What started more than a decade ago has now become an integral element in modern businesses around the globe. Virtual data rooms (VDRs) have brought revolutionary changes in business data management. A digital data room is one of the most sophisticated business solutions of the 21st century that has turned the concept of virtual workspaces into reality.
Today, we are going to tell you everything you need to know about virtual dataroom software, including its benefits and common use cases.
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What is an electronic data room?
An electronic data room is a cloud-based data storage space where businesses or professionals can store and exchange sensitive and routinely-used business data.
An online data room is equipped with the latest document management tools, collaboration tools, and project management tools. That is why modern businesses are shifting from paper documentation systems to VDRs.
Professionals, employees, freelancers, and business teams can safely share documents and communicate on VDRs. They can work on shared documents, arrange audio and video meetings, start polls, cast votes, and hold Q&A sessions in real time. Most importantly, all of this happens in a controlled, centralized space.
Lastly, modern data room software can be turned into virtual deal rooms for bigger financial transactions like asset purchases, mergers, acquisitions, joint ventures, fundraising, initial public offerings, partnering, and real estate transactions.
What types of businesses can use virtual data rooms?
Virtual data rooms are mega solutions that can cater to the needs of all types of businesses, including corporations, enterprises, small businesses, firms, partnerships, nonprofit organizations, unions, freelancers, independent contractors, etc.
Here are some most common use cases of digital data room software:
- Mergers and acquisitions
- Real estate firms and agents
- Lawyers and law firms
- Finance experts/financial advisors
- IT firms
- Oil & energy industry
- Investment bankers
- Initial public offerings (IPOs)
- Pharmaceutical companies
- R&D firms
- Healthcare industry
- Education sector
Advantages of using data room software
1. Secure data storage
Secure data storage is the primary function of any virtual data room software. VDRs allow businesses to store data in multiple file formats, including videos, audio, documents, images, etc. The “drag-n-drop”feature makes it very easy to upload files in bulk — just select the files you want and drag them to the VDR.
The term “secure” data storage means digital data rooms provide maximum protection from hackers or data leaks. With the multi-factor authentication feature, it is very difficult for the hacker to get through even after getting a user’s password. Even if a hacker gets access by pretending to be a registered user, the remote purging feature allows the data room administration to remove that logged-in device and all the VDR data in it.
Pro-tip: always use certified data room services. Certified virtual data room vendors are licensed service providers that comply with major data security standards, including SOC2, FINRA, ISO27001, etc.
2. Data organization and automation
Virtual data rooms make data organization or automation very easy. The data room users or management can upload files and categorize them in folders and subfolders. For easy file retrieval, users can search any file via name, keyword, file type or size, or phrase. Moreover, search tags can be added to simplify the search process further.
Virtual data rooms allow you to automate multiple processes. You can share a document with multiple users simultaneously. You can also schedule a document to be shared at a future date or time. The electronic signature feature makes it possible to sign any documents electronically. Moreover, a multiple number of users can work on shared documents.
3. Control over business data
A digital data room gives you total control over your business data. The data room administration can decide who can access documents, folders, or even a section of any folder or document.
Apart from that, the administration can set restrictions on editing, downloading, saving, or printing any document. In fact, the “fence view” mode in modern virtual data rooms makes sure that nobody can take photos or screenshots of a document.
What’s more, the user or data room management can revoke document access at any time, even after it is downloaded by the user.
4. Simplified due diligence
The use of a virtual data room for due diligence is getting more and more common. Data rooms quickly became a useful business asset in the M&A market as they simplified the due diligence process. Due diligence is a vital part of different business transactions such as M&As, fundraising, real estate asset acquisition, joint ventures, etc.
As virtual data rooms are remotely accessible, sellers, buyers, and intermediaries can coordinate on the VDRs. Data rooms make the data sharing process smooth and easier; sellers can control the flow and availability of data while buyers can access it 24/7 to make informed decisions. Sellers can use customizable NDAs in data rooms to avoid any data leaks.
The latest technology can be very budget-friendly, and data rooms are a perfect example of it. Most virtual data room vendors offer unlimited data storage, so you don’t have to spend money on costly hard drives.
Moreover, virtual data rooms are paperless solutions that can help you save hundreds and thousands of dollars spent on papers, printers, folders, cartridges, and other stationery items. The best part? Data room vendors offer flexible pricing plans according to your needs.
It won’t be wrong to say that virtual data rooms are one of the best tech advancements of this century as they solved the biggest problem of modern businesses—data security and management. Apart from being secure data repositories, their collaboration and project management tools make them a great business asset. Most importantly, they are budget-friendly and cost-effective.
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