The selection of a virtual data room provider is not a uniform process. It involves a lot of research, comparisons, and whatnot. It is important to take the data room software selection process seriously, as hasty decisions will affect your business in multiple ways.
That said, choosing an insecure or low-quality data room will be chaos in financial and legal terms. You will not only waste money, but data breaches may result in legal consequences and penalties. Therefore, consider an electronic data room as an investment, not an expense.
If you are using a VDR for the first time, the selection process can be puzzling. Be it a virtual data room for startups, commercial businesses, nonprofits, or public institutions, the following tips will make your decision more informed.
1. Need identification: Why does your business need data room services?
It goes without saying that an asset purchase or investment decision starts with one question — is it worth it?
Virtual data rooms are cloud-based data storage solutions that organizations primarily use for data sharing and management in M&As, IPOs, capital raising, divestitures, partnerships, joint ventures, etc. Other major uses include board communication and data management, and virtual collaboration among teams.
So, start with “Why do you need a virtual data room”? Is it for regular use, or do you intend to use it temporarily? How much storage capacity do you need? Who will use the data room in your organization? Will you use it to share data externally? How much can you spend on the data room?
Answering these questions will help you narrow down the list of your potential service providers.
2. Prepare a list of features you need
“It does matter if you want to use virtual data rooms for internal or external use; just make sure you don’t compromise on security. Investing in a secure data storage place will reap the rewards in many ways,” says Gilbert Waters, Co-founder and marketing specialist at Data-Rooms.org.
Therefore, you should start preparing your VDR features list with security at the top. You can also compare virtual data rooms and select your perfect data room software on data-rooms.org
Here is a list of features that you might want to have in your data room.
- Security features. Basic, mandatory security features include two-step verification, data encryption, dynamic watermarking, document access control settings, remote shred, and view-only mode.
- Ease of use. You can simplify different processes such as data viewing, editing, uploading, and sharing with features like bulk uploads, drag-and-drop, PDF viewer, and MS Word/Excel file editor. What’s more, it is better if you can access your data room via mobile application.
Also, make sure that the data room you consider must support the operating system you use. Unfortunately, even some of the best data rooms don’t support Windows, Mac, Android, or even iOS.
3. Be considerate about virtual data room pricing
Data room pricing is a crucial and less discussed element in the selection process. It is important to be aware of how VDR pricing works because you may be paying more than you should.
Modern-day virtual data room providers generally follow four pricing models, and every one has its perks and drawbacks; let’s have a look at them.
- Per-pager pricing. The vendor charges you for every page uploaded in the data room software. It is only beneficial for one-time, small transactions.
- Per-user pricing. You have to pay for every administrative and guest user, depending on your package. It suits business teams or small businesses.
- Storage-based pricing. The data room vendor charges you for the total number of GB (gigabytes) you consume.
- Flat-monthly fee. You will get a specified number of users, data storage capacity, and a number of projects depending on your package. It is ideal for long-term use.
4. Look for an experienced vendor
It is obvious that everyone would prefer an experienced service provider. However, general experience and industry-relevant experience are two different things. It is highly possible that the best data room providers in the nonprofit sector may not have the expertise or experience to serve public companies or startups.
Therefore, go for a service provider that knows your industry well. What’s more, vendors operating in specific industries must be certified to do so. That said, a virtual data room provider serving the healthcare sector in the United States must be HIPAA-certified.
Lastly, test the customer support service of your desired vendor. You will be dealing with these people in the future.
5. Free trials
Last but not least, always ask for free trials. The good thing is that a large number of vendors give 14-days, 30-days, or even 60-day trials. Free trials are test rides that give you a clear picture of reality.
Rounding it up
Virtual data rooms eventually become a vital part of your business. Therefore, practice due diligence when choosing a virtual data room provider for your company. You can consider elements like security, certifications, ease of use, industry-relevant experience, and customer support service.
