DPDP ACT’S IMPACT ON SAP CUSTOMERS

Introduction:

In a landmark move, India’s President recently granted assent to the Digital Personal Data Protection Act, 2023 (DPDPA). This groundbreaking legislation is set to revolutionize the protection of personal data, placing a significant burden on entities entrusted with processing such information. Among the entities likely to feel the profound impact of the DPDPA are SAP (Systems, Applications, and Products in Data Processing) customers, whose responsibilities in handling personal data will be scrutinized under the new regulatory framework.

The DPDP Act is the first of its kind in India, reflecting the growing global concern over data privacy and the need for stringent measures to safeguard users’ digital information. For SAP customers, who rely on the robust SAP ecosystem to streamline their business operations, compliance with the DPDPA becomes imperative to ensure the responsible handling of personal data.

Exploring the Range: Identifying Key Segments and Industries Among SAP Customers:

SAP is a leading software provider based in Germany. SAP is best known for its enterprise software solutions that help businesses efficiently manage their operations and customer relations. 

This allows them to enhance their business processes and facilitate integrated operations. SAP encompasses several key dimensions. These are as follows: 

• Enterprise Software: SAP offers a wide range of enterprise software applications and assists businesses in automating their processes across various departments such as human resource, finance, marketing and sales. 

• ERP (Enterprise Resource Planning): ERP software is at the core of SAP’s offering. It is a flagship product that enables organisations to integrate and manage diverse businesses activities within a unified system, fostering an efficient and smooth data flow and communication across departments. 

• CRM (Customer Relationship Management): SAP offers CRM software that assists organizations in facilitating and handling various activities such as customer relationships, tracking sales, marketing endeavours, and thereby improving customer support services.

• Industry-Specific Solutions: SAP provides industry-specific solutions, tailoring its offerings to sectors like retail, healthcare, manufacturing, and finance. Thus, SAP caters to the distinctive needs of businesses in these domains.

• Cloud Services: SAP provides cloud-based solutions, allowing organizations to access software and data remotely, fostering flexibility and scalability while minimizing on-premises infrastructure requirements.

• Analytics and Business Intelligence: SAP’s software provides various tools, including those for analytics and business intelligence. Therefore, it empowers organizations to make informed decisions and gain insights into their operations, helping them take efficient measures.

• Integration: Designed for seamless integration with other systems and technologies, SAP software facilitates smooth data exchange and interoperability with third-party applications.

SAP is a major player in the business world and a leading Enterprise Resource Planning (ERP) provider in the market. Its products and services are used by various organizations, ranging from manufacturing industries and retail to healthcare, automotive, government agencies, and public sector organizations. 

Key Impacts of DPDPA on SAP Customers:

• Data Processing Obligations: Section 3 of the DPDPA is applicable to the processing of data within the territory of India, whether the data is in digital or non-digital form and subsequently digitalized. This means that any SAP customer, acting as a Data Fiduciary and involved in the processing or handling of personal data in any form, must comply with the mandates outlined in the Act. These requirements include measures such as providing consent notices and obtaining explicit consent, among others. 

• Extended Jurisdiction: The DPDPA applies to the processing of data within the territory of India. However, if the processing is taking place outside the territory of India and is in connection with offering goods and services to Data Principals within the territory of India, then the DPDPA will apply. Consequently, SAP customers based outside of India will be affected by the Act as they are obliged to comply with its various requirements.

• Data Minimization and Purpose Limitation: The DPDPA emphasizes that only data which is necessary for offering a particular service should be collected. In other words, it emphasizes upon the principle of data minimization and purpose limitation. Therefore, SAP customers should only collect relevant data for intended purposes and not beyond that. 

• Notification of Personal Data Breach: Section 8(6) of the Act provides that in the event of any personal data breach, the Data Fiduciary should inform the Data Protection Board and the affected Data Principal. Therefore, SAP customers should follow this diligently, and in the case of a breach, they should take the measures as stated above. 

• Data Security Measures: The paramount aim of DPDPA is to safeguard the data of individuals. Therefore, the DPDPA mandates that Data Fiduciaries shall implement appropriate technical and organizational measures to ensure the effective observance of the Act. Consequently, SAP customers must implement robust measures to protect personal data from any unauthorized access or disclosure, among other potential risks. These measures include periodic Data Protection Impact Assessment, periodic audit etc. 

• Appointment of Data Protection Officer: Section 10(2) of the Act states that a significant Data Fiduciary shall appoint a data protection officer who shall represent the significant Data Fiduciary under the provisions of this Act, and such data protection officer must be based in India. Therefore, SAP customers falling under the category of a significant Data Fiduciary must appoint a data protection officer.

• Cross-border Data Transfer: The DPDPA provides that the central government may, by notification, restrict the transfer of personal data by a Data Fiduciary for processing to such a country or territory outside India. Therefore, SAP customers engaged in the international transfer of data must adhere to thisand avoid transferring any personal data to such countries.

Mitigating Measures for SAP Customers:

The DPDPA will have a profound impact on SAP customers. They must comply with the mandates outlined in the law; otherwise, they will be liable for heavy penalties as stipulated in the Act. To demonstrate greater compliance with legal requirements, they must take some mitigating measures, such as:

• Comprehensive Data Audit: SAP customers should conduct an audit of all the personal data they are processing to ensure compliance with the mandated requirements, such as purpose limitation and data minimization.

• Privacy by Design: SAP customers should integrate privacy considerations into the development and deployment of SAP solutions to proactively address data protection requirements.

• Employee Training and Awareness: Efforts should be made to ensure employees are aware of the legal requirements. They should receive training to ensure compliance with the law, specifically regarding how to handle and process the personal data of individuals. Adequate training should be provided to them for this purpose.

• Data Breach Preparedness: SAP customers should develop robust measures to respond to any kind of data breach or security-related incident, as mandated by the DPDPA.

• Regular Compliance Audit: SAP customers should conduct regular compliance audits to check adherence to DPDPA requirements. 

Conclusion:

The Digital Personal Data Protection Act, 2023, brings a notable change to India’s data protection landscape. SAP customers, key players in various leading industries, have been impacted by this shift and now must demonstrate greater preparedness and adherence to obligations while processing personal data or providing any services. The Act necessitates a comprehensive approach to data processing, security, and compliance. As SAP customers navigate the complexities of the DPDPA, a proactive and strategic approach will not only ensure compliance but also contribute to building trust with users and stakeholders in the evolving landscape of data protection.