Virtual data rooms are rapidly replacing the orthodox modes of data management in the global corporate sector. They are not only changing the face of document management but revamping financial business transactions.
But what exactly this dataroom software is, and how is it different from our orthodox data management tools? What can you do with the data room software? Which businesses can use data rooms for their ever growing demands?
Here is a guide to virtual data rooms that answers all your questions. Let’s start with the basics.
What is a virtual data room?
Virtual data room (VDR) is a secure online database and a virtual collaboration platform to manage corporate or personal documents and streamline communication between the concerned parties.
A secure VDR is a product managed or hosted by a certified virtual data room provider. That provider necessarily follows the cyber security and digital data management protocols set by international and regional bodies. Some of these organizations include ISO, FINRA, HIPAA, FISMA, GDPR, etc.
You can read more about how data rooms ensure data security at https://www.idealsvdr.com/.
Why is virtual data room different from free cloud platforms?
Why are virtual data rooms different when you can store data on free platforms like DropBox? Here is why:
- Virtual data rooms either have modern-day meeting management tools like voting tools, electronic signatures, and HD audio and video calling tools, or allow integration with external software. You won’t get this feature in free data storage tools.
- Many data storage platforms don’t have built-in tools for file editing, conversion, sharing, annotation, and distribution, while a secure VDR has tools for all these.
- Data room software has strong, AI-backed data analytics, a feature you will hardly find in any free data storage platform.
- Unlike free tools, virtual data rooms have multiple project management features.
- Security is one of the biggest differentiators between VDRs and free tools. You will rarely find the 256-bit data encryption feature in these free platforms.
What is a virtual data room used for and who can use it?
The data room technology is available and effective for any business type and size. This is why nonprofits, commercial organizations, public organizations, government institutes, unions, clubs, and associations, can all use data room software.
Virtual data rooms are common in businesses like oil and energy, banks, insurance companies, credit card companies, financial advisories, hospitals, pharmaceutical companies, the life science industry, the education sector, the telecommunication industry, and the IT sector.
You can use virtual data rooms for data storage, board communications, data distribution, due diligence, M&As, fundraising campaigns, IPOs, licensing, prospecting, consolidations, joint ventures, clinical trials, strategic partnerships, risk management, capital asset management, and real estate management.
Benefits of virtual data rooms
- Better data protection
Businesses trust virtual data rooms because of their robust data security features.
Data rooms generally boast all the modern-day security features that may include digital watermarks, 256-bit SSL data encryption, two-factor authorization, multi-step verification, document access control, IP access restrictions, remote device purging, fence view mode, and document access revocation.
- Faster deal management
Electronic data rooms provide deal-makers with everything they need to manage a transaction smoothly in one place. That said, they can use VDRs as a central point for data sharing and communication.
That is why virtual data rooms are highly used in M&As and other similar transactions. Most importantly, the technology gives you full control over how you want to share and distribute your sensitive information.
- Efficient working
Virtual data rooms improve workplace efficiency automatically. When you have a platform where your employees can share any volume of data in a few seconds, update documents really fast, communicate in real-time, and arrange business meetings at short notice, they can save a lot of their time and use it more productively.
- Cost-effectiveness
Even after all the unparalleled benefits and features mentioned above, data room software is highly cost-effective as well. It can simply minimize or eliminate the need for paper documents which can consume thousands of dollars a year. You can use them for virtual business or board meetings to avoid traveling costs and other meeting expenses.
Top 5 virtual data room providers in 2023
The following are highly reputed and globally recognized virtual data room providers for you to go for in 2023:
- iDeals — known for their premium security features and usage in the legal industry, real estate, life sciences, board communications, and M&As
- DealRoom — very effective for M&As and corporate development
- Google Workspace — suitable for small businesses and virtual meetings of large scale
- Merrill Datasite — well known for M&As and due diligence
- irmRoom — suitable for deal management
