Debunking compliance myths in the digital era

Despite recent economic fluctuations, the software-as-a-service (SaaS) market isn’t letting up. The industry is set to grow annually by over 18% and be valued at $908.21 billion by 2030. It’s evident the industry is fueled by an increasing reliance on software and other digital services in the cloud.

As strange as it may sound, compliance is an enabler of this growth. Businesses usually perceive compliance as a necessity, not a choice. However, besides following regulatory requirements, being compliant can be a sales enablement tool for B2B companies. Before hiring SaaS services, prospects typically urge vendors to demonstrate they can keep their data safe from malicious actors, especially amid cybersecurity rising as a top concern for companies last year. Security is critical in B2B, and the ability to demonstrate it as a core feature is attractive to buyers and streamlines the sales process.

A System and Organization Controls 2 (SOC 2) report shows how compliance can continuously improve an organization and add value. In this report, Certified Public Accountant (CPA) firms assess the data security measures of a SaaS company, where auditors should help businesses showcase their commitment to safety and share best practices.

The best part about SOC 2 is reporting on the practices that make sense for your business — not comparing them to an ancient compliance framework that hasn’t adapted to the realities of modern software development. It offers a chance to validate what business leaders believe is important and hold them accountable to those practices.

This might sound too idealistic. So, let’s address some compliance misconceptions and how modern CPA firms can deliver SOC 2 reports seamlessly for everyone involved.

Compliance restricts company operations

In the compliance world, we often hear business leaders say they’re worried about their operations getting halted or being slowed down by an audit. While the examination process used to be murky, it’s much more streamlined nowadays.

CPA firms taking advantage of compliance software to connect to a company’s operations means an audit doesn’t need to take such a large chunk of time, and businesses can keep their momentum.

Often, a SOC 2 report is about documenting the security processes businesses already have in place; they just need an auditor to confirm they are doing as they say. That doesn’t mean that nothing will come up, but hopefully, it’s finding efficiencies and process improvements.

For example, compliance tools like Drata, Vanta, Secureframe, and others integrate with platforms like GitHub to closely monitor developer actions without interrupting their activities with questions about their daily operations and other manual reviews. These compliance tools aggregate and store information, complete daily security testing, monitor results, and highlight potential issues, simplifying the data-gathering process for auditors and sparing companies time validating their operations.

These tools have also created auditor networks that connect with specialty firms that focus all their time on this specific service. Gone are the days of accountants asking about how a company protects cloud data centers — these companies have created a phonebook for finding qualified professionals who won’t waste time on these questions.

Compliance is another expense and not cost-saving

Before starting an audit, leaders often discuss where compliance, and specifically SOC 2 reports, should land in the budget. Truthfully, it could land in many places, but it should be considered a sales expense. There are many benefits to completing the report, none more important than using it as a sales enablement tool to showcase how a business keeps customer data secure.

Companies that complete their SOC 2 report almost have a swagger to them: When prospects show concerns about how their sensitive data is managed, vendors can show them an organized report that clearly and concisely outlines their security policies and processes. This leaves no room for doubt that they can trust the SaaS company.

Most reports are issued without any meaningful issues or exceptions, and the final deliverable is a visually appealing 60 to 90-page document describing the business’s system, technology, policies, and the auditor’s assessment of the results.

Getting a SOC 2 report is just a box to check

The notion of SOC 2 reports being a task to check off without adding value enhances the mindset that compliance is arbitrary and restrictive. While a company must meet criteria to complete its SOC 2 report, how it gets there is up to them. There is no standard checklist of controls that it must complete.

SOC 2 reports are industry-agnostic, which might make them seem like a one-size-fits-all solution, but the beauty of its compliance framework is that it is flexible. Healthtech and fintech companies benefit from completing their SOC 2 reports, but they might look vastly different because their commitments to their customers are very different.

A healthtech company might require background checks on every hire and must comply with HIPAA requirements, whereas a fintech company may have customers highly concerned about platform downtime and processing integrity.

SOC 2 reports follow a set of criteria, and security is covered in every report; however, companies may choose whether or not to implement the other criteria based on the function of their application or customer needs.

This freedom turns compliance into a valuable task that blends in with a company’s operations rather than being a rigid standard — auditors don’t tell you what to do. They’re a guide based on the criteria a company chooses to address and the controls they implement, which drive the requirements subject to audit.

There is no freedom in compliance

Because of the flexibility of the SOC 2 compliance framework, SOC 2 reports become malleable and customizable for each company. The criteria and commitments a company makes to its customers enable auditors to understand its security program and what needs to be assessed, as opposed to auditing against a specific set of standards that may not be relevant to the company.

So, although it’s not a rulebook, SOC 2 reports outline the policies a company sets to ascertain that it securely handles data, and the auditor can review them to ensure they are compliant.

Moreover, auditors must familiarize themselves with a company during the auditing process because they need to understand the system they are examining, know its goals and objectives, and how it plans to get there. And if companies work with a firm specializing in this area, they can benchmark their decisions against similar companies and help roadmap best practices that stand out in the industry.

CPA firms think of a SOC 2 report as telling a company’s security story, as a narrative. It’s about writing down a company’s steps to taking care of customer data in a way their clients can digest. As technology keeps penetrating compliance and processes get simpler, it’s time the industry also tackled misconceptions that might make SaaS providers weary about completing their SOC 2 report. Ultimately, it’s a streamlined process and a significant win for their compliance portfolio.