The Importance of SOC 2 and ISO 27001 Compliance in the MSP Space

Published June 20, 2023
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Evan Pappas
SOC 2 and ISO 27001 for MSPs

As businesses become digitally mature, critical information is shared more often, and the need for improved data security rises.

Cybersecurity concerns are growing, and the consequences of a data breach can be heavy for both clients and their MSPs.

Policies and controls need to be in place to safeguard clients from information loss or a security breach. That’s why many MSPs are turning to compliance standards as a benefit for both clients and themselves.

Two of the most common standards to follow are System and Organization Controls 2 (SOC 2) and International Organization for Standardization 27001 (ISO 27001).

With these security standards, MSPs protect their clients’ sensitive data. By doing this, they also gain operational benefits for both their clients and themselves.

Certification in these standards can help clients meet compliance with other regulations too. They can even give an MSP a competitive advantage.

Let’s dig into what SOC 2 and ISO 27001 are, and why they matter to both clients and MSPs.

What are SOC 2 and ISO 27001?


SOC 2 is a compliance standard developed by the American Institute of CPAs (AICPA). This standard outlines how organizations should manage their customers’ information.

The SOC 2 standard is based on five principles known as the Trusted Services Categories. The first and most important principle is security. The other principles can be included based on the businesses needs. 

SOC 2 trust services categories

The SOC 2 audits can be flexible to focus on different criteria. While security standards are always required, the other four principles can be adjusted to the client’s needs. 

A SOC 2 report audits an organization to see how its policies and controls meet the data security standards. SOC 2 compliance is obtained through audit reports done by a CPA or accounting agency.

Passing the audits demonstrates that the business is SOC 2 compliant.

ISO 27001

ISO 27001 is an internationally-recognized standard for information security management systems (ISMS). It defines the best practices for data security management and security controls. 

Where SOC 2 had some flexibility, ISO 27001 is more rigid. It applies security standards universally. Meeting those standards is more complex, as it is an examination of the organization’s entire ISMS.

Businesses that want to improve their protection of sensitive data should strive to meet this standard.

Passing a compliance audit will earn a business ISO 27001 certification.

Because ISO 27001 has a broader scope than SOC 2 compliance, it can take more time and effort to complete.

Security compliance for MSP clients

With concerns around data breaches growing, MSPs need to prioritize data security compliance. 

Cybersecurity has become a primary concern for business in all industries. Especially for companies that are subject to other regulatory requirements.

Avoiding those data breaches is an important factor for all clients. The consequences of getting hit with ransomware can be devastating for a business. 

Not only does it compromise sensitive information, but the recovery process can be very expensive. Mishandling security has led to litigation, lost clients, and lost revenue. 

For clients complying with other government regulations, the threat of a data breach is even bigger. 

Businesses that deal in sensitive consumer data, like financial or healthcare institutions, must meet separate compliance requirements.

The Health Insurance Portability and Accountability Act (HIPAA) is one of the most well known compliance standards. It requires the security and privacy of individuals’ healthcare information. Violations can have expensive consequences. Violating this regulation can cost tens of thousands for your MSP and client.

With SOC 2 or ISO 27001, the data security policies in place will quickly meet any other government regulations.

This not only keeps clients data safe, but protects them from any fines caused by violating the regulation.

HIPAA violations can be costly for MSPs

Why is SOC 2 and ISO 27001 compliance important for MSPs?

The benefits of data security standards aren’t just for clients. Both MSPs and clients benefit from becoming compliant with these standards. 

With the ability to take a client through SOC 2 certification and become compliant themselves, an MSP will gain a big competitive advantage in the market. 

Customers want a service provider that can provide high quality security practices. An MSP that can bring their IT best practices up to standard is a valuable asset.

Being able to provide security compliance boosts an MSPs value and credibility to prospective clients. Your MSP will now be a prime candidate for prospects looking for a vendor with experience in SOC 2 compliance.

Of course, getting started on the steps to build to SOC 2 or ISO 27001 compliance can take time and effort. But the long term benefits MSPs see from these standards can make a big difference.

MSPs will be saving on long term costs and providing higher quality security for a long time.

Data security benefits MSPs

When a client knows their MSP is aligned with their goals, they build trust that any new policies will keep them safe. 

In the event of a data breach, an MSP can suffer damage to their reputation alongside monetary damage. MSPs could also be struck with lawsuits related to the data breach. 

That’s why these security standards can be a difference maker for MSPs. They not only protect your business, but improve your position in the market.

Taking SOC 2 and data security seriously

The value of compliance standards for data security can’t be overstated. Both SOC 2 and ISO 27001 allow MSPs to commit to security and data protection while also offering business advantages.

MSPs can develop credibility, trust, and value, and begin a path to growing their business. Not only will an MSP become a more attractive vendor to prospects, but they will be able to take on more clients with better service. 

Improving your business’ digital maturity is a surefire way to grow the business. With effort put into security compliance measures, you can scale up to meet the needs of clients.

MSP professionals from around the industry admit that the process takes time and effort, but the value they have seen has been more than worth it. 

As the MSP industry gets more competitive, take the opportunity to build a new advantage into your business. SOC 2 and ISO 27001 compliance are investments that will let your MSP thrive as the industry evolves.