What is a virtual data room?
Virtual data rooms become more and more popular over the last decade. The name is rather self-explanatory – VDR is a virtual storage where businesses can keep all their corporate data. It is located in the cloud – remote server with strong and reliable encryption and high capabilities.
A data room eliminates the necessity of keeping piles of physical papers or bulky servers in the office. Also, this technology allows sharing sensitive information securely without any risk of data leaks or theft. Therefore, a lot of businesses start using virtual data rooms during processes that require heavy amounts of documents, for example, Mergers and Acquisitions and due diligence.
There are plenty of reasons why a business owner should consider using an online data room. The first and foremost is, of course, that it is very convenient. Old-school entrepreneurs remember all the hassle paper documents created. They had to deal with piles of them, trying to assemble and organize everything.
Papers were getting lost and corrupted all the time. And any M&A or due diligence turned into a huge time-consuming, expensive procedure. Companies had to send someone with all the documents to another firm. If the destination point was in another country or even in another part of the globe, the expenses were enormous.
Today all a business needs to do it to upload required files to the data room and give potential partners or authorities access to them. This whole process is entirely safe – VDR providers apply the most robust encryption possible both to the storage itself and data transfer ways. So all documents are reliably protected, and there is no chance for hackers to lay their hands on sensitive corporate information.
The virtual data room software is rather flexible when it comes to granting rights to users. The owner of the storage can create a clear hierarchy letting some participants edit and share files and other – only to view the documents. It provides businesses with even more protection for their data.
Unauthorized individuals can’t get into the data room. This technology has a two-factor authentication that involves an additional action to enter the storage. It can be a code sent in an SMS to the user’s phone, or a fingerprint authentication if the person is using a smartphone.
Such software has even more security functions than there was already listed. Users can apply watermarks on documents, use restricted view modes to make sure no one will see what they’re not supposed to see, and even destroy files with one click if needed.
Another useful feature of VDRs is that they help to improve the communication between sides. Users can point out specific issues in documents, ask questions and leave comments. It allows to speed up all the business processes significantly and to make sure everyone is getting what they’re expecting.
Additionally, data rooms allow seeing statistics on the activity of users and the progress of business processes. Studying this data can give company leaders many useful insights that will help to improve the workflow.
How to set up a data room
Even though it might seem like a complicated task, actually, it’s quite easy to do. If you plan the process out, of course. To simplify this for you, here are steps you need to go through to assemble a proper virtual data room that will be convenient for everyone.
1. Choose the provider
On this site, you will find useful tips to help you with picking a suitable provider. It is essential to understand what are you looking for since there are so many vendors it’s easy to get lost. So do your research before making a choice and read virtual data room reviews.
2. Gather all the physical papers
If you still have your documents as real printed papers, make sure you fish them all out and digitalize. You can do it either by scanning or by typing everything in a text editor and putting an electronic signature on the file. Once you have gathered every paper and converted them into digital documents, you can go to the next step.
3. Prepare all your documents and upload them
Double check every file – you don’t want to have useless papers sitting in your data room. First of all, they waste space. And also, they will just clutter the storage getting everyone confused.
If you already have an established structure for your files on the computer, you can simply drag and drop all folders to the virtual data room. If not – you can either structurize them on your PC or upload all documents to the VDR as is and create a convenient hierarchy of folders there.
4. Invite all the participants
Now when the data room is ready to use, you can give access to others so that they can interact with the information, too. At this point, you want to set the level of authority each user has: who can edit files, and who can just review and comment them. It will ensure that the data is safe.
Also, on this step you can set up additional security features your provider has. It could be watermarks or any other instrument of protection. There is no such thing as too much security, so do your best to make sure you keep your files as safe as possible.
5. Stats and maintenance
Now, when users started interacting with a data room, you can see the stats on their activity and the progress of deals. The insights can be truly useful. So take your time to study statistics.
Even though you made all the primary job on structuring your VDR, you have to maintain it as new documents are added. So go through it from time to time, get rid of unnecessary files and reassemble the ones that left as needed.