GDPR for SaaS: 8 Steps to Ensure Compliance

As a Software as a Service (SaaS) provider, managing customer data is crucial to your business, from user account management to personalized services and targeted marketing. However, the European Union’s General Data Protection Regulation (GDPR) imposes legal responsibilities for handling this data. As the SaaS market rapidly expands, the scrutiny of data protection increases and non-compliance with GDPR can have severe consequences. This guide discusses ensuring GDPR compliance in your SaaS company and provides and recommends solutions.

GDPR compliance is not just a legal obligation. It’s also fundamental to building trust with your users. Staying compliant protects your company from hefty fines, legal issues, and reputation damage. For SaaS companies, you can continue operating smoothly and accessing the data you need to serve your customers. Compliance helps you build a stronger, more reliable relationship with your users.

Financial and legal repercussions

The financial penalties for GDPR violations are steep, with fines reaching up to 4% of your global annual turnover or €20 million, whichever is higher. These fines apply not only to large corporations but also to small and medium-sized SaaS companies. Additionally, legal battles stemming from data breaches or non-compliance claims can drain resources and tarnish your brand’s image.

Impact on product development

SaaS companies thrive on data, whether it’s for improving product features, enhancing user experiences, or driving marketing campaigns. Non-compliance with GDPR can restrict data processing activities, severely impacting your operating ability. This can result in losing valuable customer insights, hampered product development, and decreased competitive advantage.

Trust and reputation

Customers increasingly know their data rights and expect companies to handle their information responsibly. A breach or non-compliance incident can lead to a loss of customer trust, which is difficult to regain. SaaS companies prioritising GDPR compliance protect themselves legally and build stronger, trust-based relationships with their users.

When evaluating GDPR compliance in your SaaS products, several key criteria should be considered to ensure compliance with the GDPR regulations:

Role in data processing

When evaluating the GDPR compliance of your SaaS product or platform, it is crucial to understand your role in the user’s data processing. In most cases, the SaaS provider acts as a data processor, meaning they process personal data according to the instructions of the data controller (the client). The controller determines the purpose and means of the data processing while you, the SaaS provider, carry out these instructions. 

Legal bases for processing

Evaluate whether you have identified and documented the legal bases for processing personal data, as GDPR requires.

Data minimization

The platform should collect only the data necessary for its intended purpose. Ensure that you follow the principle of data minimization by limiting personal data collection, storage, and use to what is necessary.

User consent management

The SaaS application or provider must have mechanisms for obtaining, recording, and managing user consent. Consent should be explicit, informed, and revocable at any time. It should allow users to easily withdraw consent and manage their data preferences.

Data subject rights

Assess whether your SaaS platform provides tools and processes for users to exercise their GDPR rights, including accessing, rectifying, deleting, and porting their data. Enable easy response to data subject requests (DSRs).

Data retention and deletion policies

Ensure your SaaS platform includes clear policies for data retention and deletion, allowing for the secure and permanent deletion of personal data when it is no longer needed.

Security measures

Your SaaS application implements appropriate technical and organizational security measures to protect personal data. These measures include encryption, secure data storage, access controls, and regular security audits.

Data breach notification

Evaluate whether there is a protocol for detecting, responding to, and notifying customers and regulators about data breaches. The platform should have clear procedures for reporting breaches within the 72-hour window GDPR requires.

International data transfers

If your SaaS product involves transferring personal data outside the EEA, ensure that the provider complies with GDPR’s requirements for international data transfers. This includes using Standard Contractual Clauses (SCCs) or ensuring the recipient country has adequate data protection laws.

Privacy by design and default

Ensure that the SaaS platform is designed with privacy as a core principle. This means you have incorporated data protection measures into the design and operation of the platform by default rather than as an afterthought.

Transparency and accountability

Ensure you clearly outline how personal data is collected, used, and shared. Verify that proper policy pages, such as a privacy policy, are in place to disclose data processing practices to users. Also, maintain thorough documentation and records demonstrating GDPR compliance, including conducting regular compliance audits.

Vendor and third-party management

Assess how the SaaS provider manages its sub-processors and third-party vendors. The provider should have clear agreements and disclose all third parties involved in data processing.

Data processing agreement (DPA)

Ensure that your SaaS platform offers a Data Processing Agreement (DPA) outlining the roles and responsibilities of data controllers and processors in handling personal data. The DPA should detail how data is processed, stored, and secured. 

In case your SaaS platform fails to pass the evaluation, here’s a step-by-step guide to help your SaaS company stay compliant:

Step 1: Conduct a data audit

Start by identifying all the personal data your platform collects, processes, and stores. Map out where this data comes from, where it’s stored, and which third-party processors are involved. Regular audits will help you understand your data flows and identify areas that need attention to meet GDPR standards, especially as your business grows and new data processes are introduced.

A detailed data audit lets you understand if you are a data controller or a data processor.

Step 1.1: Conduct Data Protection Impact Assessments (DPIA)

A DPIA is required under GDPR for processing activities that may pose a high risk to an individual’s rights, especially when using new technologies. It helps identify and reduce data protection risks.

Key steps in a DPIA:

• Determine if your processing involves high-risk activities like sensitive data handling or large-scale monitoring.
• Outline how data is collected, stored, used, and shared, along with the purpose and legal basis.
• Evaluate potential impacts on individuals, including data breaches or unauthorized access.
• Implement measures to reduce identified risks, such as improving security or limiting data access.
• Engage with relevant parties, including the DPO, to ensure thorough risk assessment.
• Keep records of the DPIA and regularly update it, especially when changes occur.

Step 2: Appoint a data protection officer (DPO)

If your company handles a large amount of sensitive data, appointing a DPO is essential. The DPO will manage your compliance strategy, ensuring all data processing activities meet GDPR requirements. They’ll also serve as the point of contact with regulatory authorities and guide data protection best practices.

Qualities of a good DPO include:

• Comprehensive understanding of the regulation.
• Proven experience in privacy and protection.
• Strong legal background and technical understanding.
• Ability to identify, assess, and mitigate data risks.
• Effective communication and ability to guide others.
• Strong ethical compass and commitment to data protection.

Step 3: Implement data protection by design and default

Incorporate data protection into your product development from the start. This means considering privacy implications early on and limiting data collection to what’s necessary. By adopting a “privacy by design” approach, you can address potential privacy issues before they arise. This helps with compliance and builds trust with your users by committing to protecting their data.

Step 4: Develop a robust consent management system

Use a consent management tool to let users give, withdraw, or change their consent. Ensure consent is obtained, GDPR-compliant, with straightforward information about users’ choices. Your system should be flexible, able to handle new data processing activities and allow users to update their preferences as needed.

Step 5: Establish procedures for data subject requests

Set up clear processes for handling data subject requests, such as accessing, correcting, deleting, or transferring their data. These requests must be handled promptly and in line with GDPR’s timelines. Offering a self-service portal where users can manage their data rights can streamline this process and ease the load on your support team.

Step 6: Strengthen data security measures

Protect personal data with strong encryption, access controls, and regular security audits. Train your staff on data protection practices and their GDPR responsibilities. Regular security checks can help identify vulnerabilities and ensure your security measures stay effective against new threats. Consider obtaining certifications like ISO 27001 to show your commitment to data security.

Step 7: Review third-party agreements

Make sure all contracts with third-party processors comply with GDPR. Verify they have strong data protection measures and are committed to GDPR compliance. Conduct thorough checks when choosing SaaS vendors, and include specific GDPR compliance clauses in your contracts. Regularly review these agreements to maintain compliance as your business relationships change.

Step 8: Prepare for data breaches

Create a data breach response plan that includes steps for notifying affected individuals and regulatory authorities within 72 hours. Outline the steps to take in the event of a breach, including containing the breach, investigating the cause, and taking corrective action. Regular drills can help your team stay prepared to respond effectively, minimizing the impact on your business and customers.

Achieving GDPR compliance requires careful planning and execution. Here are some tips and solutions for implementing the GDPR compliance steps discussed earlier.

Data mapping tools

Implement data mapping tools to identify and document all personal data your platform collects, processes, and stores. This will help you understand data flows and ensure all data handling complies with GDPR.

A robust data-mapping program should:

• Provide advanced data visualization tools for quick insights.
• Be highly customizable to align with specific business needs and scale easily.
• Include built-in analytics to support data-driven decision-making.
• Be cloud-based and accessible from any device, with mobile compatibility.
• Offer a user-friendly interface that requires minimal training.
• Support integration with databases for seamless data retrieval and mapping.
• Generate comprehensive, real-time reports that are easy to understand.

Solutions like Talend, Skyvia, and Boomi are popular for data flow management.

Consent management platforms

A consent management platform (CMP) can efficiently manage user consent. This ensures that you obtain, record, and manage user consent in a GDPR-compliant manner, offering users easy ways to withdraw or modify their consent.

Key considerations when choosing a CMP include:

• Handles various tracking technologies and user preferences.
• Adheres to data privacy regulations (GDPR, CCPA, etc.).
• Protects user data and offers audit trails.
• Customizable banners, preference centres, and integration options.
• Clearly communicates data practices to users.
• Minimal impact on website speed and performance.
• Regular updates and new features.

CookieYes is an industry-leading cookie CMP used by many SaaS companies to regulate the use of cookies on their websites and applications. Its wide range of features ensures you meet the necessary requirements for GDPR cookie compliance.

Data protection officer (DPO) services

If you don’t have the resources to appoint an in-house DPO, consider using DPO-as-a-Service (DPOaaS. These services provide expert GDPR compliance guidance, help you oversee data protection strategies, and act as a liaison with regulatory authorities.

Companies like Deloitte and IT Governance provide DPOaaS for SaaS companies. 

Encryption and data security solutions

Utilize advanced encryption and data security solutions to protect personal data. Implementing encryption in transit and at rest, along with strong access controls, ensures that data is secure against unauthorized access and breaches. 

Sprinto is one of the popular choices for security compliance among tech companies. It helps tech companies quickly achieve compliance and pass security audits, supporting over 20 standards (other than GDPR) like SOC 2, ISO 27001, HIPAA, and PCI-DSS.

Solutions like 1Password help in password management.

Automated data subject request (DSR) tools

Adopt tools that automate data subject request management. These tools streamline handling requests for data access, correction, deletion, and portability, ensuring compliance with GDPR’s response timelines.

Solutions like DataGrail provide data subject request (DSR) fulfilment and automation, reducing complexity and saving time.

Third-party vendor management

Use platforms that help manage and monitor third-party vendors for GDPR compliance. These solutions ensure that all third-party processors adhere to GDPR standards, reducing the risk associated with outsourcing data processing.

Breach detection and response systems

Implement breach detection and response systems that can quickly identify and respond to data breaches. These systems should include automated alerts, containment protocols, and reporting tools to ensure compliance with GDPR’s breach notification requirements.

CrowdStrike’s Falcon platform secures your systems with a single lightweight sensor, requiring no on-premises equipment or complex setups. It is trusted by businesses across various fields, such as finance, healthcare, and tech.

GDPR certification programs

Engage in GDPR certification programs to validate your company’s compliance efforts. Certifications provide external verification that your SaaS platform meets GDPR standards, building customer trust.

Here are some good GDPR certification programs.