Virtual data rooms are continuously making data storage and management a lot easier for business organizations around the globe. The cloud-based online data repository not only allows highly secure data storage and due diligence processes, but it is equally handy in terms of business insights.
What is a virtual data room?
For those who don’t have much awareness about a virtual data room, it is an online space where you can store, share, and manage data in a totally safe and secure environment. You might ask, how exactly is this environment kept secure? Well, online data room providers have multiple security layers that make it impossible for the “unwanted factors” to break in. These security layers may include two-factor authentication, end-to-end encryption, antivirus protection, and a wide array of security compliances. Alright, that’s a brief introduction to a virtual data room. However, in this blog post, we are going to help you with your data room setup. Shall we start?
6 steps to your virtual data room setup
1. Select the best data room provider
Ok, the most important part of your virtual data room setup is choosing the best data room provider according to your industry needs. Different online data room providers specialize in industry-related data rooms. Every business sector, such as M&As, real estate, healthcare, etc., has different needs. Therefore, go with a data room provider that specializes in your particular industry. Still, there are certain standard factors that must be considered before choosing your virtual data room provider. Here are some of them.
Features
A virtual data room is not just an ordinary storage space. Instead, VDR software must have these features:
Data organization in a convenient folder index Document tags to navigate between files easily File search option and optical character recognition for quick access to needed materials
Security
Data security is one of the essential features of a virtual data room. Make sure the data room you choose has robust security features such as data encryption, two-way authentication, security compliances, auto-malware detection, adjustable permission settings, and many more.
Ease of use
Ok, you don’t want your employees to “turn against you” just because of software that is too hard to use. The purpose is to make things easy, not sophisticated. Choose a data room that has a simple user interface and is easy to operate.
User base
Selecting a virtual data room also depends on your user base. That is, how many users do you want in your VDR. Make sure the option you choose can accommodate your desired user base.
Pricing
Online data room providers charge for their services in different ways as per your needs — it may be a fee for storage, user limit, number of pages, or a certain period of time. A VDR can be a capital expense or a recurring expense. All you have to do is choose the option that suits your business needs.
2. Determine what documents to upload
Now that we have chosen our virtual data room provider, the next step is to determine the documents which you want to add to the data room. Again, this will depend on your business needs. Are you using the data room just as a repository? Or do you use a data room for due diligence? Do you want to use it temporarily for an M&A deal? Or are you planning to use it in the long term for your corporate documents? Consider these questions to properly identify what types of files to upload.
3. Create and organize your folders in virtual data room
Make sure you organize your data room well, especially if you are using it for audits or due diligence. Even if you are using VDR software just as a repository, make sure you organize your data as per your business needs. Here are some useful tips:
Create files with complete names on them; it will help the users to identify a file without even opening it. Make separate folders for each type of document. For instance, you can make a folder for financial statements and then add a folder for balance sheets, profit and loss accounts, etc.
4. Give access to users after defining their roles
Organizing the data in folders will make it easier for you to define users’ roles. For instance, your legal advisor doesn’t need to access every document which your auditors should. Give them access according to their roles. Similarly, you can set access limitations for investors or third parties, such as potential buyers, external auditors, etc.
5. Establish Non-Disclosure Agreements (NDAs)
Although they are not mandatory, NDAs are sometimes a precondition before giving access to virtual data rooms or letting view a specific file to a third party. Different online data room providers have standard NDA texts, which you can easily modify as per your requirements.
6. Double-check software settings
Once you are done with folder creation, data organization, access permissions, and security protocols, it is time to go for a final check before you make the data room operational. Check the settings and everything else twice or thrice and then add the users in the data room.
Final words
Virtual data room setup is something that can make things easier for the future. Make sure you choose the right virtual data room provider that suits your business needs and provides industry-related services. And don’t forget to check the above-mentioned tips to jump straight to work, quickly!
About the author
Priyanka Aggarwal is Senior Market Research Specialist at Gartner, loves to research, and is passionate about helping small-business owners in their software selection journey. M.B.A in Marketing and B-tech in Electronics and Communication.
