The one-size-fits-all business approach is becoming outdated as modern-day businesses are switching to more specialized services. The same goes for virtual data room providers. Gone are those days when virtual data rooms were only used for M&As. Businesses are now using data room software for IPOs, fundraising, crowdfunding, or real estate trades. And the global electronic data room is expected to reach $5,497 million by 2030.
Keeping that in mind, data room vendors are offering more customized services for different industries and processes. Thus, it is highly possible that a virtual data room for IPOs may not be good enough for real estate. Also, the type of data room services varies for business size as well.
How would you know if a data room is suitable for your business? Or, how should you choose a virtual data room that your business needs?
Follow these three simple steps when choosing the right online data room software for your company.
1. Define why you need data room software
Virtual data rooms are essentially digital document repositories hosted by certified data room vendors. Businesses and public institutions use data rooms for online data sharing, digital collaboration, and project management. Therefore, before opting for data room services, it is important to answer a few questions, such as:
- What do you need a VDR for? Do you need it for a one-time project or looking to incorporate it into your systems permanently?
- How will a data room help you achieve your organizational objectives? Will it make operations more effective?
- How much can you spend on the data room? Will it help you reduce other expenses, such as paper or printing costs?
- What features do you need a data room to offer? How much data room storage do you require?
- Who will be using the technology? Are your employees comfortable using new technology?
2. Choose the features you need
Need identification and budget setting are important steps, as they will help you assess what type of features and services you can afford. For example, if you need a data room to facilitate communication between your board members, it is important to have meeting management tools in addition to data management services.
However, some features are mandatory, and they should be in your VDR no matter how you intend to use it. Here are some aspects you should look for.
Data room security
Security is the most important aspect of the data room technology. Every single buyer uses data room technology primarily because of its data protection features.
Therefore, make sure your VDR has at least basic security features like two-step verification, device access control, document access control, digital watermarks, 256-bit SSL data encryption, and view-only mode.
Some of the best data rooms in terms of security include iDeals, FimrRoom, Firmex, and Datasite. You can read more about these data rooms at datarooms-review.com — a reliable platform with detailed and unbiased reviews on the most popular data room providers.
Data room providers have to comply with standards set by different global and regional regulatory bodies. For example, global bodies include ISO and GDPR, while FINRA, HIPAA, and FISMA are regional regulatory authorities.
Ease of use
Data rooms are generally used to handle large pieces of data. Having features like bulk uploads, drag-and-drop, or file editor are important to share or store large amounts of information.
3. Do research on virtual data room providers
When you compare virtual data rooms, it is highly recommended to do some research on the vendors as well. Start with the certifications mentioned above and see if they comply with regulations set by your regulatory authority. For example, HIPAA regulates the data management practices in the healthcare sector in the US.
Here are some other important things to consider.
Relevant industry experience
As mentioned in the beginning, data room vendors nowadays offer customized services for different businesses and industries.
Industry experience is crucial as it helps the vendors assess industry-specific challenges in a better way. Also, data rooms for nonprofits are different from those used by public institutions or commercial organizations.
Modern-day consumers consider digital presence as a vital factor in building trust. Can you imagine a virtual data room without any digital presence? Apart from an official website, you can look out for company profiles on professional platforms like LinkedIn.
What’s more, you can extend your research to renowned global software reviews platforms like Capterra, TrustRadius, G2, and Software Advice. Negligible digital presence is a red flag.
Customer support service is one of the defining factors in choosing a vendor. From data room installation to training to troubleshooting, only knowledgeable and responsive customer support can make things easier for you. A good data room with exceptional customer support is better than an exceptional data room with ordinary customer support.
Lastly, do not forget to use your free trial period, which almost every high-end data room vendor offers.
The data room selection process is not to be taken lightly. A faulty decision not only wastes time and resources, but may lead to data breaches or leaks, and thus, jeopardize the overall well-being of your business. The above-mentioned steps are highly recommended tips when choosing data room software for your business.