Virtual data rooms are a revolution in data management practices. From managing tons of documents to having hundreds and thousands of files on your tips, data room software has just revamped everything. And it is not just simple data storage — online data room software is playing a key role in million-dollar business transactions like M&As, capital raising, joint ventures, and strategic partnerships.
The strength of virtual data rooms not only lies in data management. They can help you with up-to-date collaboration tools that are extremely valuable in the transactions mentioned above.
But, how does a virtual data room simplify the data management process? Let’s find the answer.
What are virtual data rooms?
Virtual data room software (also known as an electronic data room) is a digital document repository for storing, exchanging and managing hundreds and thousands of business files.
Broadly speaking, virtual data rooms are cloud-based, highly secure, and remotely accessible data storage solutions where businesses, professionals, remote workers, government organizations, companies, firms, nonprofits, and any type of business entity can store or, more precisely, manage their confidential or general business documents.
Additionally, online data room software is supplemented with different collaboration tools that make data sharing and online communication easier, simpler, and faster.
Read Getting Started with a Virtual Data Room.
Lastly, and arguably most importantly, virtual data rooms are globally used digital deal rooms where businesses conduct their unusual affairs such as acquisitions, mergers, PPE (property, plant, and equipment) purchases, etc.
However, not all virtual data room providers have similar services. That said, the number and type of features vary from vendor to vendor. Therefore, you should run a complete comparison based on virtual data room pricing, features, customer support, ease of use, and data room security.
How to manage data with virtual data rooms?
Below, we will discuss how VDRs help manage data for general and specific uses, such as M&A, due diligence, fundraising, etc.
1. Store your data centrally
Before moving to the benefits of central data storage, it is important to know what it is. In centralized data storage, you can store any type of document of your business in one place. Generally, different business departments have their own separate data management systems. For example, the tax department will have a different database while accounting or HRM will manage their data separately.
However, virtual data rooms are central data storage units where you can store data from all departments in your company. But why is it important? First of all, because having a centralized data storage solution, you’ll benefit from the following:
- The need for multiple databases will be eliminated.
- Inter-departmental data sharing will be much faster.
- Any authorized user will be able to access documents remotely.
- The data can be shared without using emails or other channels; data never leaves your VDR.
- Data protection will be easier.
Importance of central data storage in M&As
M&As and similar activities such as fundraising and ventures are based on a voluminous amount of data sharing. Fundraisers and seller companies are legally obligated to present all required documents to investors and potential buyers.
Paper documentation or dispersed business data not only wastes time but also poses security risks. When a seller company or fundraisers have a centralized data storage system, buyers would know that all the documents they need are available in one place. Also, they can access data remotely from anywhere, anytime.
2. Organize your data for better searchability
Central data storage is one thing, but data organization is totally different. Organizing your data improves the searchability process and saves time. In fact, the right data organization is mandatory in fundraising, M&As, or joint ventures.
Using virtual data rooms, you can organize your data in whatever manner you prefer. You can create as many folders and subfolders as you want. When it comes to data searchability, virtual data rooms take it to the next level.
When you upload a document, it is automatically indexed, and you can use that index number to search the file later. Apart from that, an electronic data room usually has a full-text search feature that allows you to find a file through a keyword, phrase, or a piece of text from the document.
3. Get more control over your data
Having control over your business data is indeed the most important thing, and online data room software gives you that power. You, as your VDR administrator, can decide who will or will not access any file, document, folder, or even a page from the document.
Depending on the data room services you choose, you can even revoke document access anytime or even remove documents from a device’s browser’s history. You can restrict anyone from saving, copying, printing, downloading, or editing a document. Other notable document security features include file tracking, digital watermarks, device purging, etc.
Rounding it up
Data management is more important for current-day businesses as compared to the past because data is the biggest asset for any enterprise. Virtual data rooms make data management easier and safer. Remote accessibility, centralized data storage, document access control, and fast data sharing surely save time, money, and human efforts.
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