Accepted Accounting Principles (GAAP).

Both ASC 606 and GAAP require SaaS providers to identify performance obligations in contracts and securely deliver services within specified timeframes. SaaS providers must consider the security implications of any modifications to customer contracts, particularly changes in service scope, access levels, or data handling.

SaaS providers need effective internal controls to mitigate risks associated with data breaches and unauthorized access. Disclosure requirements in both of these frameworks provide transparency into revenue recognition policies.
The Federal Financial Institutions Examination Council (FFIEC) sets information security standards for financial institutions and any SaaS solutions they use within the United States. The New York Cybersecurity Regulation (23 NYCRR 500) places cybersecurity requirements on financial institutions and their SaaS tools in the state of New York. Both of these frameworks can also affect various SaaS providers.

SaaS Security Compliance

International Organization for Standardization (ISO/IEC 27001)

ISO/IEC 27001 is a widely recognized information security management systems (ISMS) standard. The systematic ISO/IEC 27001 approach to ISMS implementation can help identify, manage, and mitigate SaaS security risks.

The ISO/IEC 27001 requires SaaS providers to conduct comprehensive risk assessments to identify and mitigate potential security risks. ISO/IEC 27001 security controls include access control, encryption, and incident response.

Adhering to ISO/IEC 27001 guidance helps SaaS providers align with legal requirements and privacy laws, and ISO 27001 SaaS compliance certification reassures customers that the platform has a demonstrated commitment to information security.

Security Organization Control 2 (SOC 2)

A SOC 2 (Service Organization Control 2) framework is a set of criteria developed by the American Institute of Certified Public Accountants (AICPA) to evaluate the extent to which a service organization manages its data to protect the interests of its clients and the privacy of their information. Unlike SOC 1, which focuses on financial reporting controls, SOC 2 is specifically designed for service providers storing customer data in the cloud, making it particularly relevant for SaaS (Software as a Service) companies, cloud computing providers, and other technology and cloud services.

The SOC 2 framework is based on five Trust Services Criteria (TSC), previously known as Trust Services Principles. These criteria are:

• Security: The system is protected against unauthorized access (both physical and logical).
• Availability: The system is available for operation and use as committed or agreed.
• Processing Integrity: System processing is complete, valid, accurate, timely, and authorized.
• Confidentiality: Information designated as confidential is protected as committed or agreed.
• Privacy: Personal information is collected, used, retained, disclosed, and disposed of in conformity with the commitments in the entity’s privacy notice.

SaaS providers must adopt specific information security management controls under SOC2 to protect data against unauthorized access, disclosure, and alteration. SaaS providers must also conduct continuous monitoring of security measures and undertake independent third-party audits to achieve SOC 2 compliance.

SOC 2 requires SaaS providers to perform risk assessments to uncover vulnerabilities and adopt strategies to address them. Additionally, these providers are responsible for overseeing their vendors, ensuring that the vendors’ security protocols align with SOC 2 criteria.

SaaS providers must promptly respond to incidents and communicate their security posture to customers and stakeholders. SOC 2 Type 2 is often referred to as a certification, but more accurately, it is an attestation report. It demonstrates that a service organization has not only designed but also effectively implemented its controls over a specified period, usually at least six months. The SOC 2 Type 2 report is conducted by an independent Certified Public Accountant (CPA) or an accounting firm, providing a detailed review of the organization’s internal controls related to one or more of the Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy.

The distinction between a “certification” and an “attestation report” is significant in that certifications are typically associated with a formal process of verification against a set standard, leading to a certificate of compliance. SOC 2 Type 2, however, results in a detailed report that includes the auditor’s opinion on the effectiveness of the controls in place during the review period. While it doesn’t result in a certificate like ISO standards, it is a highly respected and rigorous assessment that demonstrates compliance with the relevant Trust Services Criteria to clients and stakeholders.

Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS was designed to ensure secure processing, transmission, and storage of credit card information. It mandates that SaaS providers use strong encryption to transmit and store sensitive data and requires SaaS providers to implement measures to secure network infrastructure and protect payment data such as firewalls and intrusion detection systems

PCI DSS requires SaaS providers to use access controls to ensure only authorized personnel can access payment information. And they must conduct ongoing security assessments including vulnerability scans and penetration testing.

SaaS providers must clearly define incident response processes to address and mitigate security breaches promptly, such as an Incident Response Plan (IRP). SaaS providers involved in payment processing must undergo annual compliance validation assessments and submit compliance reports to demonstrate adherence to PCI DSS standards.

National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and Center for Internet Security Controls (CIS controls)

NIST CSF best practices are designed to help organizations improve their cybersecurity posture. CIS controls are a set of critical guidelines for securing information systems. SaaS providers use the NIST CSF and CIS controls to conduct risk assessments and understand potential threats to their services.

SaaS providers can implement NIST CSF security measures and CIS controls as foundational security measures to protect sensitive data and enhance their security posture. SaaS providers implement access controls and identity management to ensure secure user access and manage user privileges within their platforms.

SaaS providers use CIS controls to configure software securely and identify and remediate vulnerabilities rapidly. NIST CSF guidance and CIS controls also help SaaS providers establish mechanisms for ongoing monitoring and assessment of security measures.

Finally, SaaS providers use NIST CSF guidance and CIS controls to foster collaboration among different cybersecurity teams and to respond to security incidents quickly and effectively.

Importance of SaaS Compliance

SaaS compliance is important for several reasons:

• Legal obligations and industry requirements. SaaS providers comply with data protection laws such as the GDPR and industry regulations such as HIPAA to avoid liability and penalties.

• Customer trust and brand reputation. A demonstrated commitment to SaaS compliance enhances brand reputation, proves ongoing ethical business practices, and builds trust with potential customers and existing users alike.

• Risk mitigation. Robust SaaS compliance measures reduce the risk of security breaches and data incidents.

• Contractual agreements. Maintaining SaaS compliance helps businesses adhere to contracts and maintain positive relationships.

• Global business access. Following international data protection standards allows SaaS providers to expand their market reach.

• Competitive advantage. SaaS compliance can help platforms attract customers who prioritize regulatory adherence.

Challenges SaaS Compliance Standards Present

Achieving and maintaining SaaS compliance requirements presents several challenges:

• Cost. SaaS compliance certification can be resource-intensive, requiring dedicated personnel, time, and financial investments. Resource allocation for SaaS compliance may be especially challenging for small and medium-sized enterprises.

• Complexity. The compliance and regulatory landscape is complex and continually evolving. In addition, the pace of regulatory change varies based on industry, location, and the nature of the data being handled.

• Interoperability. Integrating compliance measures into existing SaaS solutions, especially legacy systems, without disrupting operations can be challenging.

• Global reach and jurisdiction. Legal frameworks and jurisdictional requirements differ worldwide, making harmonizing compliance efforts across regulatory environments a significant challenge.

• Scalability. As SaaS solutions grow and scale, maintaining compliance to accommodate a growing user base and expanding infrastructure becomes more complicated.

• Continuous monitoring and adaptation. Achieving compliance requires continuous monitoring and adjustment to changes in industry standards and new security threats.

• Vendor risk management. Dependence on third-party vendors introduces additional risks, and ensuring vendor compliance can be difficult.

• Security risks. Achieving compliance does not guarantee immunity from security breaches, so SaaS providers must proactively address potential vulnerabilities.

• User education and awareness. SaaS application users may inadvertently contribute to compliance challenges, for example with weak password practices or unauthorized data sharing. A culture of compliance is essential.

• Documentation and audit trail management. Maintaining thorough documentation and an audit trail can be labor-intensive. Properly documenting compliance efforts and activities is crucial for audits but can be challenging to manage effectively.

Best Practices in SaaS Compliance Management: A Comprehensive SaaS Compliance Checklist

There is no process for every situation, as compliance requirements vary based on industry and jurisdiction, but here is a checklist for most circumstances:

• Identify applicable regulations where you operate

• Establish a dedicated compliance team responsible for managing the process that may include compliance officers, security experts, and legal professionals

• Conduct risk assessments regularly to identify potential compliance risks and vulnerabilities

• Prioritize risks for assessment based on their potential impact on compliance

• Develop comprehensive policies that outline how the organization will achieve and maintain compliance

• Evaluate and monitor third-party vendor compliance

• Implement strong access controls and review and update user access privileges regularly

• Implement strong encryption mechanisms to protect data during transmission and storage

• Develop and maintain a detailed incident response plan

• Conduct regular training sessions on maintaining a compliant environment

• Implement continuous monitoring to track compliance status in real-time

• Maintain thorough documentation and establish an audit trail

• Design compliance for scalability so the program can adapt to organizational growth

• Seek legal consultation

• Engage in Continuous Monitoring and Improvement

• Use security information and event management (SIEM) tools to monitor systems and networks for suspicious activities.

• Implement a continuous improvement process to enhance compliance and security measures over time.

SaaS Compliance Solutions

SaaS compliance solutions typically involve a combination of technology, tools, and processes to address the complexities of compliance:

• Regulatory mapping. SaaS compliance solutions often map relevant regulations and standards to specific organizational requirements. This helps ensure the organization can address applicable compliance obligations for its industry and geographic location.

• Policy management. SaaS compliance software manages policies and procedures centrally so users can access the latest guidelines.

• Risk assessment. SaaS compliance tools help organizations identify and prioritize compliance risks based on impact.

• Access controls and identity management. SaaS compliance solutions manage user identities, ensuring that only authorized individuals have access to sensitive data and systems.

• Data encryption and security measures. SaaS compliance solutions help protect sensitive information during transmission and storage, aligning with data protection requirements.

• Continuous monitoring. Automated SaaS compliance software helps organizations track adherence, identify issues, and generate alerts for proactive intervention in real-time.

• Incident response planning. Some SaaS compliance tools for developing and maintaining incident response plans. These help organizations respond promptly and effectively.

• Audit trail and reporting. SaaS compliance tracking solutions generate audit trails and reports that document compliance activities for internal reviews, external audits, and demonstrating compliance to regulatory authorities.

• Integration with existing systems. SaaS compliance solutions often integrate with existing IT systems, cloud services, and applications to apply compliance measures consistently across the technology stack.

• Automation. Automated SaaS compliance solutions including automated policy enforcement, compliance checks, and notifications streamline the process, reducing the manual effort required for compliance management.

• Scalability and flexibility. SaaS compliance software is flexible enough to adapt to changes in infrastructure, industry regulations, and business operations.

• Training and awareness. Some solutions include features for employee training and awareness programs. SaaS compliance tools foster a culture of compliance within the organization.

How Does AppOmni Help SaaS Companies With Their Compliance Efforts?

AppOmni is the preeminent pioneer in SaaS security enabling organizations to secure mission-critical and sensitive data. Trusted by over 25% of the Fortune 100 and secure enterprises worldwide, AppOmni provides identity security, data access visibility, and SaaS management and security solutions.

AppOmni’s patented technology scans APIs, configuration settings, and security controls deeply to evaluate existing SaaS deployments and compare them against best practices and business intent. Organizations can use AppOmni to establish rules for data access, data sharing, and third-party applications that will be continuously and automatically validated. The platform also delivers SaaS compliance reporting capabilities that meet or exceed leading compliance benchmarks.

AppOmni is more than a platform, with a leadership team that harnesses expertise and innovation from leading high tech companies, cybersecurity vendors, and SaaS providers. AppOmni was recently named by Forrester as a Notable Vendor and was among the PURE CYBER 100 “Companies To Watch In 2023.” AppOmni has also been recognized as a SINET16 Innovator and a Dark Reading Cybersecurity Vendor to Watch.

Learn more about how AppOmni can help your team achieve and maintain SaaS compliance.