Cloud storage presents a revolutionary method for organizations to flexibly and conveniently store their data. Regardless of cloud storage services becoming more secure, their levels of security are not reliable enough for organizations to use them to store sensitive data. A fairly new innovation in the form of virtual data rooms addresses this gap.
What is a Virtual Data Room?
A virtual data room is a secure online repository used by companies for the storage of sensitive and confidential data. It is a cloud storage service used to share critical information with third parties such as other companies, consumers, and partners. They are commonly used in corporate activities that require a lot of due diligence such as mergers and acquisitions, conducting audits, and partnerships.
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Why Is There a Need for Virtual Data Rooms?
Realization of the potential of data in business
Enterprises understand the role of data in the evolution of their activities and their overall business longevity. As such, the current business landscape is dominated by the need for quality data. The global pandemic has forced enterprises to digitally store and share sensitive data — opening up opportunities to use technology to augment enterprise operations by storing, controlling, transferring, and securing data. This data explosion has led to increased demand for intellectual property as well as the need to improve risk management.
Security and digital transformation
Numerous corporate activities involve carrying out due diligence, which may result in a lot of documentation for an organization. Physical data rooms are where documents are disclosed and shared. However, digital transformation has inevitably decreased reliance on physical documents, rendering physical data rooms obsolete.
Additionally, the advancement of online security is encouraging organizations to leverage their sensitive data in digital spaces. High standards of security offer confidentiality to organizations, which is a key selling point for virtual data rooms.
Rise of on-demand business models
The rise of on-demand business models is encouraging the use of virtual data rooms. The expectations of customers have been raised to a level where they can request service whenever they want and conveniently have the service honored by a provider. Customers seek access as opposed to ownership of a service, making the pricing of services much more flexible. Such business models have disrupted the economic world.
To enterprises, such a model would make organizing, transferring, sharing, and storing crucial documents more flexible. This value proposition makes virtual data rooms all the more attractive compared to their alternatives.
Benefits of Virtual Data Rooms
- Security and encryption. Virtual data rooms have security measures at multiple levels to combat intrusion, hacking, and other potential threats. They use encryption technology such as 256-bit Advanced Encryption Standard and secure connections like Premium Grade Transport Layer Security Protocol.
- Ease of use. Virtual data rooms are easy to use since they do not limit you to a physical location or a specific type of device. They offer flexibility to work through data from wherever you might be.
- Access control. Enterprises may use virtual data rooms to create custom levels of access to data. This simplifies managing the access rights of a large number of users and controlling the flow and disclosure of information.
- Monitoring. Virtual data rooms allow enterprises to monitor the activity of users through regular reporting. Any changes to data are tracked and documented thus offering greater transparency compared to generic cloud storage.
- Storage volume. Virtual data rooms offer the storage capacity to manage many active users and vast data.
- Improved efficiency. High-quality virtual data rooms provide all the required tools to ensure productive collaboration. Furthermore, data is more organized, thus lessening time spent on searching, transferring data, and making decisions.
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Use Cases for VDRs
- Storing business applications. The use of such virtual environments allows a great number of applications to be hosted by a single server. Enterprises may use virtual data rooms to store various business applications. For instance, they may store accounting, billing, and inventory tracking applications.
- Protection of IT infrastructure. Virtual data rooms can be used to protect IT infrastructure through using servers for disaster recovery. Through the virtualization of servers, disaster recovery is made flexible. Virtual data rooms offer high availability in the occurrence of a failure as well as costing much less than physical disaster recovery infrastructure. This makes virtual data rooms more lucrative for organizations with limited resources.
- Storage and transfer of highly sensitive data. These data rooms can be used to store an enterprise’s highly sensitive content. Content may be in the form of finance, customer, legal and tax data, intellectual property, and trade secrets among others. In addition to storage, virtual data rooms allow enterprises to transfer sensitive data over a secure connection.
- Facilitating remote work. Since virtual data rooms allow authorized personnel to access data from wherever they are, they support remote work. Members of a remote workforce enjoy convenient access to not only data but business applications and workloads.
- Sandbox for system developers. System developers may use such virtual environments to prototype, evaluate and release useful applications.
Future of Virtual Data Rooms
We are already seeing more virtual data room providers evolving from a per-page pricing model to a SaaS model to make their value proposition more competitive. This is through making costs more flexible and making virtual data rooms easier to use. The adoption of cloud-based virtual data rooms is also expected to rise since they require lower infrastructure fees and enjoy remote support and maintenance compared to on-premise offerings.
Due to their flexible nature, it is expected that virtual data rooms will evolve to adopt new technologies. Greater levels of security are encouraging users to carry out larger, more complex, and more sensitive transfers. The potential increase in the adoption of blockchain technology in virtual data rooms promises to make data rooms much more secure than their cloud storage alternatives.
In addition to blockchain technology, we should expect more implementation of artificial intelligence and better process automation in virtual data rooms. They would improve the efficiency of the rooms through improved analytics, automation of tedious and repetitive tasks, and predicting and identifying threats to confidentiality among other duties.