GDPR Compliance – When is GDPR applicable to SaaS Companies?

GDPR Compliance – When is GDPR applicable to SaaS Companies?

Accessing cloud services is so common in modern life that it is easy to forget that, not so long ago, the only way to use software tools was through a tangible copy. Although some still exist, there is no denying that Software as a Service Companies (or SaaS for short) is currently the norm

In a SaaS, a cloud-based service is created, and a usage fee is charged to the client. This freedom to do things with a few clicks seems to please consumers, with the subscription-based economy growing more than 100% annually. Besides, the ability to install and apply any service updates, rather than purchasing new tools, has made it much more user-friendly.

In 2018, the European Union established the GDPR (General Data Protection Regulation) to provide greater data protection rights to individuals in the EU. Since then, the GDPR has changed the way data is collected, processed, and stored across countless industries, including Saas Companies. 

Why Should a SaaS Comply with Data Protection Regulations?

Complying with local data protection regulations can be an easier task, but SaaS companies usually reach international markets.

Since SaaS companies live on subscriptions, every day, millions of consumers provide personal data to use their products. However, capturing this data places a lot of responsibility on companies. They must ensure the appropriate measures for data privacy and safety.  

Failing to do so can put the company at risk of facing a fine of a maximum of €20 million (about £18 million) or 4% of annual global turnover – whichever is greater – for infringements, as additional lack of trust from customers. And as per Amazon’s experience, regulators aren’t afraid to take fines as high as hundreds of millions .  

Becoming fully compliant requires Saas Companies to compromise to all the required steps. 

First GDPR Compliance Steps for SaaS Companies

First, most SaaS are usually both controllers (e.g. when it comes to their website, user databases, newsletters, marketing, payment data, etc.) and processors (e.g. in B2B activities when they process personal data of their client’s customers). SaaS companies must conduct an audit to understand which categories they fit for each data activity, bearing in mind the differing responsibilities of the data controller and the data processor. The audit will help the SaaS company gather a complete view of their data usage. 

Ideally, companies will need an understanding of:

  • Where every bit of personal information resides,
  • Who has access to which personal information,
  • Who and where is personal information transferred to,
  • All security controls to protect personal information, and
  • The retention times for every piece of personal information and how the data is deleted. 

Additionally, either as a processor or as a controller, SaaS Companies are legally obliged to perform a data processing agreement (DPA) with other companies it relates to, with a clear indication of the safeguards that should be put in place by both parties during the processing of data. 

Other measures for Compliance with the GDPR include establishing top-level security and performing staff training. Parallelly, SaaS companies must ensure that subcontractors are also complying with the GDPR. 

Regarding users’ rights, SaaS companies must ensure that data subjects can easily request and receive the information they have about them, request for updates, or their data deletion. 

It is long past the time that innovation walked separately to being compliant. In the competitive world of the internet, be transparent and keep information safe, and customers will surely reciprocate with loyalty. 

At Apex Privacy, we specialize our data protection services in helping SaaS companies to create and implement top privacy programs. Want to know more? Feel free to reach us and get a free compliance consultation. 

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