The Benefits of Using Data Room Software for Businesses of All Types
The benefits of virtual data rooms are not new to deal makers. Whether it is fundraising, mergers, acquisitions, initial public offerings, or private equity transactions, data room software has been at the forefront of modern-day deal-making.
However, just associating virtual data room software with deal-making will be an injustice to this multi-purpose technology. That is because online data room software is a complete data management solution for any business type and size. In this article, you will be able to explore the benefits of a virtual data room for businesses, its distinguishable features, and the best data rooms available in the market.
Why are virtual data rooms important for businesses?
A virtual data room is a digital data repository developed via cloud technology. It allows businesses to store, organize, protect, share, and manage sensitive documents or routinely-used data. Here are the top benefits of data room services for businesses.
1. Data protection
Data security is the oldest and still the biggest challenge for businesses across the globe. It is interesting to see that despite constant development in digital data protection methods, hackers or cybercriminals still find ways to rob highly sensitive business data costing millions in fines to businesses. For example, Twitter reported that hackers stole 5.4 million accounts on the platform. That’s just one example from 2022.
An electronic data room minimizes the risk of cyber attacks to a great extent. That’s because data rooms give you multiple layers of protection, making it much harder, if not impossible, for hackers to steal your sensitive information. The best thing about data room software is that it provides protection from:
- External threats such as hackers and paid cybercriminals
- Internal threats such as dishonest employees
Some of the notable security features in data room software include multi-factor/two-step authorization, document shredding, document access control, document access revoke, fence view mode, IP address access control, and remote device purging.
2. Compliance
Virtual data rooms have also solved one of the biggest challenges for businesses — compliance. Data rooms not only help comply with local or national regulatory requirements, but they help businesses with international compliance requirements. For instance, ISO compliance is mandatory for businesses in many countries. Virtual data rooms are mostly ISO 27001, ISO 27081, and ISO 27017 compliant.
Financial institutions in the US, like banks, insurance companies, credit card companies, etc., need to comply with FINRA regulations for digital data management. Subscribing to FINRA-compliant data room vendors like iDeals Solutions means that financial institutions don’t have to worry about compliance issues.
Other major virtual data room certifications include FISMA, HIPAA, SOC2, SOC1, GDPR, CCPA, etc.
Note: Always make sure you are buying services from certified virtual data room providers to enjoy the true benefits of the technology.
3. Safer communications
Data room technology has minimized business communication barriers. Companies use VDRs for board communications and data management. Apart from that, online data room software is a resourceful virtual workplace for small and medium businesses. They use data rooms for:
- Real-time file sharing — data rooms allow you to share a large number of files without any maximum file size limitations. Data room users can also schedule document sharing for future dates and work on shared documents.
- Board meetings and team meetings — data rooms possess all the necessary tools to streamline business meetings. These tools may include task manager, audio/video conferencing, meeting minutes and agenda builder, electronic signatures, and voting tools.
- One-to-one and group communication — data room software has a chat messenger. Many data room providers allow integration with third-party apps like Slack, Zoom, and Microsoft Teams.
An electronic data room also boasts Q&A modules for deal-making or instant Q&A sessions. Q&A feature is highly used in due diligence during M&As, fundraising, licensing, etc.
4. Cost-efficiency
No business can say that cost-efficient processes are not its primary goal. Financial resources are scarce, and with ever-growing market competition, businesses have to reduce costs to maximize their profits.
Online data room software is a super cost-effective business solution as it reduces operating costs in different ways. For instance, it eliminates the need for buying and maintaining an in-house data management system.
Second, it reduces paper and printing expenses which can consume hundreds of dollars a year. An average company in the USA spends $400,000 on paper and printing-related costs, which a virtual data room can reduce significantly.
Best virtual data room providers in 2023
Data room vendors have now started targeting different business sizes and types. Here are some of the best data room providers to look for in 2023:
- iDeals — the most popular overall and commonly used by law firms, the life science industry, and financial institutions
- DealRoom — best suited for corporate development and deal-making
- Digify — suitable for small and medium-sized businesses
- Google Workspace — best for business teams and small business
- Merrill Datasite — suitable for medium and large businesses
Virtual data rooms bring automation to business workflows and thus improve the productivity and efficiency of your workforce. An efficient workforce is a key element in achieving organizational goals. Thus, adding data room technology to your business today is a decision you will cherish tomorrow.
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