3 Reasons Virtual Data Rooms Are So Useful for Businesses
By Space Coast Daily // December 29, 2022
Any modern-day professional has either used or at least heard about the virtual data room software. That’s because online data rooms are playing a vital role in day-to-day data management needs as well as facilitating deal-making in all parts of the world.
Whether it is about M&As, licensing, capital raising, or joint ventures, deal makers turn to data room software for smooth, fast, and safer transactions. Is the data room only useful for deal-making?
Can any business use a virtual data room? How are VDRs different from other data management platforms? Most importantly, why should you use data room software for your business? You can find the answers in this guide.
What is a virtual data room?
A virtual data room or electronic data room is an online, secure, and remotely accessible document repository and a deal management platform that businesses primarily use for:
- Data management
- Communication
- Deal management
In broader terms, data rooms are a mixture of different types of technologies combined to simplify multiple necessary business operations.
For instance, it has data management tools to upload, categorize, organize, share, edit, analyze, annotate, and distribute documents.
Its communication tools, like chat messenger, audio calling, video calling/conferencing, Q&A modules, live polls, and group chat rooms, facilitate all types of communication.
Lastly, and most importantly, data rooms are turning out to be universal deal rooms where businesses and professionals of all types carry out financial transactions, including mergers, acquisitions, joint operations, consolidations, strategic partnerships, licensing, asset management, and real estate trades.
Virtual data rooms vs free cloud storage solutions
You can differentiate data rooms and free document repositories on multiple grounds. The biggest difference between the two is data protection.
Virtual data rooms have a wide range of security features, such as 256-bit SSL data encryption, remote device purging, document access control, fence view mode, and view-only mode.
These features are rarely available in free tools like DropBox. You can read more about the difference between Dropbox and VDRs at https://www.idealsvdr.com/blog/virtual-data-room-vs-dropbox/.
Communication tools are another major difference between these two platforms. You won’t find meeting management tools, chat messengers, and Q&A modules in free data management platforms. Similarly, these platforms don’t have data analytics, but virtual data rooms possess all these features.
Why should you use a virtual data room for your business?
Data rooms can make things simple for your business in multiple ways, and here are the top three.
- Unparalleled data protection
What do you think is the biggest challenge for businesses nowadays? Modern-day corporations have skilled workforce, investors, and digital media for better marketing campaigns. Yet, data protection or security remains the top concern for all types of businesses and even government agencies.
The definition of virtual data room software had the term “secure.” That’s because a VDR is not an ordinary document repository like other free data storage tools. A secure VDR is a product hosted by certified virtual data room vendors who are mainly ISO-certified and have several other regional certifications to their name. Here is how it gives protection to your business data.
Platform security
Security is a fundamental element in VDRs, and it should be a part of any virtual data room review during VDR selection. Virtual data room’s platform security consists of multiple features, including two-factor authorization, device purging, IP access restrictions, multi-factor authorization, and NDAs.
Document security
In addition to platform protection, a secure VDR boasts a multitude of document security tools. They may include fence view mode, document access control, document shredding, file tracker, digital watermarks, view-only mode, and document access revocation.
- Safer and faster business deals
Every business, in one way or another, has to deal with external business entities for deal-making or any other corporate reason. Virtual data rooms give you every necessary tool for deal or project management. You can manage joint ventures, collaborations, partnerships, and other activities through the data room. But how?
Data rooms can be used as central platforms during such transactions. Both sides can use it for safe data sharing. One party can limit the data access of other parties according to their needs. Anyone can add notes/comments or annotations, work on documents in real-time, create live document links, and whatnot.
Similarly, communication between both sides can easily take place in the data rooms. From 1:1 communication to meeting management, data rooms have got everything covered for you. You can use Q&A modules developed explicitly for real-time question/answer sessions. The best of all? Virtual data rooms have audit logs or detailed audit reports on all data room activities. Both sides can generate these reports, thus ensuring maximum transparency.
- Cost-effectiveness
Financial resources are scarce for every business, and you would love to save money without affecting the quality of your operations. Virtual data rooms help you save thousands of dollars that you may have to spend on paper, printing, and document compilation costs.
You can also minimize your meeting expenses, and data rooms minimize the need for managing costly databases.
Final words
Virtual data room software is a multi-dimensional tool that simplifies business data management, communication, and deal management. Most importantly, it reduces administrative expenses in your business.
Unlike a free data storage solution, a virtual data room possesses advanced data protection and communication capabilities. For this reason, it is the most reliable choice for data-heavy business transactions.
