We’re livin’ in a SaaS world! When software is part of every task we complete at the office, it’s easy for SaaS compliance issues to slip under the radar. All it takes is one error to open up your company to serious security risks and consequences.
Here’s why SaaS compliance is so important, and how to boost your efforts. Plus, we put together a list of the major security certifications your company should consider implementing today.
What is SaaS compliance?
Your SaaS technology stack has a lot of moving parts and keeping your systems in SaaS compliance is a continuous effort. SaaS compliance requirements cover the use and storage of data, as well as how you share user data across systems and with third parties. The primary goal of your SaaS compliance efforts is to protect your data and the data of your customers and partners.
Depending on your industry and location, your company may be required to comply with certain state, federal, and international laws and regulations. Some of these certifications aren’t mandatory—however, just because you don’t have to comply with these policies, doesn’t mean that it’s not in your best interest to do so.
Some certifications are must-haves when working with a global user base. For example, you can’t do business with European users unless you comply with GDPR regulations. With many companies employing and selling to people across the world, international certifications are table stakes in 2022.
Why is this important?
Modern companies have dozens, if not hundreds, of SaaS applications making up their software stack. Each of these tools, while adding a lot of value, can also act as a security risk for your entire organization. Some risks will get your company in the news, like large scale data breaches and leaks.
SaaS compliance is part of risk management. These regulations and frameworks guide how your company sets up processes in your organization, helping you avoid risks and their penalties, which can be quite severe and include fines, lawsuits, and damaged reputation in your industry.
Trying to regain customer trust after a cyberattack is an uphill battle that your company may not win. That’s why certifying your organization and staying in SaaS compliance is the best way to show customers that your business is serious about protecting their data.
How to achieve Saas Compliance
SaaS compliance can be broken down into three categories: Financial compliance, security compliance, and data security compliance. Here are the top certifications and regulations that you need to meet in order to ensure your SaaS compliance.
Financial compliance
ASC 606
ASC 606 is a new revenue recognition standard and applies to all businesses that enter into contracts with their customers to provide goods and services. This standard applies to all entities including public companies, private businesses, and non-profits.
ASC 606 is a framework that helps businesses recognize revenue more consistently by eliminating any variations in accounting transactions across industries. This framework has a five step process:
- Meeting criteria when setting up a contract with a customer to deliver goods or services
- Identifying distinct performance obligations and how they are handled within the contract
- Determining the transaction price that a business will receive for providing goods and services to their customer
- Allocating the transaction price across the contract’s separate performance obligations
- Recognizing revenue as and when the business meets each performance obligation
GAAP
Generally Accepted Accounting Principles (GAAP) is a framework of accounting rules and practices set by the Financial Accounting Standards Board (FASB). United States law requires companies that release public financial statements, or are publicly traded, to follow these guidelines.
The goal of GAAP is to ensure a company’s financial statements are consistent, comparable, and complete, in order to make it easier for investors to analyze those statements. GAAP has ten key principles:
- Principle of Regularity
- Principle of Consistency
- Principle of Sincerity
- Principle of Permanence of Methods
- Principle of Non-Compensation
- Principle of Prudence
- Principle of Continuity
- Principle of Periodicity
- Principle of Materiality
- Principle of Utmost Good Faith
IFRS
The International Financial Reporting Standards (IFRS) are another set of globally accepted accounting rules intended to increase corporate transparency. IFRS is the standard in jurisdictions like the European Union, while GAAP is the standard for the United States.
The IFRS sets mandatory rules for the following:
- Statement of financial position
- Statement of comprehensive income
- Statement of changes in equity
- Statement of cash flows
Security Compliance
Technology companies that sell software have additional measures for security compliance. These help protect both the company and its customers from security breaches and fraud.
SOC 2 certification
The Systems and Organization Controls report is intended to show your customers that your company is serious about the controls related to availability, processing integrity, and security of your users data and privacy systems.
The SOC 2 report is specifically for auditing the management of customer data and requires companies to show how they comply with at least one of the five Trust Services Criteria:
- Security
- Privacy
- Confidentiality
- Processing integrity
- Availability
PCI DSS certification
The Payment Card Industry Data Security Standard certification shows that you have the controls in place to secure cardholder data and reduce the chance of credit card fraud. For companies that take payment through credit cards, both Mastercard and Visa will require you to meet PCI standards. If you are found to not be in compliance, you’ll be fined, incur legal costs, have a poor reputation, and might be banned from accepting certain payment cards.
ISO 27001 certification
ISO 27001 is an international standard intended to provide a management framework for information security management systems. This certification isn’t mandatory for most companies but it shows your customers that you have invested in the tools and systems needed to protect their data.
Data security compliance
An important part of data security is data control. This is the management oversight of information and covers activities like inspecting and reporting on data processes, plus validating, documenting, and tracking any data issues.
There are 3 steps to define expectations for data control:
- Setting information policies that are used to monitoring data quality
- Putting systems and processes in place and measuring them by setting thresholds and building reports to track metrics
- Establishing service level agreements (SLAs) for data controls and setting processes for how to respond to any SLA issues
GDPR
The General Data Protection Regulation (GDPR) is a very strict regulation around how companies process and store the personal data of European Union citizens. Even though this mandate was created for, and applies to, the data privacy of countries across Europe, most companies engaging in international business transactions will need to comply.
As part of GDPR, there are significant legal requirements around data protection by design and data protection by default. Basically, data controllers are obligated to limit the processing of users’ personal data to only what is absolutely necessary.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law intended to protect personal patient health information from being shared without the patient’s consent or knowledge. If your software is intended for healthcare providers, insurance providers, or any entity that deals with personal medical information, you must be in compliance with HIPAA.
Unlike some certifications, HIPAA is absolutely mandatory for any software companies that do business with covered entities. If this applies to you, here is a list of nine minimum requirements your organization must meet. These requirements cover topics like:
- The Privacy Rule, HITECH and Omnibus Rule, and the Security Rule
- Security safeguards
- Transport and storage encryption
- Secure backup and disposal of data
- Signing and following a Business Associate Agreement
CCPA
California has its own privacy laws and, because so many companies have customers and users in California, many companies have to comply, even if they’re headquartered in another state. The California Consumer Privacy Act of 2018 (CCPA) ensures that California consumers have increased privacy and consumer protection. In this law, consumers have greater control over the information that companies can collect, use, and share.
Furthermore, California consumers have the right to delete any personal information that’s collected about them, opt-out of having personal information sold, and they have the right to receive notices about a company’s privacy policies.
How can Quolum help with SaaS compliance?
At Quolum, we believe that a SaaS management platform is an important part of data integrity and security measures. Having all of your SaaS technology monitored through a central tool ensures that you’re meeting the financial, security, and data protection laws of your industry and region.
For more peace of mind, we regularly practice penetration testing, compliance checks, and maintaining our security certifications. We’re SOC 2, CCPA, and GDPR certified. On top of that, to ensure that your financial compliance is under control, our SaaS expense card helps you consolidate all of your purchases into one SaaS management platform.
Learn more about how Quolum does security
Quolum’s SaaS management platform helps manage a significant amount of data about your users’ SaaS consumption and purchases. That’s why security is the highest priority for us. Visit our security page to learn more about our SaaS compliance certifications and how we approach information and application security.