What is SOC 2 & why does it matter?
Service Organisation Control 2 [SOC 2] is a compliance framework developed by the American Institute of Certified Public Accountants [AICPA]. It ensures that organisations securely manage Customer Data based on five (5) Trust Service Criteria [TSC]: security, availability, processing integrity, confidentiality & privacy. So the question arises that is SOC 2 only for SaaS organisations & what is its relevance across industries.
Misconception about SOC 2 & SaaS
Many believe that SOC 2 is exclusively for Software-as-a-Service [SaaS] companies. While SaaS Providers often pursue SOC 2 Compliance to assure Customers of their data security practices, the framework applies to any business handling sensitive information.
Who can benefit from SOC 2 Compliance?
SaaS Companies
SOC 2 Compliance reassures Clients that SaaS Platforms follow strict security controls. It helps companies build trust & streamline vendor approval processes.
Non-SaaS Businesses
SOC 2 Compliance is beneficial across various industries, including:
- Healthcare: Ensures patient data security & aligns with Health Insurance Portability & Accountability Act [HIPAA] regulations.
- Finance: Strengthens security in Banking, Insurance & Fintech services.
- Legal Services: Protects confidential Client Data & Legal Records.
- E-commerce: Secures online transactions & Customer payment details.
- Cloud & IT Services: Enhances data protection for Infrastructure Providers.
Key Differences: SOC 2 for SaaS vs. Non-SaaS Organisations
| Feature | SaaS Companies | Non-SaaS Businesses |
| Data Focus | Cloud-based Customer Data | On-premises or hybrid data storage |
| Compliance Driver | Client trust & third-party security requirements | Internal security improvements & regulatory alignment |
| Common Controls | Multi-tenant security, cloud monitoring | Physical security, on-site infrastructure protection |
Common Misconceptions about SOC 2
SOC 2 is only for Cloud-Based Services
SOC 2 is relevant for any business handling Customer Data, whether cloud-based or on-premises.
SOC 2 is a Legal Requirement
While not legally mandated, SOC 2 Compliance is often required in Contracts & Vendor Assessments.
SOC 2 Compliance is a One-Time Effort
SOC 2 requires Continuous Monitoring & Annual Audits to maintain compliance.
Challenges of SOC 2 Implementation in Non-SaaS Businesses
Infrastructure Complexity
Non-SaaS companies may need to integrate SOC 2 Controls with legacy systems.
Higher Costs for On-Premises Security
Ensuring Physical Security & Access Controls can be costly.
Resistance to Change
Traditional industries may struggle to adopt SOC 2 Controls due to operational rigidity.
Conclusion
SOC 2 Compliance is not limited to SaaS businesses. Any organisation handling sensitive Customer Data can benefit from its Security Framework. While implementation challenges vary across industries, the advantages of trust, security & regulatory alignment make SOC 2 a valuable Compliance Standard.
Takeaways
- SOC 2 applies to any organisation that manages Customer Data, not just SaaS businesses.
- Various industries, including Healthcare, Finance & Legal Services, benefit from SOC 2 Compliance.
- Non-SaaS businesses may face Infrastructure & Cost challenges when adopting SOC 2 Controls.
- Continuous Monitoring & Audits are necessary to maintain SOC 2 Compliance.
FAQ
Is SOC 2 only for SaaS?Â
No. SOC 2 applies to any business handling Customer Data, regardless of its Service Model.
Can a non-SaaS Company get SOC 2 certified?Â
Yes. Any Company that stores or processes sensitive Customer Information can pursue SOC 2 Compliance.
Why do Companies outside SaaS seek SOC 2 Compliance?Â
Organisations in Finance, Healthcare, Legal Services & IT adopt SOC 2 to demonstrate strong Data Security practices.
Does SOC 2 cover Physical Security?Â
Yes. SOC 2 includes Controls for Physical Security, such as restricted access to data centers & offices.
How long does it take to become SOC 2 compliant?Â
The process can take several months, depending on the Company’s existing Security Posture & Audit Readiness.
Does SOC 2 replace other Security Frameworks?Â
No. SOC 2 complements Frameworks like ISO 27001, HIPAA & GDPR but DOES NOT replace them.
What happens if a Company fails a SOC 2 audit?Â
Failure may result in Corrective Actions & re-audits to address non-compliance issues.
