Virtual Data Rooms: Should You Use One or Not

server image

From paper documents to computer storage and cloud technology, data management evolution has been quite remarkable. Virtual data rooms are a prime example of cloud technology that has given data management approaches a new shape.

Gone are those days when companies had those massive and expensive data servers and tonnes of paper files buried under each other. That’s because online data room software gives you the luxury of storing and managing data on cloud tech.

Is virtual data room software necessary for everyone? Should you start using data room software for your company or personal use? Why should you use a virtual data room when there are free data storage platforms? Here are all your answers.


What is online data room software?

Before exploring the benefits, it is important to understand what a virtual data room is.

An online or electronic data room is a digital document repository that companies or all forms of businesses use to manage their business documents.

In broader terms, digital data rooms are used for storing, sharing, exchanging, editing, organizing, and managing business or even personal data. Many companies use virtual data rooms as their main data repository, while others use them as a medium to share or present data during financial transactions.


Traditionally, online data rooms were just associated with mergers and acquisitions. However, over time, especially in the past few years, virtual data rooms became a standard part of auditing, IPOs, intellectual property management, board communications, fundraising, joint ventures, due diligence, and strategic partnerships.

Nowadays, due to the growing demand for industry-specific solutions, virtual data room providers have developed dedicated rooms for due diligence, real estate, M&As, life sciences, and litigation. Read more about the particular benefits data room vendors offer for each of these uses at dataroomreviews.org.

Why do you need virtual data room services?

Why is it important to move your business data to data rooms, or why are virtual data rooms better than other free online platforms? Here are the answers!


1. Virtual data rooms are safer

It goes without saying that the security and integrity of your business data are of utmost importance. Besides, if you are directly dealing with sensitive customer information, then using a compliance data management system is mandatory for you.

Data rooms are more secure than other tools on many grounds. Here’s why:

  • Two-factor authorization may be a common feature in private data management platforms, but data rooms are way ahead in data encryption.
  • Most of the modern-day VDRs boast 256-bit SSL encryption, which is the strongest data encryption standard in the world.
  • Also, there is a remote device purging feature to immediately remove suspicious, lost, or stolen devices connected to the data room.

Free data storage tools mostly don’t have these features.

2. Virtual data rooms give more control

Platform security is one aspect, while data security is a different thing. And this is where virtual data rooms are stronger. In your VDR, you can decide what type of authority you should give to other users. That said, you can give customized access to users individually or create user groups with the same settings.


You can restrain a group from editing, printing, or downloading documents. In fact, you can even customize access settings for specific users in the group. This level of customization is rare to find.

Moreover, as the administrator of your data room, you can revoke any user’s access to any document anytime. You can share a document for a specified time, and the access rights will expire after that.

When it comes to data sharing with external parties, VDRs give you 100% control. You can use the Fence View feature to present highly confidential data such as product prototypes, research studies, intellectual properties, etc. The Fence View prevents anyone from taking screenshots or photographs of documents. It also prevents users from scanning, editing, changing, downloading, or printing files.


Additionally, the dynamic watermarks in online data room software are a great tool to track changes made in documents and settle copyright disputes.

3. Virtual data rooms are economical and easy to access

Electronic data room solutions are accessible from your mobile phones or tablets. Dedicated VDR apps usually allow you to perform all functions that you can do on desktops. In fact, VDRs nowadays give data access without internet connectivity.


Most importantly, from a business’s perspective, data rooms are cost-effective. First, these paperless solutions make sure you don’t have to spend thousands on paper and printing costs. Second, they are way cheaper than having specifically designed data management software. Also, you don’t have to spend on software maintenance because everything is done by data room vendors.

Final words

Virtual data room software offers banking-grade security thanks to the two-factor authentication, 256-bit encryption, and remote device purge. Data rooms have strong access security tools and an array of document security features.

Most importantly, they help you save thousands of dollars annually by reducing your administrative expenses. This makes an electronic data room a more favorable choice when compared to a free cloud storage solution.