The idea of security, especially regarding business data and financial information, is a top priority right now.
In the past, it might have been okay to use options like Google Drive or Dropbox, but now with the constant data breaches and security issues businesses of all sizes face, there are questions of whether Dropbox is really secure or if another solution should be explored.
When businesses need workspaces and document control and management, they are looking at other solutions, and one option is a virtual data room or VDR.
The following is an overview of some of the most important things to know about VDRs, particularly from the perspective of a business or legal organization.
What Is a Virtual Data Room?
First, what is a virtual data room?
A VDR is essential a way that companies can share their confidential information, especially that’s related to financial transactions. Information can be not only shared but also stored, and it’s somewhat like a digital online system for filing. A virtual data room is valuable not only from a security perspective, but it also helps organizations move more in the direction of being paperless.
Some of the things that might be stored in a VDR include anything that’s considered sensitive, and it’s often used during due diligence or any processing where deals are being made. For example, private documents can be added to a VDR before a financial transaction, and there they can be securely viewed by relevant parties.
A company’s most high-value information is usually what’s stored in a VDR. This can relate not only to financial information but also legal documents and tax information. Intellectual property may be stored in a VDR as well.
What Are the Benefits of a VDR?
So, along with the general elements of what a VDR can be used for, what about the benefits?
First, most organizations using a VDR feel it saves them time. It can be set up quickly, and if you’re let’s say about to start working with an investor, once you’re set up everything is right there for them. It’s also easy to not only track documents, but audit them quickly, and access is available anytime.
Having a VDR is also extremely efficient. If you’re in the middle of the due diligence process, your potential buyer or your investors can work with your data in real-time, and you can let them know right away if there’s something new for them to view. You can also see who’s looking at what document and you can see the status of everything quickly.
There’s also the unique consideration of being able to have multiple investors or buyers look at the information at one time. With traditional documents, only one potential buyer or investor can access the information at once. Since multiple stakeholders can all be seeing it at the same time, it makes the process much faster, and it makes it more likely you’re going to be able to sell or get funding from investors in a shorter period.
Security is also a top benefit of a VDR over other storage solutions.
Overall, a VDR is ultimately going to cost you less money over the long-term as well. It might be more expensive in the short-term when compared to something like Dropbox, but over time you’re going to find that you save money in most cases.
As compared to traditional document storage and sharing, the cost savings is even more significant. The cost of storing and transporting physical data is much higher.
Are There Downsides to VDRs?
As with anything, there are potential downsides of VDRs to consider as well. For example, some people have a preference to review physical data rather than going through it all on their computer screen.
There is also the risk that some organizations could get lulled into a false sense of comfort when using VDRs. For example, even though they are secure, they may not take the steps they would otherwise to ensure additional security. It may be necessary to still do certain things like encrypting data in PDF files, even with the use of a VDR.
Finally, another possible downside to be considered with VDRs is downtime, but this can be fairly easily remedied as well. It’s just important that organizations using VDRs do have a plan for any crashes or downtime because they don’t want to have to deal with the costs and inefficiency of not having access to information at any given time.