Listen to: "What Do SOC 2 Reports Mean to Managed Service Providers?"
Are you looking for ways to attract new clients of all types and sizes to your Managed Service Provider (MSP) business? One route to success you might consider includes providing prospective clients with the assurance that you are a thoughtful and proactive business leader when it comes to your clients’ information security.
The great news for you is that there is an existing auditing protocol in place to help you protect your clients’ information assets. The SOC 2 report has become a crucial tool that you need in your kit as your MSP bids on work for clients, applies for insurance, and works to satisfy standards, regulations and policies.
What Is a Managed Service Provider?
Also known as a Management Service Provider, a MSP is an organization that manages information technology services for other businesses, providing a server, network and specialized applications to clients, who are sometimes called end users. The MSP hosts and manages these applications, serving as an Application Service Provider (ASP), allowing end users to perform daily business functions more easily.
The end user pays an upfront cost to the MSP then continues to pay an ongoing subscription fee to ensure regular maintenance and management. These services can address any business functions, including supply chain, payroll and HR functions.
MSPs have largely provided web hosting or ASPs over the years, but an increasing number of MSPs are providing services in the cloud. As a matter of fact, InfoWorld reported in 2015 that MSPs were already in use by about 80 percent of cloud deployment projects in the years previous to the article.
Outside of cloud-based service providers, MSPs usually own all the physical infrastructure, giving them the ability to offer those resources to end users remotely via the internet. End users can then can access resources on a self-service and on-demand basis.
Businesses are increasingly relying on the specialized services of MSPs since it allows them to stay current on all the latest technology without the need to incur a huge upfront cost of the infrastructure, hardware, software and upkeep of it all.
What Is the Security Concern for Managed Service Provider and End User Relationships?
The primary concern that businesses have when it comes to MSPs is security, and more specifically, the potential for data breaches and leaks.
Cybercriminals of all stripes never stop working on ways to infiltrate systems, and it is nerve wracking enough for a CIO to worry about information security on the organization’s own premises. Add another business, such as a MSP, to the mix that has access to the company’s system, personal customer data and other intellectual property, and it would be a wonder if a business’s IT manager got another good night’s sleep.
However, with further exploration into modern MSPs’ portfolios, CIOs are increasingly and pleasantly surprised to learn that MSPs are happy to invest in preventive solutions like performing SOC audits and providing SOC reports to ensure an alignment of security practices and protocols.
What Is a SOC 2 Report?
Now that you know that providing a System and Organization Controls (SOC) 2 report to a prospective client is a strong and attractive preemptive strategy that puts your MSP business ahead of the competition, you may be wondering exactly what it is.
The SOC 2 audit or examination assesses a MSP’s internal controls and objectives to ensure that the five Trust Services Criteria (TSC) are regularly and fully being addressed by the engaged service organization, or in this case the MSP.
The five TSC are:
- Processing Integrity
Security is the only criterion that is required for all SOC 2 reports. Any other included criteria—previously and sometimes still referred to as principles—are decided based on specific concerns that someone in your organization or your client’s organization has about a certain principle. You may choose one or all five of the TSCs to test against, based on the level of access you have to your customer’s information, as well as the level of security and controls in your environment.
Additionally, there are two types of SOC 2 reports that your service organization may perform:
- >A SOC 2, Type I Audit examines the MSP’s controls to address any one or all five of the TSCs to assure that controls are designed effectively to meet the desired objectives at a point in time.
- A SOC 2, Type II Audit examines the same information as a Type 1 audit, but it also explores the operating effectiveness of a MSP’s controls over a period of time.
Why Would a MSP Choose to Undergo a SOC 2 Report?
In today’s technology-centered business environment, a MSP choosing to undergo a SOC 2 report before approaching clients is a wise strategy. With every data breach broadcast across all mainstream news channels, organizational leaders become more aware of the risks to their own systems and data all the time.
These business leaders—at least the really good business leaders—understand that, while they need to find ways to trim costs by outsourcing services like those involving information technology, they must first and foremost protect the interests of customers and third parties.
What Does a MSP’s Performance of a SOC 2 Report Tell clients and Prospective Clients?
Without the trust of their customers, vendors and other invested third parties, businesses stand to lose everything in the event of a data breach if they have not done everything possible to prevent the compromise of customer data. These diligent business leaders need to know that your MSP’s controls align with their own and that your system is fit to fend off the attacks of relentless hackers.
Since there are currently no official governing entities overseeing SaaS, cloud services, IT, security providers and MSPs, the American Institute of CPAs (AICPA) stepped in to fill the gap by designing and maintaining the SOC 2 Audit and SOC 2 Report, as well as an entire SOC suite of audits and reports. The AICPA were determined to find a comprehensive solution to respond to the concerns of business leaders entrusting their critical business assets, like customer data and intellectual property, to an outside business entity.
Today’s sharp organizational leaders who need the services of MSPs are increasingly prioritizing their search criteria based on the willingness of a MSP to step up to ensure the security of valuable customer information. They certainly want to know what type of protection you have in place for information security, and if you have performed an unsolicited SOC 2 examination—or you are willing to perform one upon request—it will put you at the head of the line of contenders for their business engagement. The organization’s IT manager or CIO will then know that you take your obligations to their security seriously.
Are You Ready to Become Your Client’s Dream MSP By Providing a SOC 2 Report?
Putting your clients’ minds at ease is part of what you do as a Managed Service Provider. You work to take hot daily information technology issues off their plate to give them to freedom to focus on core tasks, so it only makes sense that you would want to take the extra step to ensuring peak security of their valuable data assets.
At I.S. Partners, LLC., our SOC 2 report team will assure you that your eagerness to perform regular SOC 2 audits is invaluable to your clients. Business leaders, just like you, feel like they must always reassure their customers to maintain their trust, respect and ongoing business. A SOC 2 report offers your end users peace of mind, and it does a great deal to benefit your business on its own, as well.