SOC 2 (System and Organization Controls 2) is a reporting framework developed by the American Institute of Certified Public Accountants (AICPA), designed for service organizations that store customer data in the cloud. It has become the gold standard for demonstrating security and privacy controls to enterprise customers, particularly in the United States.
What SOC 2 Is For
SOC 2 reports evaluate how well an organization safeguards customer data based on five Trust Services Criteria (TSC): Security, Availability, Processing Integrity, Confidentiality, and Privacy. Unlike a simple checkbox certification, SOC 2 specifically focuses on the operational effectiveness of controls over a period of time, and provides a detailed report to customers and auditors about the service organization's controls.
The Five Trust Services Criteria (TSC)
SOC 2 compliance is built around the AICPA's five Trust Services Criteria, which serve as a framework for evaluating controls:
Security (Common Criteria - CC) - Required
Required for all SOC 2 reports, addressing the protection of information and systems against unauthorized access, use, disclosure, modification, or destruction to meet the entity's objectives. This is the foundation of every SOC 2 audit.
Availability (A) - Optional
Focuses on whether the system is available for operation and use as committed or agreed. This includes network performance, disaster recovery, and operational uptime—critical for SaaS providers with uptime guarantees.
Processing Integrity (PI) - Optional
Addresses whether system processing is complete, valid, accurate, timely, and authorized. This is crucial for organizations that process customer data, such as transaction processing or data analytics platforms.
Confidentiality (C) - Optional
Pertains to the protection of information designated as confidential from unauthorized access or disclosure, like intellectual property, business plans, and financial data beyond what's covered in the Security criteria.
Privacy (P) - Optional
Relates to the collection, use, retention, disclosure, and disposal of personal information in conformity with the organization's privacy notice and generally accepted privacy principles. Essential for companies handling personal data under regulations like GDPR.
Note: Organizations can choose which of the four optional TSCs (Availability, Processing Integrity, Confidentiality, Privacy) are relevant to their services and customer commitments. The auditor then assesses the design and, for a Type 2 report, the operating effectiveness of controls against these chosen criteria.
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5 Benefits of Being SOC 2 Compliant for Tech Companies
1.Customer Assurance (Especially U.S. Clients)
SOC 2 reports provide a detailed and objective assessment of a service organization's controls, which is often a prerequisite for doing business with larger enterprise clients, particularly in the U.S. Many Fortune 500 companies will not sign contracts without seeing a current SOC 2 report.
2.Competitive Differentiator
In the market, having a SOC 2 report can differentiate a company from its competitors. It signals to potential customers that you take security seriously and have invested in formal controls, giving you an edge in competitive sales situations.
3.Reduced Vendor Due Diligence
A SOC 2 report can significantly streamline the vendor security review process for potential clients, saving both parties time and resources. Instead of answering hundreds of security questionnaires, you can provide a comprehensive SOC 2 report.
4.Proactive Risk Mitigation
The process of preparing for a SOC 2 audit helps identify and address security weaknesses, leading to a more robust security posture and fewer incidents. You'll discover gaps before they become breaches.
5.Foundation for Other Compliance
Many SOC 2 controls overlap with other regulatory requirements (e.g., HIPAA, GDPR), making it easier to achieve additional compliance certifications down the line. SOC 2 can serve as your security foundation.
What Companies Would Need to Do a SOC 2 Report?
SOC 2 is particularly relevant for service organizations that store, process, or transmit customer data:
Software-as-a-Service (SaaS) companies
The vast majority of SaaS providers, as they handle customer data in the cloud. If you're building a SaaS product for B2B customers, SOC 2 should be on your roadmap.
Cloud infrastructure providers (IaaS, PaaS)
Companies providing the underlying cloud infrastructure where customer data resides, such as hosting providers, cloud platforms, and infrastructure services.
Managed Security Service Providers (MSSPs)
Companies offering security services to other businesses, where demonstrating your own security controls is critical to credibility.
Healthcare technology providers
Companies handling Protected Health Information (PHI) often seek SOC 2 in conjunction with HIPAA compliance to meet both regulatory and customer requirements.
Fintech companies
Those handling sensitive financial data, payment processing, or banking information where security is paramount.
Bottom Line:
Any tech company offering services where the security and privacy of customer data are critical will benefit significantly from SOC 2 compliance. If you're serving enterprise customers or handling sensitive data, SOC 2 is not optional—it's a business enabler.
Ready to Get Started with SOC 2?
SOC 2 compliance may seem daunting, but it's a strategic investment that pays dividends in customer trust, reduced sales friction, and improved security posture. The sooner you start your SOC 2 journey, the sooner you can unlock enterprise deals and differentiate yourself in the market.
Whether you're just beginning to think about SOC 2 or you're ready to start your audit preparation, having the right tools and guidance can reduce your audit prep time by up to 80% and ensure you pass on the first try.