Buying SaaS without checking security standards is a huge mistake.
Businesses enter into agreements with SaaS vendors every year that jeopardize their customer data. Buyers are uninformed about what to look for before they click “sign”. They see a polished dashboard and reasonable price.
Then a breach happens.
Here’s the thing:
Enterprise security standards are there for your protection. They inform you whether or not you can trust a vendor with your information. With breaches costing companies millions, verifying these standards isn’t optional anymore.
Here is everything a SaaS buyer needs to know…
Inside this guide:
- What Are Enterprise Security Standards?
- Why SaaS Buyers Should Care About Security
- The Top Security Standards To Look For
- Red Flags That Should Send You Running
What Are Enterprise Security Standards?
Enterprise security standards are frameworks that SaaS vendors follow to protect customer data.
Consider them as your vendor’s report card. They grade how a SaaS vendor handles security, privacy and reliability. Third-party auditors audit the vendor and publish a report. Buyers can review the report to see if its safe to buy from the vendor.
The most well-known standards include:
- SOC 2 — Covers security, availability and privacy of customer data
- ISO 27001 — International standard for information security management
- GDPR — European Union rules for handling personal data
- HIPAA — Rules for handling healthcare data in the US
- PCI DSS — Rules for handling payment card data
Every standard has different priorities and metrics. But they all aim to ensure vendors protect your data.
Why SaaS Buyers Should Care About Security
Vendor security should never be overlooked. Doing so is one of the quickest ways to lose money, customers and reputation.
Just look at the numbers.
Did you know the average cost of a data breach was $4.44 million in 2025? And did you know most data breaches involve a third-party vendor? According to Verizon, third-party breaches doubled from 15% to 30% in one year. Partnering with the wrong SaaS provider can leave your business vulnerable.
But there is another reason to care.
Buyers today rely on trend tracking software to watch markets, follow competitors and customer behavior. Those applications ingest terabytes of sensitive information daily. If the platform isn’t built on strict security standards that information is vulnerable. Newer trend tracking software platforms are embedding an AI powered agent to help manage compliance and security 24/7. Make no mistake about it — Security is no longer a “nice to have” for any SaaS offering. It’s table stake.
Here’s what strong security standards give you:
- Peace of mind — Your data is being handled properly
- Faster procurement — Legal and IT teams sign off quicker
- Stronger trust — Customers see you take their data seriously
The Top Security Standards To Look For
Not all benchmarks apply to every SaaS product. However, there are several that every purchaser should inquire about.
Here is a breakdown…
SOC 2
SOC 2 is the gold standard for SaaS companies.
The document was created by the American Institute of CPAs, which established criteria spread out over five categories — security, availability, processing integrity, confidentiality and privacy. Auditors test how effectively a vendor manages each area, and then issue a report.
There are two types:
- Type I — Reviews the design of controls at one point in time
- Type II — Reviews controls over a longer period (usually 3-12 months)
Type II evidence is much stronger since it documents that the vendor practices security on an ongoing basis rather than just at a point in time.
New data shows that approximately 66% of B2B buyers require a SOC 2 report prior to signing a contract. That’s significant. If your favorite vendor can’t produce one, they are likely to lose the customer.
ISO 27001
ISO 27001 is the international equivalent of SOC 2.
International buyers, particularly European and Asian tend to prefer this. It tells vendors everywhere that you take security seriously if you have SOC 2 and ISO 27001.
GDPR & Regional Privacy Rules
If your SaaS vendor processes data belonging to European customers, then GDPR compliance is mandatory. Ditto CCPA for California customers, and any other local regulations.
Violations of these regulations can reach millions of dollars in penalties quickly. Question your vendors on how they process data subject requests, deletion requests, and cross border transfer requests.
Industry-Specific Standards
Some industries need extra standards:
- Healthcare — HIPAA compliance is a must
- Payments — PCI DSS covers card data
- Government — FedRAMP is often required
- Finance — SOX and GLBA rules apply
If you operate in a regulated industry, make sure any vendor you sign can tick these boxes.
Red Flags That Should Send You Running
Not every SaaS vendor takes security seriously. Here are the warning signs.
No Security Documentation
If vendor doesn’t have a SOC 2 report, security whitepaper or trustpilot page…. run.
Legit vendors have this information prepared in advance. They understand you’ll ask. If they don’t have it, they either haven’t looked or they are hiding something. Either scenario isn’t good.
Vague Answers About Data Handling
Security questions should get clear, direct answers. Watch out for vendors who:
- Dodge questions about where data is stored
- Can’t explain their encryption practices
- Don’t have a clear incident response plan
- Refuse to talk about past breaches
No Regular Audits
Security is not a set it and forget it proposition. Vendors should be audited annually. Inquire as to when the last audit took place. If it has been over a year, consider it a red flag.
Weak Access Controls
Ask them how they handle multi-factor authentication, role-based access and employee offboarding. Poor access controls are one of the primary causes for breaches occurring.
Bringing It All Together
Enterprise security standards protect your business.
Any SaaS buyer who overlooks vendor security due diligence is “playing with fire”. There is a much higher cost to failure than diligence. Here is a quick recap:
- Ask every vendor for their SOC 2, ISO 27001 or equivalent reports
- Check for industry-specific standards like HIPAA or PCI DSS
- Watch out for red flags like vague answers and missing documents
- Make sure vendors run regular audits and have strong access controls
- Never sign with a vendor that can’t prove their security posture
Completing this little homework assignment can protect your business from millions of dollars in losses and help secure your customer data. Make the effort to do it correctly — you’ll thank yourself later.
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