SaaS Compliance: A Quick Guide for SaaS Buyers

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In today's business landscape, organizations are well aware of the complications involved in implementing non-compliant SaaS solutions.

According to the CloudEagle.ai 2025 IGA Report, 60% of AI and SaaS applications operate outside IT's visibility, creating significant compliance risks due to shadow IT. 

SaaS compliance is crucial for businesses striving for operational continuity while staying ahead in a dynamic market. Hence, SaaS vendors must be carefully vetted for the necessary compliance certifications.

This article aims to provide an overview of the SaaS compliance requirements a vendor should follow.  Additionally,  we'll walk you through the compliance checklist and the risks of non-compliant apps.

Our objective is for you to be aware of the necessary compliance certifications that vendors must have when signing a contract with vendors.

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What is SaaS Compliance?

SaaS compliance refers to the adherence of Software as a Service (SaaS) providers to various regulatory, legal, and industry-specific standards. It involves safeguarding data privacy, ensuring operational security, and meeting obligations outlined by frameworks such as SOC 2, GDPR, HIPAA, and ISO 27001.

In essence, SaaS compliance confirms that a provider meets the necessary requirements to protect sensitive data and ensure system reliability, both of which are essential for maintaining customer trust and business credibility.

Typically, the security and legal teams in an organization stay on top of these compliance standards and ensure that the SaaS vendors or you (your products) adhere to the relevant rules based on where they operate and the type of data.

Buyers can rely on SaaS compliance management to reduce risks, protect data integrity, and meet regulatory responsibilities. You can build confidence, maintain data privacy, and reduce the possible effects of security events by selecting compliant SaaS suppliers.

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Types of SaaS Compliance Frameworks

SaaS compliance frameworks are typically grouped into three key categories: Financial, Security, and Data Privacy. These frameworks help ensure that SaaS companies follow the necessary regulations and best practices related to secure transactions, data protection, and overall system integrity. Notable examples include GDPR, HIPAA, SOC 2, PCI DSS, and ISO 27001.

You could also check out our SaaS agreement checklist to ace your contract negotiations.

SaaS vendors and their applications must adhere to some of the compliance regulations. SaaS compliance is divided into three broad groups: financial compliance, security compliance, and data privacy compliance.

Here is the checklist of key SaaS compliance certifications and requirements you can refer to during your procurement process to ensure that your SaaS vendors comply with the necessary regulatory standards.

Data security and privacy

GDPR

The General Data Protection Rule (GDPR) is a rigorous regulation that governs the processing and storage of individuals' personal data in the European Union. While it was first developed for European data protection, its scope now includes worldwide enterprises.

This comprehensive European data privacy law empowers individuals to access, refresh, erase, object to processing, and export their data. Compliance with GDPR is crucial for organizations to safeguard individuals' data rights and avoid penalties imposed by regulatory authorities.

CCPA

The California Consumer Privacy Act of 2018 (CCPA) strengthens and protects the privacy rights of California customers. This rule applies to businesses with clients and users in California, irrespective of where their headquarters are.

The CCPA allows customers more control over their personal information, including removing acquired data, opting out of data selling, and getting company privacy policy alerts.

For SaaS vendors operating in California, it is necessary to comply with the CCPA or risk facing penalties or legal action.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that ensures that a patient’s sensitive information is protected from being shared with anonymous individuals without the patient’s consent.

It gives people access to their health records while protecting healthcare professionals' privacy. HIPAA compliance is required for vendors that deal with personally identifiable medical information, including healthcare and insurance providers.

Organizations must follow the rules, such as the Privacy Rule, HITECH, and Omnibus Rules, and the Security Rule, to satisfy HIPAA standards. Security protection and encryption for transmission and storage, safe data backup and deletion, and establishing Business Associate Agreements are all required. HIPAA compliance is critical for preserving patient privacy.

FERPA

The Family Educational Rights and Privacy Act, also known as FERPA, protects the privacy of student education data. FERPA standards must be followed by educational facilities that receive federal funds. The Act gives parents and qualifying students several rights, including viewing and controlling their educational information.

FERPA compliance entails preserving the confidentiality and security of student records and their correct treatment and dissemination. It is done to ensure student privacy and to retain the trust and confidence of students and their families.

Financial compliance

Financial compliance refers to observing financial, banking, and capital market regulations. This assures the integrity and security of financial transactions and reporting.

PCI DSS

The Payment Card Industry (PCI) and Data Security Standard (DSS) are security guidelines for businesses that accept, transport, or store credit card information.

PCI DSS compliance assures that companies that deal with payments, credit card information, or authentication do so in a secure and safe environment.

PCI DSS frameworks apply to all businesses accepting payments, regardless of their geographic location, payment methods, or transaction volume.

IFRS

International Financial Reporting Standards (IFRS) are widely acknowledged accounting standards that provide financial statement transparency, uniformity, and comparability for public corporations worldwide. Around 140 jurisdictions, including the European Union, Brazil, and India, have made IFRS standards a necessity.

They serve as standards for key financial documents like the statement of financial position, statement of total income, statement of changes in equity, and statement of cash flows.

Companies that adhere to IFRS exhibit their commitment to standardized and accurate financial reporting methods, allowing for improved understanding and analysis of financial data across borders.

GAAP

Generally Accepted Accounting Principles (GAAP) are a set of accounting standards created by the Financial Accounting Standards Board (FASB). It covers the complexities of accounting processes.

GAAP must be followed by companies that release public financial statements or are publicly listed on the stock exchange, per United States law.

It is designed to provide an organization’s relevant financial information to investors, creditors, and other users of financial statements. Private, non-profit organizations use GAAP certification as a benchmark to maintain credibility in their financial reporting.

ASC 606

ASC 606, established jointly by the FASB and the IASB (International Accounting Standards Board), is a strong revenue recognition standard for firms that enter into contracts to deliver products and services.

Built explicitly for the SaaS business, ASC 606 provides financial reporting clarity through a five-step process: contract setup, defining obligations, setting transaction prices, allocating prices, and recognizing income upon fulfillment of duties.

ASC 606 applies to all enterprises and helps account for client costs throughout the customer's lifetime to realize income from several sources.

Security compliance

Security compliance entails putting in place information security measures to protect the privacy, integrity, and accessibility of sensitive data. Do not sign contracts with SaaS vendors that do not adhere to these standards.

SOC 2

A SaaS application must exhibit robust security protocols to ensure it is capable of keeping data secure. And this is why (Systems and Organization Controls) SOC 2 Audit compliance is a must for SaaS vendors and their applications.

Widely regarded as the gold standard of compliance audits, the SOC 2 report audits client data management and demands adherence to at least one of the five Trust Services Criteria: security, privacy, confidentiality, processing integrity, and availability.

By acquiring a SOC 2 certification, vendors can reassure buyers that they emphasize data security and proper management, fostering trust and confidence in their services.

ISO 27001

The International Organization for Standardization (ISO) has created a set of principles for information security called Information Security Management Systems (ISMS).

Organizations can use ISMS to identify, analyze, and mitigate security threats and to create, implement, monitor, and continuously improve their security practices to safeguard data.

The primary focus of ISO 27001 is to help organizations protect sensitive information. By adhering to ISO 27001 standards, SaaS vendors demonstrate their commitment to maintaining a robust information security management system. 

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Why SaaS Compliance Matters for Buyers and Procurement Teams

SaaS compliance is essential for buyers and procurement teams as it safeguards data, reduces legal and financial exposure, and builds customer trust. 

Prioritizing compliant solutions helps organizations prevent data breaches, avoid costly lawsuits, and protect their reputation from the fallout of non-compliance.

• First, it guarantees that the SaaS applications they invest in comply with security and privacy standards. You can minimize the risk of third-party applications by choosing compliant vendors who are capable of securing sensitive data and ensuring regulatory compliance.
• Second, concentrating on SaaS compliance management strengthens your relationship with your customers. By selecting vendors that adhere to industry standards and regulations, you can effectively communicate your dedication to protecting your customers’ data.
• Further, SaaS compliance assists buyers in mitigating the dangers of data breaches and illegal access. Buyers can ensure that their data is treated with the highest care by dealing with compliant providers, lowering the risk of security incidents and costly repercussions.
• Finally, SaaS compliance management protects buyers against legal obligations, litigation, and regulatory fines. Buyers can avoid financial and reputational implications by ensuring that their providers satisfy compliance standards.

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7-Step SaaS Compliance Checklist for Buyers

A 7-step SaaS compliance checklist for buyers typically includes: identifying relevant laws and regulations, listing required features and services, mapping data flows, reviewing contract terms, seeking legal approval, conducting a risk assessment, and implementing proper security safeguards.

Whether you’re in procurement, IT, or risk management, this 7-step SaaS compliance checklist helps you evaluate vendors and minimize risk at every stage of the SaaS lifecycle.

Discover and Inventory All SaaS Applications

You can’t secure what you don’t know exists. The first step in any SaaS compliance checklist is gaining visibility into every application used across your organization. Shadow IT, free tools, or department-specific apps often fly under the radar but still process sensitive data.

Use SaaS discovery tools or CASBs to identify unmanaged applications, assess their use cases, and map data flow. Once you have a comprehensive inventory, you’re ready to evaluate it for compliance risk.

This foundational step supports every other part of your SaaS compliance strategy.

Classify Data and Risk Levels

Not all apps are equal in terms of sensitivity. After inventorying your stack, classify applications based on the type of data they access, such as personally identifiable information (PII), financial records, or protected health information (PHI).

Group apps into risk tiers (e.g., high, medium, low) based on regulatory exposure and potential impact. This classification allows you to prioritize which SaaS tools require deeper due diligence or stricter controls during vendor assessments.

A risk-based approach ensures your SaaS compliance checklist adapts to evolving business needs.

Implement Role-Based Access Controls (RBAC)

Next, apply Role-Based Access Control (RBAC) to minimize privilege sprawl. Every employee should only have access to the apps and data they truly need based on their job role.

By limiting unnecessary access, you reduce both insider threats and the blast radius of a potential breach. Many SaaS apps support native RBAC settings, make sure they’re enforced across tools and not just during onboarding.

Strong access governance is a core part of SaaS compliance that aligns with standards like SOC 2 and ISO 27001.

Automate Access Reviews and Audit Trails

Manual reviews don’t scale. Automating access certifications and logging user activity gives you a defensible audit trail, which is essential for passing security audits and meeting SaaS compliance requirements.

Set up quarterly or event-driven access reviews, especially for high-risk apps, and retain logs for forensic analysis. Many SaaS compliance checklist templates include this step as a non-negotiable for demonstrating accountability.

The more automated this process is, the more sustainable and accurate your compliance program will be over time.

Evaluate Vendor Compliance Posture

Before purchasing or renewing any SaaS tool, assess the vendor’s compliance posture. Request certifications like SOC 2 Type II, ISO 27001, HIPAA, or GDPR compliance documentation, depending on your industry needs.

Ask about third-party audits, data residency, breach response processes, and sub-processors. These questions help you understand whether the vendor meets your internal SaaS compliance standards.

Vendor evaluation is one of the most critical steps in any SaaS compliance checklist—don’t skip it or rely on assumptions.

Set Up Renewal and Contract Compliance Alerts

Compliance isn’t a one-time check; it’s an ongoing process. Set up alerts for contract renewals and key compliance milestones like SOC 2 expirations, DPA updates, or insurance certificates.

Use a SaaS management platform or shared compliance calendar to track upcoming deadlines. This ensures your organization isn’t caught off guard if a vendor falls out of compliance or changes their data policies.

Renewal cycles are ideal times to revalidate a vendor’s alignment with your SaaS compliance checklist.

Train Teams and Update Policies

Even the most robust systems fail without user awareness. Your final step is building a culture of compliance through regular training and updated policies.

Educate teams on data handling best practices, phishing awareness, and usage restrictions for SaaS apps. Revisit your SaaS compliance policy quarterly or when new regulations roll out.

Empowered users become your first line of defense and ensure your compliance checklist doesn't just live in a spreadsheet, but drives real behavior across the company.

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Risks of Selecting Non-Compliant Applications

Choosing non-compliant applications can put organizations at serious risk, leading to data breaches, regulatory fines, and reputational harm. Such issues can disrupt operations and result in financial setbacks. 

Recognizing these risks is key to making informed decisions during application selection and deployment.

Violations of data protection and privacy rules infringe on individuals' rights and subject the buyer to legal ramifications. This can lead to regulatory fines, legal challenges, and reputational damage, severely impacting the buyer's operations and relationships with stakeholders and clients.

Here's a quick rundown of the risks,

• Data and security breaches
• Data privacy hassles
• Issues in running business operations
• Penalties and lawsuits for loss of data
• Reputational damage
• Loss of market advantage

Buyers can reduce these risks by insisting on frameworks and ensuring that the SaaS vendors are secure, private, and legally compliant. It is safer to foster a secure and trustworthy business environment, reducing possible interruptions and protecting the buyer's interests.

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How CloudEagle.ai Can Help You With SaaS Compliance

Ensuring all the vendors and their applications comply with the latest security regulations can be tedious when done manually. This is where a centralized SaaS management platform like CloudEagle can help.

CloudEagle.ai is an ISO 27001, GDPR, and SOC 2 certified platform that integrates seamlessly with your internal systems and applications to gather relevant data. With centralized visibility, you can easily verify the trustworthiness and compliance certification of each application without hassles.

The procurement workflows of CloudEagle.ai and assisted buying experts will help you streamline your SaaS buying process. They'll ascertain that all your vendors are vetted for compliance requirements before signing contracts.

Make sure that all the applications in your SaaS stack comply with regulatory standards using a SaaS management and procurement platform before it is too late. Get onboarded in 30 minutes and keep your SaaS procurement process secure.

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Frequently asked questions

1. What are the compliance standards for SaaS?
Common SaaS compliance standards include SOC 2, ISO 27001, GDPR, HIPAA, PCI DSS, and CCPA, each focused on security, privacy, and data handling.

2. What is SOC 2 compliance for SaaS?
SOC 2 ensures a SaaS provider securely manages customer data using five trust principles: security, availability, processing integrity, confidentiality, and privacy.

3. What is the SaaS security checklist NIST?
The NIST checklist includes best practices for securing SaaS apps, covering access control, encryption, incident response, and continuous monitoring.

4. What is the 3 3 2 2 2 rule of SaaS?
The 3-3-2-2-2 rule outlines a model for scaling SaaS businesses: 3x growth for 2 years, then 2x growth for 3 years—used to track healthy expansion.

5. What is the difference between framework and compliance?
A framework provides structured guidelines (like SOC 2); compliance means adhering to those guidelines to meet legal or industry requirements.

6. What is the 5 pillar SaaS metrics framework?
It includes MRR growth, churn, CAC, LTV, and NRR, core metrics used to evaluate a SaaS company's performance and scalability.

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