In the 20+ years since the first Software as a Service (SaaS) application launched in 1999, SaaS is now everywhere, offering businesses convenient access to software solutions without the hassle of installation or maintenance. However, as the diversity of SaaS applications continues to grow—with the average company using over 100 different apps—so does the need for regulatory oversight.
With today’s customers increasingly (and rightfully) expecting companies to protect their data without exception, it’s important to understand what compliance for SaaS entails. By knowing the various regulations and standards that govern these platforms, organizations can minimize their risk and ease their customers’ data security and privacy concerns. Let's explore the regulatory landscape surrounding SaaS and shed some light on the compliance obligations that businesses must navigate.
Who Regulates SaaS?
When it comes to regulatory oversight of SaaS, several entities play key roles in establishing and enforcing compliance standards. When organizations can show that they comply, they receive a SaaS certification. To earn the certification, SaaS providers must meet specific criteria related to security, reliability, and data protection. Achieving SaaS certification demonstrates a commitment to upholding industry best practices and instills confidence in customers regarding the security of their data.
In addition to SaaS certification, SaaS legal requirements also govern the operation of SaaS applications. These legal frameworks vary by jurisdiction and commonly include data privacy laws, consumer protection regulations, and intellectual property rights. Compliance with SaaS legal requirements is essential for avoiding legal liabilities and maintaining trust with customers and stakeholders.
What Is the Compliance of SaaS?
“SaaS compliance” essentially means a company has taken the necessary steps to certify themselves and meet all relevant requirements. Achieving compliance certification starts with understanding the specific regulations that apply to the organization.
With this foundation in place, they can get to work. They often use one or more software platforms for their compliance services, meaning a range of measures aimed at ensuring that SaaS providers are operating in accordance with industry regulations and best practices. These services may include regular audits, security assessments, and compliance monitoring to identify and address any potential vulnerabilities or risks.
There are two main types of compliance services: SaaS vs PaaS and (Platform as a Service) offerings. While both models offer cloud-based solutions, SaaS typically provides ready-to-use software applications accessed over the internet, while PaaS offers a platform for developing, deploying, and managing applications.
Understanding the differences between SaaS and PaaS is essential for determining the applicable compliance requirements and ensuring that businesses meet their obligations accordingly.
Is the Customer Responsible for Managing the SaaS Application?
A common question that arises in discussions about SaaS compliance is whether the customer (in this context, a business customer) is responsible for managing the SaaS applications they use. Unlike with a traditional, on-premises software deployment where the business itself installs, maintains, and updates their applications, SaaS providers instead handle the technical aspects of software management. This includes tasks such as updates, patches, and security enhancements, relieving customers of the burden of software maintenance, and is a big part of what they’re paying for when they opt for a SaaS subscription.
Similarly, in the context of PaaS, providers offer a platform for developing and deploying applications, but customers are responsible for managing the applications themselves. By understanding the division of responsibilities between providers and customers, businesses can better navigate the compliance landscape and ensure that they meet their obligations without unnecessary duplication of effort.
Who Regulates SaaS in the USA?
It depends on the company type, industry, and other factors. Some of the major organizations responsible for setting SaaS regulatory standards include:
Health Insurance Portability and Accountability Act (HIPAA)
Payment Card Industry Data Security Standard (PCI DSS)
Sarbanes-Oxley Act (SOX)
California Consumer Privacy Act (CCPA)
Is SOC 2 Mandatory for SaaS?
SOC 2 (System and Organization Controls 2) is a widely recognized compliance framework that assesses the security, availability, processing integrity, confidentiality, and privacy of cloud service providers. While the SaaS compliance requirements that comprise SOC 2 certification are not mandatory for all SaaS providers, it is increasingly becoming a standard requirement for businesses seeking to demonstrate their commitment to data security and compliance.
Achieving SOC 2 compliance involves implementing robust controls and processes to protect customer data and ensure the integrity of SaaS operations. While SOC 2 compliance is not a legal requirement, it can provide assurance to customers and stakeholders that a SaaS provider has implemented adequate safeguards to protect sensitive information.