Business data management has never been safer and easier than it is nowadays — all thanks to virtual data rooms. Apart from high-level data security, digitalization is one of the biggest factors that triggered the growth of dataroom software.
In addition to that, the Covid-19 also pushed global businesses to look for online collaboration channels, and this was when the business world was able to explore the benefits of a digital data room.
If you haven’t heard about data rooms before, here is a complete guide for you. We will discuss:
- What is a virtual data room?
- What are the benefits of a data room for startups, companies, professionals, and enterprises?
- Who can use data room software?
- Who are the best data room providers in the market?
What is virtual data room software?
A virtual or electronic data room software is primarily a secure, cloud-based digital storage space globally used for storing, sharing, or managing business documents. A secure data room is regularly used by businesses to share important business documents with their employees, stakeholders, investors, or other parties.
The term secure here means that virtual data rooms are not like free online data repositories. Only a certified data room vendor (who complies with local and international security cyber security standards) can host a secure data room.
Other than data storage and sharing capabilities, data rooms are commonly used for centralized online business communication. Any high-end virtual data room is enriched with a wide range of communication tools, including chat messengers, audio and video conferencing tools, polls, Q&A modules, group chats, and integration with external communication apps.
Lastly, an electronic data room is one of the best project management solutions available in the market right now. VDRs are commonly employed for mergers, acquisitions, joint ventures, business partnerships, and commercial real estate deals.
Who can use a virtual data room and what for?
Data room software is a for-all solution, and it is equally beneficial for any type of business. Here are some common consumers of virtual data rooms:
- Investment banks
- Financial institutions
- Insurance companies
- Private equity firms
- Healthcare industry
- Education sector
- Legal industry
- Oil and energy
- Freelancers
- Service providers
- Nonprofit organizations
- Real estate industry
Data rooms are commonly used for M&As, portfolio management, project management, joint ventures, strategic partnerships, real estate deals, litigation, asset management, initial public offerings, fundraising, data storage, and online business communication.
What are the benefits of virtual data rooms for businesses?
The data room serves various industries in different ways. However, here are some very common benefits of data room software for your business.
1. Easy data management
Managing paper documents or decentralized databases are not only expensive but also require more staffing. It is obvious that when a business keeps multiple databases, it needs more employees to manage them.
On the contrary, data management becomes way easier with virtual data rooms. That’s because VDRs are centralized, online platforms that can store any type of business data in any recognized format. You can upload audio files, videos, images, documents, podcasts, presentations, etc.
Most importantly, the management can keep all business documents in one place and manage them with more ease.
2. Data room security
Businesses, startups, firms, government agencies, or other consumers primarily use virtual data rooms because of their unparalleled security. A secure data room has multiple layers of security that protect the data room and the documents stored in it.
The protection starts from the very first step; the data room providers employ two-step verification to restrict the entries of hackers and unauthorized users.
A device connected to a virtual data room is locked if a user enters the wrong credentials repeatedly during a login attempt. The VDR management can remove any device from the data room whenever needed.
Lastly, virtual data rooms allow you to generate audit reports that give comprehensive details on all virtual data room activities.
3. Document security
In addition to data room security, a VDR has many document security features. For starters, the data room administration can set document access restrictions on any user (or group of users). Users can be restricted from accessing, editing, altering, printing, saving, sharing, or downloading any document.
Similarly, the management or file owner can revoke document access anytime, even if other users are viewing the file or have downloaded it. Users can also create self-destructing documents that will be deleted after the specified time. A file creator can use digital watermarks to track all the changes made in the document and avoid plagiarism claims from others.
4. Reduced administration expenses
Studies revealed that all expenses related to paper and printing costs consume 3% of the total revenue of companies. Another research stated that an average company in the USA spends $400,000 annually on paper and printing costs. A virtual data room can help your business save hundreds of thousands of dollars on yearly paper, printing, and travel expenses, as it stores all files digitally and securely, in one centralized space.
Top 5 virtual data room providers
Based on their features, utility, customers’ reviews, and overall effectiveness, here are some of the best virtual data room providers:
- iDeals
- Merrill
- Firmex
- Digify
- SecureDocs
Rounding it up
Virtual data rooms bring automation to your business; they give you a platform to manage your highly confidential documents and keep your communications on one platform. What makes them unique is their security features, ease of use, and cost-effectiveness.
Consider using a virtual data room if you haven’t used it before — enjoy its long-term beneficial impact on your business.