Why Virtual Data Rooms are Important in the Modern Corporate World

June 11th, 2016

Virtual data rooms (VDRs) are one of the fastest growing sub-sectors of the innovative cloud storage industry. They offer similar advantages as public cloud services do to clients including scalability, cost and convenience. However, security is absolutely paramount in Virtual data rooms. This is the main reason why many companies are seeking these services to safeguard their data. Data rooms are used by many entities ranging from financial institutions to mining companies. Of late however, these rooms have become especially important when a deal is currently underway between two or more companies.

Why Virtual Data Rooms are Preferred over Physical Data Rooms

The data room is a secure location where all data pertaining to a particular deal or company is stored. This includes sensitive information like the company’s finances, specifics of the deal or its background information. A physical data room (PDR) makes it easy to monitor access to the information stored therein. However, since it acts as the centralized repository of documents, anybody who wishes to access the information stored in it has to physically travel to its location.

This is quite inconvenient considering the fact that the world today has been reduced to a global village by the Internet. With deals like mergers and acquisitions taking place between companies located in different parts of the globe, using the internet is more prudent when accessing and storing information. This is the main reason behind the emergence of the virtual data room and why it has gained mainstream popularity globally. In a high stakes deal, using platforms like email to send and receive information is not secure; thus, totally unacceptable.

VDRs are highly secure, and cloud-based, data repository centers that enable access to documents and files of a company in a secure environment. The VDR is a central server that contains all the relevant documents of a company and has an extranet connection. This is a well-secured internet connection whose access is secured from the outside world. Extranet access to VDRs is controlled by an administrator who is charged with granted access levels to concerned parties.

This means that no one can gain access to the stored documents without permission. What’s more, every activity in the data room is monitored and tracked. This creates a secure environment that allows the sharing of critical business information with external parties including customers, lawyers and partners. Users can access this information from anywhere in the world provided they have an internet connection.

What to Look Out for in Potential VDR Providers

It is important to consider several things before selecting a competent VDR provider. There are several providers already operating in the market each offering similar services. So the question is, how does a company choose a good VDR provider? Below are key considerations to look out for.

Strong Security

Security is the main concern when looking for a provider. This is because corporate financials and documents are highly sensitive. Some basic security features that one should look out for include 256 or 128b data encryption, dynamic watermarks, data backups, audit logs, two factor authentication, SAS certification, user permissions and presence of tiered access levels. One should ensure that the VDR provider they are considering offers all the specific features desired.

Pricing Structure

The cost of hiring these services should be reasonable and known to the client. Enquire about any hidden costs and extra fees charged for additional features or storage. Always look beyond monthly fees charged and find out the total cost of these services when all is said and done. Additionally, ask the provider what their ongoing fees are after the expiration of the initial contract.

Technical Support

What support does the VDR provider offer to its clients? It is important to ask whether unlimited support costs extra, or if these services are covered in one package. Since a company is securing its most valuable data and information, it only makes sense that ready technical support should be offered round the clock. A company should also look out for any instructional videos, training and FAQs.

Ease of Use

Complicated software has an impact on efficiency because it can cause several delays and frustrations. It is prudent to look for a virtual storage room that is easy to access and use for convenience purposes. Simple features like bulk uploads, drag and drop tools, web-based access as well as automatic logging are important. Furthermore, one should consider whether the implementation process is easy or complicated.

Free Trial

A free trial is an important feature because it allows the client to test the services offered by a VDR provider before making any final decisions. The company can get a realistic feeling of the provider’s products and service delivery.

Due diligence is required when sourcing for a suitable VDR service in the market. These services are more economical and secure when compared to other solutions including hiring an IT individual or firm to offer similar services.

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