Virtual data rooms (VDRs) are critical for a wide variety of business processes, such as M&A, due diligence, litigation and compliance. Corporations often invest in a VDR to store and share documents securely, both internally and with partners beyond the firewall.
While on the surface, the general profile of a virtual data room can appear quite similar, not all VDR solutions are created equal. Virtual data rooms range widely in terms of feature set, ease of use, price and support, making it challenging for customers to choose the right solution. Small differences in how a VDR service is delivered, priced and supported can have a large impact on the speed at which projects are completed and whether a client is satisfied with the service or not. This article aims to present everything that should be considered when comparing virtual data room providers so that you can choose the right one for your business needs.
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Different Types of Providers
VDR providers fall into three broad categories: legacy, modern, and generic file sharing tools. Solutions in the last group aren’t “true” virtual data rooms in the sense that they provide only a small fraction of the features and functionality found in a purpose-built VDR solution.
Legacy Providers: Legacy providers are typically long-established businesses that predate the Internet. Some were financial printing services that morphed into virtual data room providers with the shift from print to digital. They have gained a reputation primarily based on their familiar name and longevity in the industry, and their higher prices are set to match their notoriety. For the most part, they offer the same types of features as other providers, along with a few unnecessary ones, sometimes leading to a bloated and cluttered interface that can be confusing for users.
Modern Providers: These are part of a new breed of VDR providers that emerged in the mid-2000s. These providers focus on providing specialized data room features at a competitive price without compromising security and control. Designed from the ground up for electronic document sharing, this class of VDR leverages new business models and technology innovations, including modern and efficient Software-as-a-Service delivery models to provide professional-grade document control, security, and support at a price point much lower than legacy providers. The price/performance ratio offered by these modern providers make them well-suited to mid-sized corporations and investment banks.
Generic File Sharing Tools: These providers are the most common for users interested in a platform where they can upload and share data and documents at a low cost for initial setup. However, if the documents being shared are sensitive or of consequence to your business, you should keep in mind that generic file sharing tools are not as secure as real VDRs. These providers are built for the basic user and offer little to no support compared to the alternatives. They offer minimal control and customization with less robust user and document permissioning, potentially leaving a client’s data vulnerable to breaches or being accessed by unwanted third parties.
Their simplistic interface provides no due diligence-specific features such as audit reporting or the ability to stage due diligence. These basic tools are often not accepted through the firewalls of financial institutions or compliant with the policies of security-conscious companies. Be sure to review your firm’s security policies before downloading one of these tools from the Internet to support a mission-critical process. And keep in mind that a tool that makes it easy to share vacation photos might not be up to the task of supporting your business needs when the stakes are high.
Security
Security is a defining factor of a successful virtual data room and what differentiates it from other document sharing platforms. When considering a VDR provider, look for internationally recognized security compliances, such as ISO/IEC 27001:2013 certified data centres, GDPR, and SOC2. These compliances offer clients the peace of mind of knowing that their information is stored in a safe online repository. Some providers go beyond the standard security protocols to provide advanced features designed to keep your confidential documents even more secure.
For example, Firmex has detailed user, group and document permissions to make sure the right people see the right documents, at the right time. Firmex also provides dynamic watermarks, lock to IP, expire document access, and the ability to revoke document access remotely even if documents have already been downloaded to a user’s computer. You can also choose to disable save, print, copy and share so highly confidential documents can only be viewed within the data room. These features allow you to set the right security level based on the sensitivity of the documents. A virtual data room provider’s merits lie in its ability to ensure their clients’ confidentiality during every step of the process.
Staple Security Features:
· Data encryption
· Security compliances
· Complex permission settings
Control
The ability to control how documents are accessed and by whom allows you to better manage mission-critical processes and transactions, address any bottlenecks, and steer them toward the desired outcome. For example, Firmex aims to keep the interface clean and simple so that clients are never confused when working within their data room, and users can quickly and easily find the documents they need to review. With useful features designed to make document sharing easy and efficient, clients remain in control of their information and their time.
Staple Control Features:
· Group and user-based permission settings
· Real-time audit reporting
· Document viewing restrictions
Support
Support is one of the biggest differences among data room providers. Seemingly trivial differences can be game changers when your project is on the line. You want to ensure that the support you are receiving is from qualified and knowledgeable representatives and that you are given the best support right away. You don’t want to discover that a provider’s support isn’t up to snuff when you’re in the middle of a transaction and something has gone wrong. The last thing you need at a time like this is call center runaround and delays getting the answers you require.
Pricing Structure
Virtual data room pricing varies greatly between the three tiers of VDR providers. Legacy providers often opt for per-page pricing, a rather antiquated method that is a carryover from their days in the printing industry. Per page pricing can be unpredictable and lead to higher than expected storage costs. Generic file sharing services can be affordable, at least in the beginning. Targeted toward basic users, don’t expect professional-grade support outside of business hours, or a representative who understands the nuances of your business.
Firmex, for example, offers flexibility in their pricing structure with an annual subscription plan that allows clients to run unlimited projects for a fixed fee. So, for example, if you work on more than two transactions per year, a subscription can be more cost-effective, while also giving you a data room “on standby” whenever you need it. Every provider is different in their pricing, so doing a little homework to understand which one aligns with your business, budget and desired outcome is vital for making an informed decision.
The Bottom Line
VDRs are effective tools for sharing your most sensitive documents and streamlining core processes and transactions that are dependent upon effective and secure document sharing. Choosing a VDR provider is not a decision that should be taken lightly when your mission-critical processes are at stake.
Discover a virtual data room that's made with you in mind.
Learn more about serious sharing by booking a live one-on-one demo.
How Firmex Can Help
Easy to use, affordable, and backed by 24/7 support, you can trust Firmex Virtual Data Rooms to run mission-critical processes and get projects finished faster. Over 120,000 companies have used Firmex to share confidential documents during mergers and acquisitions, fundraising, audits, litigation, and procurement projects with billions of dollars at stake. Firmex can have your project live within minutes, and every user has access to the same expert support as you do. No per page pricing or hidden fees. Get started with Firmex today.
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