SaaS Terms Explained: General Data Protection Regulation (GDPR)

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SaaS Terms Explained: General Data Protection Regulation (GDPR)

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SaaS Terms Explained: General Data Protection Regulation (GDPR)

Get SigmaOS Free

It's free and super easy to set up

SaaS Terms Explained: General Data Protection Regulation (GDPR)

Welcome to our guide to the General Data Protection Regulation (GDPR) and its impact on SaaS companies! If you're part of the SaaS industry, you likely know that GDPR is a vital piece of legislation that's transforming how data is handled and protected. But with all the legal jargon out there, it can be confusing to understand what it means for you and your business. Fortunately, in this article, we will give you a clear overview of GDPR, along with a breakdown of the most important aspects you need to know.

Understanding the General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) is one of the most important pieces of legislation in the field of data protection. It serves to strengthen and unify data protection for all individuals within the European Union (EU). The regulation came into effect on May 25th, 2018, replacing the 1995 Data Protection Directive. It's designed to give individuals more control over their personal data and to ensure that organizations handle that data in a responsible and transparent way.

GDPR is a comprehensive regulation that applies to all organizations that process personal data of EU citizens, regardless of where the organization is based. The regulation has a broad scope and covers a wide range of data processing activities, from collecting and storing data to analyzing and sharing it.

The History of GDPR

The development of GDPR began in 2012, with the European Commission proposing a comprehensive reform of data protection rules in the EU. The aim was to update the existing laws to reflect the rapid changes in technology and the increasing importance of data protection in the digital age. After several rounds of negotiations and revisions, the regulation was finally adopted in April 2016 and was enforced starting May 2018.

The adoption of GDPR was a significant step towards protecting the privacy of individuals in the EU. It represented a major overhaul of the existing data protection laws and introduced a number of new requirements for organizations that process personal data.

Key Principles of GDPR

Before we dive into how GDPR impacts SaaS companies, it's essential to understand the key principles that underpin this regulation. These six principles are designed to ensure that any personal data collected and processed is handled legally and transparently:

  • Lawfulness, fairness and transparency - Personal data must be collected and processed in a legal, fair and transparent manner.

  • Purpose limitation - Personal data must be collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes.

  • Data minimization - Personal data must be adequate, relevant and limited to what is necessary in relation to the purposes for which it is processed.

  • Accuracy - Personal data must be accurate and, where necessary, kept up to date.

  • Storage limitation - Personal data must be kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data is processed.

  • Integrity and confidentiality - Personal data must be processed in a manner that ensures appropriate security of the personal data, including protection against unauthorized or unlawful processing and against accidental loss, destruction or damage.

Each of these principles governs how personal data is collected, processed, stored, and used by organizations, and each one has an important role in ensuring that GDPR is adhered to. By following these principles, organizations can ensure that they are processing personal data in a legal and ethical manner, and that they are protecting the privacy rights of individuals.

Overall, GDPR represents a major step forward in data protection, and it has important implications for organizations that process personal data. By understanding the principles of GDPR and complying with its requirements, organizations can ensure that they are protecting the privacy rights of individuals and building trust with their customers.

GDPR and SaaS: Why It Matters

The Role of SaaS in Data Processing

Software as a service (SaaS) platform providers have been revolutionizing the way that businesses operate, delivering efficient and innovative solutions that in many cases, are essential for businesses to function. These platforms collect and process vast amounts of data, which can make them a target for regulators who are looking to ensure that personal data is protected and used only when necessary. SaaS companies have a crucial role to play in GDPR compliance, given their role as data processors.

SaaS Providers as Data Processors and Controllers

A data controller is an entity that determines the purposes and means of personal data processing, while a data processor is a third party that processes personal data on behalf of the controller. SaaS providers are data processors because they process personal data on behalf of their clients (who act as data controllers). However, in some cases, SaaS providers may also be data controllers themselves – for example, when they use their clients' data to improve their own services.

Compliance Challenges for SaaS Companies

GDPR compliance can be particularly challenging for SaaS companies, as they not only need to ensure they are complying with the regulation themselves but also make sure their clients are doing the same. For example, SaaS providers need to ensure that their clients have obtained appropriate consent to use personal data and that the data is protected against unauthorized access, use, or disclosure, both when it is transfered and when it's stored.

Key GDPR Requirements for SaaS Providers

Data Protection by Design and Default

Data protection by design and default is a core requirement of GDPR. It means that SaaS companies need to incorporate data protection measures into their systems and processes from the very beginning, rather than adding them as an afterthought. This principle applies to both the technical and organizational aspects of data processing and puts privacy at the forefront of everything SaaS companies should do.

Data Processing Agreements

GDPR requires that data processing agreements (DPAs) outline the necessary information, agreements between processors and controllers, and compliance measures to protect personal data in secure ways. It's important to ensure that DPAs cover the terms and obligations set out by GDPR.

International Data Transfers

GDPR has strict rules governing the transfer of personal data outside of the EU. SaaS companies need to ensure that they are transferring data legally and securely, and they'll often require additional measures to do so. Part of the compliance process involves ensuring that the data processors at the accessed third-party site are compliant with GDPR.

Data Breach Notification

In the event of a data breach, companies must inform the relevant authorities within 72 hours of becoming aware of the breach. SaaS providers must make sure that their clients are notified in case of a data breach and work with their clients to develop procedures for detecting, reporting, and investigating data breaches.

Achieving GDPR Compliance for SaaS Companies

Conducting a Data Protection Impact Assessment (DPIA)

DPIA is a process to identify and mitigate the data protection risks of a project or product. SaaS companies must carry out a DPIA when introducing new data processing activities, or when changes in data processing operations result in a high risk to privacy.

Appointing a Data Protection Officer (DPO)

Organizations whose core activities involve regular and systematic processing of personal data must appoint a Data Protection Officer (DPO). This role exists to ensure compliance with GDPR and help manage the risks and impacts of data processing activities.

Implementing Privacy Policies and Procedures

GDPR requires SaaS companies to create transparent and complete privacy policies that clearly communicate what data they collect, how they use it, and who they share it with. Organizations also need to ensure that they implement data protection procedures and systems that capture and enforce the requirements of GDPR.

Training and Awareness Programs

GDPR compliance is everyone's responsibility within a SaaS company, and training is essential to ensure effective data protection policies are followed. SaaS companies should provide training to all employees and ensure that they know how to handle personal data securely and what to do in case of a data breach. Awareness programs can be designed to spread awareness to customers and the public about data protection.


Compliance with GDPR is a must for SaaS providers. It ensures data protection, which is crucial for building customer trust. Fulfilling the requirements may be difficult, but the costs of not doing so are substantial. If you're a SaaS provider and you plan to do business in the EU, you must stay informed about GDPR's obligations and restrictions. By knowing and following the rules, your company can comply with GDPR and build a strong reputation in the marketplace. We hope this guide has given you a better understanding of GDPR and an idea of what your company needs to do to comply with this critical legislation.