Companies nowadays operate on two pillars, finance, and data. So they need data security in both storage and transmission. And no matter what industry, information security is critical to any firm.
In addition, businesses want to automate storing, retrieving, and transmitting data. How can they do that? With a secure data warehouse. These days, that’s the virtual data room or VDR.
What is VRD Used for?
In many cases, the data room for due diligence is used during an MA, loan syndication, or private equity and venture capital transaction. As part of this due diligence process, a physical data room has traditionally been used for document disclosure. However, virtual data rooms have widely supplanted more traditional physical data rooms for cost, efficiency, and security reasons.
Bankruptcy and dissolution is another application of online data rooms. Data room for bankruptcy provides a single secure interface to fetch all required data. In addition, restructuring VDR helps share data access to intended users.
Using VRD, you can perform audit and compliance control and thus simplify financial auditing, streamline your business processes, reduce the hassle, and lower costs.
What is more, confidential business communication is advantageous when you need to provide access to a single source of information to multiple users from any geographic location.
Key Market Trends
The IT and telecommunications sector is expected to take a significant share of the market of virtual data rooms.
- VDRs have evolved into online meeting rooms for everyone involved in the agreement. Collaboration between parties has become more accessible and reliable as VDR tools are available throughout the transaction journey. Security protocols for opening, sharing, and printing documents create a detailed trail for participants and auditors.
- Blockchain-based technologies are emerging to enhance data room security in the IT ecosystem. The use of online data rooms extends beyond M&A activity, as most business transactions are now conducted online. Many well-known IT and telecommunications companies have implemented integrated technologies that can offer them a fast and efficient flow of information and communication.
- The virtual data room has evolved throughout the IT space to become a tool to advance the entire enterprise. Thereby widely finding applications for transactions in various end-user enterprise segments with the growing use of cloud technology.
The Main Reasons to Invest in VDR Software
1. Data storage
Document storage is one of the biggest challenges for any business. Traditional physical storage options mean you must keep a stack of documents on paper. Well, essays spoil pretty quickly, and you may have to have a backup. Also, searching for documents is time-consuming, especially when you have hundreds or thousands of files on a single shelf.
However, you can eliminate all that with an electronic data room: no paperwork is needed. In addition, restoring any document or even a part of it will only take a few seconds.
2. Data security
A virtual data room stores your business data and keeps it secure. Storing data is one thing; keeping it secure is another. If you use regular free cloud software to store your business data, the chances are that hackers could easily break-in.
Virtual data rooms, on the other hand, are a much more secure option. VDR software provides maximum security through encryption and certain login features. For example, data sent from one location to another using data room software is fully encrypted. In addition, a two-way authentication process ensures that no intruder can hack into the system.
3. Operational efficiency
Imagine you need an assistant whose job is processing and organizing permissions and documents. To work correctly, your assistant must pass the appropriate items/documents to various departments within your company or outside parties/other businesses. In addition, this person must be an experienced IT professional or external IT service provider to meet your technology needs. Finding such a person can be a challenge, but fortunately, data room services have a solution because:
All accesses are secure and provided only to people with the proper permissions. So you don’t have to worry about accidental third-party access.
All processes are automated and easy to handle. As a result, your employees will have more time to focus on other essential things.
All data is stored in the cloud — no need to worry about external or local servers.
All documents are digital. You can get rid of all the paperwork and save money for your business.
4. Access restrictions
Sometimes businesses do not want to give their employees access to data. For example, if you don’t want your junior staff to access management-level data, you can set access restrictions for them. Data room software even allows you to restrict the uploading or print any particular document.
If you’re still using a physical data room, keeping a record of who accessed or used a document won’t be easy. But the electronic data room records every single action in the data room. For example, who accessed the data room and when? What file did they open or use? How much time did the user spend? You can quickly get all this information from the audit logs.
6. Remote Access
Another great feature of virtual data rooms is that you don’t have to return to the office on the machine. Getting one document is even more frustrating when you need something urgent, and your data room is far away. Data room providers give you the luxury of accessing your data anytime.
7. Secure disclosure of data to investors
Potential investors are going to like more and more information about your business. But, of course, you wouldn’t want to give full access to them. But, on the other hand, if someone has invested in your company, they have every right to know what’s going on with their investment. A virtual data room helps give them permission-based access to data according to their specific interests in your company.
How to Choose a Virtual Data Room
Your ideal data room would meet your business needs. However, it is essential to look for these things in any online data room software:
- How secure is the VDR? Does it meet security standards? Does it protect your business data with 256-bit encryption? Pay attention to other security features such as watermarks, audit logs, two-factor authentication, document download, or print restrictions.
- Is it easy to use? Always look for a VDR with an easy-to-use interface.
- How strong is the customer support?
- Does the service provider offer a free trial?
- Does it integrate easily with standard operating systems?
The virtual data room services market is highly competitive and consists of several major players. Few players are expanding their business in emerging economies by innovating in cloud and storage technologies. However, some new companies are expanding their presence in the market, moving into untapped market space.
A virtual data room can meet your requirements and business needs. And help in many ways at different stages. Some virtual data rooms are known for their collaboration tools. Others stand out for their security features. However, some elements are necessary, no matter which data room you choose. These are data room security, collaboration tools, ease of use, and customer support. Choose what is a priority for your business at the moment.