There’s no question that obtaining a SOC report is a significant investment for many businesses. It isn’t just a financial investment – it’s one that also requires valuable time, resources, and often, large-scale organizational change.
These costs can give many businesses pause as they consider whether or not they should get a SOC report. But in the vast majority of instances, obtaining a SOC report is an investment that pays off in multiples, giving your business a more secure foundation while serving as a platform to grow into a more lucrative client base.
IT leaders must make the case that a SOC report will provide their business with a solid Return On Investment (ROI). This is particularly important when requesting additional financial resources or when convincing colleagues from other departments that a SOC report project is an important place to allocate resources.
In this overview, we explore some of the challenges that IT leaders face in obtaining support for a SOC report and then provide leaders with the insights they need to overcome these objections.
In a time when many IT budgets are already stretched thin, it can be challenging to convince their business’s leadership that a SOC report is a worthwhile investment.
There are a variety of fees involved in obtaining a SOC report, from the fees paid to auditors to all of the costs associated with becoming SOC compliant: upgrading infrastructure, installing new systems, running a series of cybersecurity tests, and more.
This isn’t a one-time investment either – businesses have to renew their SOC attestations every year, although this tends to be less expensive than the first report. For businesses that do not yet need a SOC report, a SOC readiness assessment offers a more affordable option that helps leaders understand their business’s maturity level.
In addition to these financial costs, IT leaders also have to navigate bandwidth challenges. Developing and maintaining the internal controls infrastructure required to pass a SOC audit is a critical undertaking.
This is particularly challenging for a SOC 2 Type 1 report since businesses have to create a System Description and other required assets for the first time. Team members involved in performing this work must find the time to do so in addition to their other responsibilities.
If a business is seeking a SOC 2 Type 2 report, certain deadlines are set in stone and cannot be moved. Ensuring every employee on the SOC reporting project has sufficient time to contribute demands a thoughtful approach and support from stakeholders across the business.
Some business leaders fail to understand the value of a SOC report. They view IT as a cost center and do not understand the role that SOC reports play in enabling their business to attract more valuable clients.
If a business is seeking a SOC report proactively, IT leaders must educate executives on the anticipated future ROI of this investment and demonstrate how it will contribute to the business’s growth trajectory.
A SOC report delivers all kinds of benefits for businesses – both direct and indirect. These can influence every element of your organization, from enabling your sales team to attract a higher caliber of client to securing your employees’ data against would-be attackers. Below, we outline some of the most impactful benefits of obtaining a SOC report.
If your business has aspirations of signing contracts with public companies, a SOC 2 or SOC 3 report is virtually non-negotiable. Attracting these more sophisticated enterprise-level clients demands that your business can demonstrate that it can deliver a secure, high-quality product.
Additionally, public companies are required to have an External Financial Statement Audit. As part of this process, the company’s auditors must opine on how the public company secures its financial and system data. The auditors will verify that the public company’s partners are held to the SOC framework.
If your business has a SOC report, it will enjoy a significant competitive advantage over competitors that do not. Your business is ready to sign a contract and immediately start working, whereas a competitor without a SOC report will take at least six months to secure the attestation required to commence a partnership. Once a business gains its first enterprise client, it’s far easier to land more of these large contracts, opening up important growth opportunities.
As noted above, having a SOC report gives your business a meaningful competitive advantage. It’s common for public companies to perceive vendors that lack SOC reports as unserious and relatively immature.
Risk management teams at these companies will likely express skepticism over whether a vendor will be a reliable partner, meaning that a company’s product has to be truly unique and exceptional to pass the procurement process. When you have a SOC report, these barriers are completely removed.
SOC reports also allow businesses to avoid having to complete security questionnaires. These questionnaires might be as long as 1,000 questions, requiring businesses to disclose extremely detailed security information. Every corporation has its own security questionnaire, meaning that without a SOC report, valuable time and resources have to be expended into completing this process.
A SOC report isn’t just an external tool that can be shared with potential clients: it’s also a detailed framework that helps your team better focus its investments in new technologies and initiatives. Specific exercises that must be completed to pass the SOC 2 audit, including a penetration test and a vulnerability scan.
These will be identified during a readiness assessment, enabling your team to focus its resources on the items that will be required to successfully secure SOC attestation. It’s worth considering that the cost of becoming SOC compliant can be passed along to your customer as your product will be significantly more valuable when a SOC report attests to its security.
Today, businesses face more cybersecurity threats than ever. Attackers are employing increasingly sophisticated methods to gain access to confidential data and systems.
Bad actors tend to target businesses with a weak cybersecurity infrastructure. Businesses with a SOC report often have a higher level of protection and are less likely to be targeted. A SOC report not only serves as an indicator of the strength of your business’s policies and processes, it also diagnoses security weaknesses and gives IT teams a path to remedy these.
Additionally, SOC reports are becoming an increasingly important determinant of whether your business can obtain cybersecurity insurance. In the past, data has suggested that businesses with a SOC report typically pay lower cybersecurity insurance premiums. Today, it’s not uncommon for businesses without a SOC report or other security attestation to be denied coverage entirely.
Not having cybersecurity liability insurance exposes your business to critical downside risk. A SOC report ensures your organization can find sufficient coverage while potentially seeing lower premiums.
A SOC report can often be the difference between landing a deal with a multi-billion dollar client or seeing the opportunity slip away. To break into the enterprise market and attract public companies as clients of your business, a SOC report is a vital asset.
At Smith + Howard, our SOC reporting team is here to assist you with a wide variety of issues. Our team can provide assurance to your clients that you are under an engagement letter and intend to complete a SOC report, and can also provide a timeline for obtaining a full SOC report. In many instances, these assurances help your business fulfill its security obligations and begin a new contract.
If you’re not yet ready for a SOC report, consider a SOC readiness assessment – a less intensive process that establishes your business’s current level of readiness for a SOC audit and identifies which areas you must work on to secure a clean report.
To learn more about how Smith + Howard can support your SOC Reporting requirements, contact an advisor today.
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