Tech companies are nostalgic for the good old days when compliance was a simple checklist.

Today, compliance is anything but simple. It's a complex tangle of federal, local, and industry-specific laws. New clauses and provisions appear without warning, typically in response to emerging technologies, trends, and risks. Regulators are on overdrive, and companies, especially those in the tech space, are scrambling to keep up.

For tech companies, the compliance challenge is twofold. First, they must adhere to overlapping regulations and standards like PCI DSS, HIPAA, HITRUST, and NIST. But they also have to demonstrate adherence. After all, following the rules isn’t the same as proving you are.

How well are organizations managing the contemporary compliance conundrum? Poorly. According to PWC, only 7% of organizations say they are “leading in compliance.” A troubling statistic, considering 85% feel that compliance has become a more complicated task since 2022.

In this article, we’ll break down why staying compliant is so crucial for tech companies and provide actionable guidance on how to do so.

Why Is Compliance Important for Tech Companies?

Regulatory compliance is a critical business pillar for organizations across all sectors. But regulators really double down when it comes to tech companies. For anyone in the tech sector, the stakes are incredibly high.

Here’s why.

Heightened Legal Scrutiny

Tech innovation outpaces legislation every day of the week. Unfortunately, the general perception is that game-changing innovations result in legal workarounds. Regulators and supervisors know this, which is why their crosshairs are trained on tech companies.

Companies handling sensitive data like PII, PHI, or financial data are especially under the legal microscope. The implications are no joke: Noncompliance investigations and audits could potentially lead to penalties in the millions.

Reputation and Public Perception

Tech companies are to us today what textiles, iron, and steel were during the Industrial Revolution. As was the case then, public trust is an invaluable resource.

Staying compliant is essential to fostering that trust. In an era where breakthroughs like AI are completely changing the competitive landscape, being compliant, ethical, and secure is nothing less than a strategic imperative.

Complex Data Privacy and Security Challenges

Contemporary technology is built on data—lots of it. No factor’s more important. Tech companies ingest, store, process, and leverage immeasurable amounts of information, including that which is sensitive and personal.

With so much high-risk data hanging in the balance, adhering to data privacy, sovereignty, and security laws is crucial. Failure to implement data protection mechanisms, such as encryption, anonymization, and access controls, can lead to data breaches and major regulatory violations—resulting in lawsuits, financial penalties, and reputational damage.

Compliance as a Business and Financial Driver

For tech companies, noncompliance is basically an existential threat.

The first question from customers, vendors, and target companies or acquiring firms in M&A deals is: Are you compliant?

A simple yes won’t suffice. Tech companies have to meticulously demonstrate compliance via certifications, attestations, and other supporting documentation. From a business perspective, a healthy compliance posture is the fulcrum that opens the door to more lucrative markets, opportunities, and innovations.

Long-Term Organizational Resilience

A robust regulatory compliance posture isn’t just about satisfying a handful of regulators and supervisors. Compliance reinforces other organizational pillars, including security and operations.

Especially in the tech sector, compliance guardrails must be embedded into all other enterprise pillars. This enables companies to bounce back fast—and with little fuss—no matter what kind of disruptive crisis or event hits.

Unpacking Key Compliance Standards

It’s easy to get tangled in today’s crisscrossing regulatory landscape. While there are countless standards, frameworks, and laws across geographies and sectors, we’ll be honing in on a few that are particularly pertinent to organizations in the tech sphere.

SOC 2

A product of the American Institute of Certified Public Accountants (AICPA), the System and Organization Controls 2 (SOC 2) addresses how organizations handle customer data and connect their IT practices and infrastructure.

Who does it apply to?

SOC 2 is relevant to service organizations that store, process, and analyze customer data. This includes SaaS vendors, cloud infrastructure vendors, and managed services providers.

How can tech companies comply?

SOC 2 features five core components known as the Trust Services Criteria (TSC). Here’s how tech companies can satisfy them:

1. Security:

• Implement robust access controls, detection and response mechanisms, and network security.
• Establish incident response protocols and vulnerability management processes.

2. Availability:

• Continuously monitor systems.
• Establish backup and recovery procedures.
• Optimize system capacity management.
• Set up a disaster recovery strategy.

3. Processing Integrity:

• Ensure data hygiene across input and output processes.
• Test and validate data processing systems and practices.

4. Confidentiality:

• Encrypt sensitive data and establish safe data management practices.
• Classify data based on sensitivity.

5. Privacy:

• Adopt a policy-driven approach to guaranteeing privacy across the data lifecycle.
• Establish data privacy notices to disclose how customer data is leveraged.

NIST

The National Institute of Standards and Technology (NIST) has multiple resources that apply to tech companies, including the adaptable NIST Cybersecurity Framework (CSF) and the Special Publication (SP) 800 Series, which serve as detailed guides.

These frameworks, which offer a degree of flexibility that many others don’t, help tech organizations manage risks and build cyber resilience.

Who does it apply to?

Only government contractors and federal agencies are obligated to adhere to NIST. However, although not mandatory, private tech companies can significantly enhance their overall compliance posture by using NIST resources.

How can tech companies comply?

NIST guidelines span five functions. To align with NIST’s guidelines, tech companies must address each one:

1. Identify: Conduct regular risk assessments, and inventory and classify resources and data.
2. Protect: Dial in IAM and access controls, as well as data security controls, e.g., encryption.
3. Detect: Monitor IT system activities.
4. Respond: Set up incident response protocols.
5. Recover: Maintain strict documentation.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that focuses on keeping patient health data (e.g., names, addresses, social security numbers, medical records) secure and private.

Who does it apply to?

Many believe that HIPAA only applies to hospitals, healthcare firms, and health insurance companies. But this is inaccurate: Any tech company that works with ePHI or collaborates with healthcare organizations falls under HIPAA jurisdiction.

How can tech companies comply?

HIPAA requirements span three rules in detail:

1. Security:

• Use encryption, multi-factor authentication, and other controls.
• Kickstart training and awareness programs on handling data securely.
• Limit system access through role-based access control (RBAC).
• Continuously monitor sensitive data flows and related systems.

2. Privacy:

• Build protections into daily practices.
• Ensure that ePHI access is limited to only authorized users.
• Standardize protocols for ingesting, storing, processing, and deleting ePHI.
• Make patient rights transparent and easy to access.
• Provide clear channels for patients to manage their ePHI.

3. Breach Notification:

• Designate dedicated personnel to oversee post-breach tasks.
• Implement validation protocols to confirm suspected breaches.
• Leverage reusable templates to accelerate the breach notification process.
• Schedule breach simulations and drills to test notification protocols.

HITRUST CSF

The Health Information Trust Alliance Common Security Framework (HITRUST CSF) is one of the most comprehensive risk management and compliance frameworks.

It meticulously weaves in elements from other industry standards and frameworks, including HIPAA, GDPR, NIST, and PCI DSS. As a result, it helps break down compliance silos and develop a unified compliance program that’s applicable across frameworks.

Who does it apply to?

Initially, HITRUST was a healthcare-exclusive framework, designed to support companies in adhering to HIPAA requirements. But today, given its cross-industry applicability, companies from multiple sectors are leveraging it.

Tech companies often collaborate and work within large, diverse ecosystems, making HITRUST a valuable resource.

How can tech companies comply?

HITRUST includes 14 control categories, including access control, risk management, compliance, and privacy practices.

The goal for tech companies should be to gain a HITRUST certification from a third-party assessor. Here’s what companies must do to secure that:

• Set goals: Design a HITRUST maturity roadmap with target scores.
• Establish security controls: Set up controls across HITRUST’s 19 controls.
• Monitor: Implement 24/7/365 monitoring across IT infrastructures.
• Create an audit trail: Document and log all findings.
• Get certified: Find the right third-party auditor.

PCI DSS

The Payment Card Industry Data Security Standard (PCI DSS) focuses on protecting cardholder data from risks like unauthorized access, fraud, and theft. This strengthens trust between customers and their service providers.

Who does it apply to?

Any company that processes cardholder data must adhere to PCI DSS rules. This includes tech companies that develop payment systems as well as those with payment integrations.

Based on the number of card transactions it processes, your company will fall under one of PCI DSS’s four levels. For context, Level 1 applies to anyone with more than 6 million transactions a year, and Level 4 is for companies with fewer than 20,000 transactions.

How can tech companies comply?

The best way for tech companies to comply is by reinforcing the six control areas:

1. Network security: Strengthen network security controls.
2. Cardholder data protections: Build and enforce safeguards around cardholder data.
3. Vulnerability management: Train employees to identify and manage vulnerabilities.
4. Robust access controls: Tighten data access controls.
5. Continuous monitoring and testing: Stay on top of potential network risks.
6. IT security policy: Develop and maintain a stringent IT security policy.

Best Practices to Ensure Robust Compliance

Compliance can quickly become an even bigger nightmare if tech companies go chasing individual certifications and attestations. It’s not about adhering to individual standards one after the other.

Create a unified governance program that aligns with relevant standards. The certifications will come naturally after that.

Here are some actionable recommendations to develop a strong compliance posture.

Develop a Unified Compliance Strategy and Framework

In building a unified compliance program, you will need to map every single standard, law, and framework that your company needs to satisfy.

Your compliance mantra should be “No silos, no separation.”

Next, work with key stakeholders to build those requirements into a holistic framework that’s tailored to your organization’s needs. All future investments, protocols, practices, and decisions should be based on this overarching strategy.

Establish Strong Security Policies

A policy-driven approach is the only way to standardize and scale a company’s compliance program.

Make sure that policies reflect requirements across all relevant frameworks.

Key policy areas should include data security, access controls, incident response, and notification and disclosure. Policies shouldn’t be jargon-heavy. Keep them simple to understand and update.

Prioritize Data Security and Privacy

Ultimately, compliance comes down to data security.

To stay compliant across multiple standards and frameworks, implement non-negotiable data protection controls, including encryption, least privilege access controls, multi-factor authentication,

and data backups.

Additionally, establish training programs to formalize secure data handling practices.

Embed Compliance into Processes

No more reactive checklists. Instead, build compliance gates and guardrails into every mission-critical process and workflow. This secure-by-design approach ensures that processes are inherently compliant and safe.

Implement Continuous Monitoring and Logging

It’s impossible to pass compliance audits without comprehensive logs. And for those, you need full-stack 24/7/365 monitoring across your IT infrastructure. This will help boost both compliance and security.

Note: Consider integrating SIEM tools to correlate and cross-analyze threats and events across your IT ecosystem.

Introduce Automated Compliance Checks

Human oversight can prove critical for compliance checks. But if that’s your only compliance gate, errors are inevitable—which no tech company can afford.

Implementing AI-driven automation will ensure continuous compliance checks across multiple standards and frameworks.

Use Third-Party Auditors

It’s tough to assess your own compliance posture objectively. Plus, certain standards only provide certifications if validated by an external auditor.

Working with third-party experts can be a compliance game changer, for everything from risk assessments to proactive optimization.

The best auditors don’t just help achieve today’s compliance goals; they prepare you for the future.

How RapidScale Boosts Compliance for Tech Companies

Customer trust, competitive advantage, fewer security incidents, optimized risk management, and business resilience. These are the transformative benefits that a powerful compliance program can unlock for tech companies. But achieving these benefits is not always easy, especially for tech organizations with limited resources and in-house expertise.

That’s where RapidScale comes in.

RapidScale’s managed IT, security, and compliance services can transform a tech company’s compliance program. Our offerings help build strong guardrails and controls for cross-framework compliance. And we can map and orient customer controls to the frameworks highlighted in this article.

The result? A reinforced and fine-tuned compliance program, ready for any challenge that the regulatory landscape might pose. Send us a message today to learn how you can achieve smarter cloud compliance today.