What is SOC 2? A 2025 introduction to understanding and achieving SOC 2 compliance

In a world where data breaches and cyberattacks dominate headlines, customers increasingly ask MSPs one important question: Can we trust you with our data? 

For service organizations, especially those in the cloud, SaaS, or IT industries, proving that trust often begins with achieving SOC 2 compliance.

But what is SOC 2, and why is it so important? 

SOC 2 was introduced by the AICPA in 2010 to provide a modern compliance framework focused on cloud-based services and data security. It evolved from earlier SOC and SAS 70 standards, with a sharper focus on privacy, availability, and confidentiality in today’s interconnected world.

Over time, SOC 2 has become one of the most recognized and requested certifications for B2B service providers.

This guide will walk you through the essentials of SOC 2 in 2025: what it is, who needs it, how audits work, and what it means for your MSP.

What Does SOC 2 Stand For?

SOC 2 stands for System and Organization Controls 2. It was developed by the American Institute of Certified Public Accountants (AICPA) to provide a standardized way for organizations to demonstrate their commitment to securing customer data. 

Unlike prescriptive compliance frameworks like PCI DSS or HIPAA, SOC 2 is a flexible and customizable set of controls based on your business model and how you handle data. It’s especially relevant for technology and cloud-based service providers.

Why Is SOC 2 Important?

We live in an era of near-constant data exposure. 

According to IBM’s 2025 Cost of a Data Breach Report, the average cost of a data breach was $4.44 million. The majority of breaches, 53%, involved customers’ personally identifiable information (PII).

A single breach can cost millions—not just in fines or legal fees, but in lost customers and damaged reputation.

SOC 2 reduces that risk while signaling to your customers that you’re serious about data protection. For many SaaS providers and MSPs, a SOC 2 report has become a critical competitive differentiator and sales enabler.

What Is SOC 2 Compliance?

SOC 2 compliance means that your organization has established and follows strict information security policies and procedures that meet the five Trust Services Criteria:

1. Security (required): Protect systems against unauthorized access and threats.
   
2. Availability: Ensure systems are operational and accessible when needed.
   
3. Processing Integrity: Guarantee that system processing is accurate, timely, and authorized.
   
4. Confidentiality: Protect sensitive business information from exposure.
   
5. Privacy: Handle personal data in accordance with customer expectations and regulations.
   

During a SOC 2 audit, an independent CPA firm evaluates how well your internal controls meet one or more of these criteria.

Note: Every SOC 2 audit must include the Security criterion, while the others are optional depending on your service offerings.

What Is a SOC 2 Audit?

A SOC 2 audit is conducted by an independent CPA who is authorized to assess your organization’s security controls.

Here’s what the process generally includes:

• Review of your company’s internal policies and technical controls
  
• Examination of systems and infrastructure
  
• Testing of how well your processes operate in practice
  
• Interviews with your staff and stakeholders
  
• Evaluation of your controls against the selected Trust Services Criteria
  

The result is a detailed SOC 2 report, which outlines the auditor’s findings. This report can be shared with clients or prospects to demonstrate your compliance status.

SOC 2 Type I vs. Type II: What’s the Difference?

There are two types of SOC 2 reports, and the difference comes down to timing and depth:

• SOC 2 Type I assesses your controls at a single point in time. This report does not evaluate the operating effectiveness of the controls themselves. A Type 1 evaluation report is generally the first step for a company.
  
• SOC 2 Type II evaluates how well your controls operate over a period of time, usually 6 to 12 months. An auditor assesses the controls’ operating effectiveness and completeness of the evidence collected. The auditor provides an opinion and detailed description of tests of controls performed and those tests’ results.
  

If you’re just starting out and need a fast report, a Type I might suffice. But increasingly, customers are demanding Type II reports for better assurance.

Pro tip: If you’ll eventually need a Type II report, it’s often more cost-effective and credible to start there.

Who Needs a SOC 2 Report?

Any service organization that stores, processes, or transmits customer data should consider SOC 2 compliance. This includes:

• SaaS providers
  
• Cloud platforms
  
• Managed service providers (MSPs)
  
• Fintech, Healthtech, or EdTech companies
  
• Data analytics firms
  
• Any vendor in a regulated or security-sensitive industry
  

Customers increasingly expect a SOC 2 report before doing business, especially enterprise clients. In many industries, SOC 2 is no longer a “nice-to-have,” it’s a requirement to win deals or move upmarket.

SOC 2 vs. SOC 1 vs. SOC 3: What’s the Difference?

If you’re researching SOC reports, you’ll likely run into three flavors:

• SOC 1: Focuses on financial reporting controls. Useful for companies impacting their customers’ financial statements (e.g., payroll processors).
  
• SOC 2: Focuses on information security and data privacy.
  
• SOC 3: A simplified, public-facing version of a SOC 2 report. SOC 3 reports are meant for marketing, not deep technical validation.
  

For most SaaS and IT organizations, SOC 2 is the standard you need.

SOC 2 Controls: What Needs to Be Implemented?

Unlike frameworks with a fixed control list (like PCI DSS), SOC 2 lets you design your own controls, as long as they map to the Trust Services Criteria.

That means you’ll need to implement and document:

• Access controls (e.g., role-based access, MFA)
  
• Change management procedures
  
• Risk assessments
  
• Incident response plans
  
• Employee training programs
  
• Vendor risk management
  
• Logging and monitoring mechanisms
  

The flexibility is great, but it also means you need strong documentation and an audit-ready posture.

Is SOC 2 Mandatory?

SOC 2 is not a legal requirement, unlike HIPAA or GDPR. But in practice, it may feel mandatory, especially when:

• Prospective clients won’t sign until they see your SOC 2 report
  
• Procurement teams demand it during security reviews
  
• Your competitors are already compliant and using it as a sales tool
  

In that sense, SOC 2 is often required by the market, even if it’s not enforced by law.

Final Thoughts: Why SOC 2 Compliance Matters in 2025

SOC 2 is more than a checkbox, it’s a framework that builds trust, transparency, and resilience. In 2025, as cyberattacks grow more sophisticated and customers demand greater accountability, SOC 2 compliance sends a clear signal:

We take your data seriously.

Whether you’re preparing for your first audit or looking to renew an existing SOC 2 report, now is the time to invest in strong, sustainable security practices. It’s not just about passing an audit,it’s about protecting your business for the long haul.That’s where ScalePad’s ControlMap comes in. Our platform streamlines the entire SOC 2 process—from evidence collection to continuous monitoring—so you can move faster, stay compliant, and build long-term trust with your clients.