The digitalization era is at its prime, and businesses are rapidly switching to automation. Whether it is sales, financial records, day-to-day tasks, data storage and management, or human resource management, companies are now looking forward to automating everything.
One of the most common and fast-growing software, virtual data room, has become an integral part of businesses from almost all industries. Online data room software caters to all data storage and management needs. If you don’t know what virtual data rooms are, or are new to this terminology, here is what you need to know.
What is a virtual data room?
Virtual data room, also known as electronic data room, is an online repository or storage space that allows the users to safely store and share data with other authorized users. Apart from that, virtual data rooms are also a great mode of intra-organizational and inter-organizational communication. Not to mention, a data room also serves as a virtual meeting place for professionals inside and outside the organization.
Virtual data rooms have been in the market for so long now, but the VDR market has seen immense growth in the past few years. That is mainly due to the fact that corporations now prefer a “paperless” approach, and virtual data rooms are the best option right now.
What type of data can a business store in a virtual data room?
Data room software can be a suitable option to store any type of business data. It may include day-to-day reports, financial records and statements, licenses, tax records, investment details, bank records, shareholders’ data, and employees’ information. To be honest, there is a never-ending list of documents you can store in a virtual data room.
Virtual data rooms are also a very safe option for businesses to store their highly confidential information such as patents, secret formulae, intellectual properties, copyrighted information, and other intangible assets of the highest importance.
Who can use virtual data room software?
Virtual data rooms have become a vital part of different enterprises from various industries. Businesses are using data room services for different purposes. Here are some business sectors that use data rooms:
- Banks and mortgage brokers often use virtual data rooms for collecting, storing, and sharing documents related to loan applications and processing.
- Accounting firms and CPAs use data room software for tax preparation, PBC list management, audit, and managing/organizing clients’ data.
- Legal Firms are one of the biggest users of VDRs as attorneys use data rooms for tax and preparation, estate planning, and storing and sharing sensitive information with relevant parties during the litigation process.
Apart from that, virtual data rooms are often used by
- Business brokers and investment banks
- Venture capital firms
- Capital equity firms
- Corporate project teams
- Small business owners
- Tech-oriented companies
- Pharmaceutical and biotech companies
- Energy and mining companies
- Mergers and acquisitions
What are virtual data rooms commonly used for?
Virtual data rooms are used for various purposes, including:
- Data storage and sharing
- Mergers and acquisitions
- Due diligence
- Internal and external audits
- Strategic partnerships
- Communication between board members
- Management of intellectual properties and intangible assets.
- Initial public offerings (IPO)
What are the benefits of using an electronic data room?
An online data room software can help a business in so many ways; here are some of its premium benefits.
1. Secure data storage
One of the biggest advantages of a virtual data room is its unbreakable security. Data room providers use different security measures such as two-way authentication to minimize the chances of unauthorized access. The data encryption features make sure that the data is shared in an encrypted form, and only the destined purpose can decode it.
2. Restricted access
Virtual data rooms allow the administration to set access limitations for different users according to their roles and authority. This ensures that nobody can access data they are not supposed to be accessing.
3. Cost-efficiency and ease of use
Online data room software is a budget-friendly option. You don’t have to pay for physical storage spaces, paper costs, stationery costs, printing costs, etc. The subscription costs for virtual data rooms vary in different service providers, and you can choose a pricing model as per your business needs. Most importantly, virtual data rooms are easy-to-use.
Here are some other benefits of using virtual data rooms;
- You can set restrictions on downloading or printing any document.
- You can add dynamic watermarks on documents or pages for security reasons
- As an administrator, you can monitor all the activity in the data room.
Top things to look for in a virtual data room
Different virtual data room providers offer various features. However, here are some essential things to consider for choosing the right data room provider for your business.
- Data security standards such as FINRA, ISO 27001, etc.
- VDR features according to your business needs
- Options for customization
- Customers’ feedbacks
- Reports for tracking all activities in the data room
- Document access controls
To make the right choice of a data room provider, conduct your own data room comparison. To make it efficient, compare virtual data rooms from different aspects such as pricing models, features, security certifications, customer feedback, etc.
Virtual data rooms are rapidly becoming a need for businesses rather than just an option. With the world switching to online channels, it is time for your business to go with the flow. If you have not used a data room for your company, it is high time you start using one.