Data privacy is one of the hottest debate topics globally, especially with an increase in the online population. The governments from different countries have realized the seriousness of this subject and started taking actions to prevent any information breach. The European Union’s General Data Protection Regulation (GDPR) has become an icebreaker among various data protection regulations. It has denied any compromise with personal data in the EU by setting high standards for data security.
SaaS (software as a service) companies normally offer a subscription-based model and can have clients from any part of the world. Thus, they tend to have a high number of users, and most of the services revolve around user data. But with the adoption of GDPR in the EU, SaaS companies are at high pressure to secure data of their hundreds of thousands of users. The most important thing that SaaS companies need to understand with GDPR is that their customers also need to follow the guidelines.
Since its launch a few years ago, GDPR has taken all over the world. It doesn’t matter where your business is situated. If you are offering your services to EU residents, you need to be GDPR compliant. Failing to comply with GDPR will lead to hefty fines that may amount to up to €20 million or 4% of the revenue, whichever is greater. Recently, Twitter has lost a case to pay the first cross-border fine of €450,000 and everyday companies are investigated and fined.
SaaS companies need to be GDPR compliant along with their customers. Why must clients of a SaaS application also abide by the GDPR? Simply because Oftentimes, in a B2B model, the SaaS is a data processor and the company using the software is the data controller. It means that both the Company that is using the software and the SaaS company itself must abide by data protection laws worldwide.
The GDPR guidelines are generally very straightforward. However, some parts may create uncertainties while implementing these guidelines. Some of the measures for SaaS companies to be compliant with GDPR include:
- SaaS-based companies must appoint their internal data protection officers (DPO) and train their employees;
- They have to create a detailed cookie policy and update their cookie-consent banners to reflect immediately on the websites;
- They need to keep the language in the privacy policy clear about the collection and use of the user data with their rights;
- SaaS-based companies have to take responsibility to create a record of the data processing flow;
- They have to assess and ensure that third-party vendors are compliant with GDPR and arrange data processing agreements with them before the engagement;
- Implement a data protection program covering technical and organizational security guidelines defined for all the company processes;
- They need to set-up a mechanism to inform users about any breach or loss of their data. The standard time of notification is within 72 hours;
- Respect data subjects’ rights and respond to them within the legal deadline;
- Compliant software development in order to implement data protection by design and by default.
We have recently seen that social media giant WhatsApp has kept an exception in their privacy policy in Europe to comply with GDPR. It gives a message to all businesses operating from different parts of the world that they need to comply with GDPR to avoid any legal breaches and penalties. As SaaS companies deal with customer data, it is legally binding for them to comply with GDPR guidelines to operate in the European Union. The best way to prevent any failure is by auditing the sites/applications carefully from the beginning. It may sound a bit extraordinary, however, with the right approach, the SaaS companies can make sure that they protect themselves from any violation of the law.