Cloud-based technologies were arguably one of the most phenomenal tech advancements in the early 21st century. They made data storing and sharing easier, but data security was still a threat as cyber-attacks started to increase. However, data management practices changed dramatically with the advent of virtual data rooms.
Although virtual data room software is at least a decade-old invention, the VDR market has grown tremendously. Businesses, corporations, enterprises, government agencies, and professionals worldwide are using online data room software for different purposes.
Despite their popularity, there are a few tremendous misconceptions about virtual data rooms, and in this guide we are going to mention the top 5 of them. Let’s start with a comprehensive introduction to electronic data room software.
What is a virtual data room?
A virtual data room or electronic data room is essentially a cloud-based data storing facility that can also be used as a virtual workspace. VDRs are highly secure data repositories where professionals and businesses can store and exchange files and documents in a controlled and safe environment.
In addition to that, businesses can use a virtual data room as a virtual working space, allowing their employees to communicate and share documents. Thanks to virtual data rooms, users can access documents, edit or alter, leave notes or annotations, and download or print them.
Moreover, data room software allows users to communicate privately or participate in group chats. They can also communicate through secured emails, conduct audio or video meetings, work on shared documents, etc.
Lastly, online data rooms are trusted virtual deal rooms used for large-scale business transactions, including M&As, capital asset acquisitions, B2B deals, real estate transactions, etc.
Top 5 interesting facts about virtual data rooms
1. Virtual data rooms are not like other free cloud-based technologies
A lot of people in the business fraternity often ask: how are data rooms better than similar free services like Dropbox? Why should they pay for data room services when there are some free options available?
It is true that there are some pretty good free online data storage facilities, but here are a few problems with most of them:
- There is an involvement of third-party apps, which creates room for cyber attacks.
- Not all cloud-based technologies follow security protocols as virtual data room vendors do.
- These free software solutions are mostly used for personal documents.
- Most of these platforms don’t have built-in document viewers.
On the contrary, a virtual data room is totally different because:
- It employs multiple layers of security such as two-step verification, strong data encryption (256 bit), document permission settings, a “fence view” mode that prevents users from taking photos or screenshots, remote device purging, and digital watermarking, etc.
- Most VDRs have built-in document viewers; in fact, data rooms like iDeals convert any document format into PDF so you can view the file easily.
- VDRs don’t have any connection to third-party apps, but they support integration with external software.
2. Data room software is not costlier than traditional paper documentation systems
Do you know that, on average, a company spends $400,000 per year on paper documentation? Now, think about the cost of printers, cartridges, high-quality papers, folders, paper clippers, printing ink, and other stationery items. These expenses consume a mentionable portion of the business’s total revenue.
On the contrary, working with some of the best virtual data room providers can minimize these costs. You may not believe it, but many VDR vendors offer unlimited data storage. You can entirely shift from paper documentation to VDRs.
The best part is that data room vendors have flexible pricing models; you can choose them according to your needs and save massive amounts of funds by going paperless.
3. Virtual data rooms are just for M&As
M&As may be the biggest use case of virtual data rooms, but VDRs are not limited to M&As alone. Data rooms are equally helpful for all types of business. In fact, the below-mentioned industries are already using VDRs for different purposes:
- Healthcare
- Oil and energy sector
- Pharmaceutical and R&D companies
- Real estate
- Investment bankers
- Law firms
- Freelancers
- IT firms
Apart from that, corporations use data rooms for IPOs, fundraising, capital investment, and directly dealing with clients.
4. Virtual data rooms are easy to use
There is a misconception that VDRs are high-end software, and you may need special training before you can operate them. Online data room software is super easy to use; even a person with basic tech knowledge can use a VDR after minimal training. Besides, data room vendors provide training material and 24/7 customer support.
5. Every data room software is not same
Every virtual data room vendor you see in the market is not trustable. Therefore, it is better to look out for certified vendors who comply with national or international data security standards like FINRA, SOC2, and ISO-27001. Apart from that, you can visit trusted websites like G2, Capterra, and Software Advice and compare best data room vendors by features, security, and reviews.
Here are some of the best providers for your independent data room review and comparison:
- iDeals
- Merrill
- Firmex
- DealRoom
- Intralinks
- SecureDocs
Final words
Virtual data rooms are not just ordinary data repositories like other free apps in the market. They are highly secure and hosted by certified data room vendors. You can store data in any format because most of the VDRs support multiple file formats. Most importantly, they are easy to use and way more cost-effective than traditional paper documentation methods.
This content is a joint venture between our publication and our partner. We do not endorse any product or service in the article.
