SOC 2 vs ISO 27001: A Startup's Guide to Choosing the Right Security Certification

As your startup scales, you'll inevitably face the question of which security certification to pursue. Security and privacy certifications are becoming a standard in the tech industry and a necessity when pursuing enterprise customers. Two of the most common options are SOC 2 and ISO 27001. While both demonstrate a strong commitment to security and data protection, they serve different purposes and come with distinct advantages.

Let's break down each certification and help you determine which is right for your startup.

Understanding SOC 2

SOC 2 (Service Organization Control 2) is an auditing procedure developed by the American Institute of CPAs (AICPA) specifically for service providers storing customer data in the cloud. It focuses on five trust service criteria (TSC):

1. Security: Protection against unauthorized access (required in every SOC 2 audit)

2. Availability: System availability for operation and use

3. Processing Integrity: System processing is complete, accurate, and timely

4. Confidentiality: Information designated as confidential is protected

5. Privacy: Personal information is collected, used, retained, and disclosed in accordance with commitments

There are two types of SOC 2 reports:

- Type I: Evaluates systems and controls at a specific point in time

- Type II: Assesses these systems and controls over a period (usually 6-12 months)

Understanding ISO 27001

ISO 27001 is a part of the ISO/IEC 27000 family of standards, and is an international standard that provides a framework for Information Security Management Systems (ISMS). This standard includes:

- 114 controls across 14 domains

- A systematic approach to managing sensitive company information and risk-based approach to information security

- A process-based approach that emphasizes continuous improvement

- Regular risk assessments, management reviews, and clear documentation requirements

Key Differences

Scope and Focus

- SOC 2: Primarily focused on software companies and cloud service providers

- ISO 27001: Applicable to any organization (regardless of industry or size)

Geographic Recognition

- SOC 2: Widely recognized in North America

- ISO 27001: Stronger international recognition (particularly in Europe and Asia)

Audit Process

- SOC 2 requires an audit by a licensed CPA firm and yields a detailed report of findings (Type I/Type II)

- ISO 27001 certification is performed by accredited certification bodies, results in a pass/fail certification

Maintenance Requirements

- SOC 2 Type II: Annual audits

- ISO 27001: Annual surveillance audits annually, recertification every three years

Making Your Decision: Key Criteria for Startups

When deciding between SOC 2 and ISO 27001, consider the below factors:

1. Customer Base and Market

- If your customers are primarily in North America, SOC 2 may be a better option

- For international expansion, ISO 27001 is usually a better investment

- Check for industry-specific requirements

2. Resources and Timeline

- SOC 2 Type I can be achieved relatively quickly (3-6 months), and a Type 2 report can have a minimum observation period of 3 months

- ISO 27001 typically takes longer (6-12 months) but provides a more comprehensive framework

- Consider your team's capacity for documentation and process implementation - using a GRC software to automate compliance can also cut down the amount of time needed to prepare for an audit

3. Business Model

- B2B SaaS companies often benefit more from SOC 2

- Companies handling sensitive data across various industries might benefit more from ISO 27001's broader scope

4. Growth Strategy

- Planning international expansion? ISO 27001 is typically the better option

- Focusing on enterprise customers in the US? SOC 2 is typically sufficient

5.  Budget Considerations

- Initial certification costs

- Ongoing maintenance expenses

- Internal resource requirements

- Potential consulting needs

Recommendation Framework

To determine which certification to pursue first, consider these initial questions:

1. Where are most of your current and target customers located?

2. What certifications do your competitors have?

3. What's your timeline for achieving certification?

4. What's your available budget for the certification process?

5. Do you have the internal resources to maintain the certification?

Another factor to consider is whether or not you can pursue multiple certifications simultaneously, specifically with those that have significant overlap. For example, if you are pursuing either a SOC 2 or ISO 27001, there is significant overlap with GDPR - many times, audit firms with provide better pricing when you package multiple certifications together, as well as GRC platforms to assist with the preparation process.

Making the Final Decision

Many startups find that SOC 2 is a good starting point because:

- It's more specific to technology companies

- The initial scope can be limited to security only, with additional TSC to be added as-needed and as they are applicable to the industry

- It's highly recognized in the North American market

- The Type I report can be achieved relatively quickly, and Type II has a minimum observation period of 3 months

ISO 27001 might be the better choice if:

- You're targeting international markets

- You need a more comprehensive security framework

- You want a certification that covers your entire organization

- You're in a highly regulated industry

Remember that these certifications aren't mutually exclusive. Many organizations eventually pursue both, starting with the one that provides the most immediate value to their business. SOC 2 is certainly a lower lift than an ISO 27001.

Next Steps

Regardless of which certification you choose to pursue, start by doing the below to ensure you are using the right information to inform your decision:

1. Conducting a gap analysis

2. Documenting current security practices

3. Identifying required policy and procedure updates

4. Creating a realistic project timeline

5. Allocating necessary resources

The key is to select the certification that aligns with your business goals, customer requirements, and available resources. Both SOC 2 and ISO 27001 provide significant value – the right choice depends on your specific circumstances, industry requirements, and long-term objectives.

Ready to Get Started?

Don't navigate the certification journey alone. Frameworks Labs specializes in helping startups prepare for and achieve their security certifications efficiently and effectively. Our team of experts can guide you through the entire process, from initial assessment to final certification. Whether you're leaning toward SOC 2 or ISO 27001, we'll help you make the right choice and implement the necessary controls and processes using leading GRC software to achieve continuous compliance. Contact Frameworks Labs today to schedule a consultation and take the first step toward achieving your privacy and security certification goals.