Jun 2021
6
Mins read

5 Features You Should Look For In a Virtual Data Room in 2021

A virtual data room is a secure cloud-based space where you can store, share, and collaborate on sensitive files between users within your workplace but also with external parties. Companies that are serious about protecting their confidential digital assets would benefit from having a VDR in today’s data-driven world. In this post, we’ll explore five features you need for a virtual data room.

What is a virtual data room?

A virtual data room (VDR) is a secure cloud-based space where you can store, share, and collaborate on sensitive files between users within your workplace, but also with external parties. A VDR differs from your usual cloud-based file-sharing, as it provides several more layers of access security plus a lawful signatory service.

You can think of a virtual data room just like a real-life meeting room where you share sensitive data and documents that you work on and go over with people - both colleagues and external clients.

Traditionally, virtual data rooms have been used by parties involved in large financial transactions that require due diligence, such as during mergers and acquisitions, IPOs, auctioning, and real estate. They’ve also been used by digitally progressive professionals needing to share and sign confidential files as a part of their day to day work, such as lawyers, insurance brokers, and auction houses. These days, almost any organization can benefit from a VDR, as it is now far more cost-effective as a security control than it was in the past.

5 features you need for a virtual data room

1. A virtual data room should be hosted on your own cloud

Virtual data rooms require managed security - which means that they should be hosted on your own cloud. This means a data solution where you have complete control of the virtualization, be it hosted on-premise, in a data center, or in a dedicated space in the public cloud, for example, AWS or Azure. 

In the past, virtual data room providers were often the ones taking care of this function, with access simply provided as needed. Modern solutions put this administrative function back in the hands of the owner of the documents - although if no one on the team is skilled enough to do this, it can be outsourced to managed service providers. 

CentricMinds Drive can be self-hosted on your own AWS or Azure cloud. With this configuration, not only do you have greater security, but you also have more control over where your data is stored. This means that your organization’s files and documents sit inside enterprise-grade infrastructure that includes security features like multi-level permission controls and Single Sign-On.

2. A virtual data room should provide its own user security layer

Virtual data rooms are most easily identified by their multiple layers of access security controls; for the ability to restrict access at the file, folder, role, and user level.

You should be able to invite and revoke user access at the data room layer

Much like you can provide read/write access to files and folders at the user or group level, you are able to do the same with a virtual data room. Access permissions are granted based on users and roles. Using CentricMinds, user management is simplified and set up is quick, allowing you to set the right level of secure access for each user.

Some data rooms will require you to use an authentication layer

This is like how Active Directory operates, which requires you to add external users to your internal directory. By grouping external users by their company and/or project and role, you have a more granular approach to security when you share sensitive documents. For project-based work, you’ll need to arrange exit workflows to either remove these users from your directory or continue access for some/all files.

Time-sensitive permissions

User access can be time-sensitive, removing the need to remember to manually revoke permissions. With CentricMinds Drive, you set expiry dates for shared files. This controls the risk of sensitive information getting into the wrong hands by limiting the time people can access and view the file. This often missed control is a risk management best practice for the modern organization.

Multi-factor authentication

Optional 2FA can give you extra security on your account. With our VDR, you’ll get notified if a user tries to log in to CentricMinds Drive from a device you don’t recognize. With user activity auditing, you can track and monitor activity on files, folders, and shares.

3. A virtual data room should support common file management processes

Virtual data rooms should operate much like modern enterprise document management systems from the user’s perspective for the best possible user experience. 

Data rooms are designed to facilitate the end-to-end process of having multiple parties seek agreement over a collection of documents

These documents can vary and include Office content, PDF, images, video, and more. In addition, project work is varied and will require users to interact with these files without downloading them locally.

A good virtual data room should provide a solid content management capability  

User expectations are high, and when working with external parties, you want to give them the most seamless technology experience possible. They should not be hindered by a lack of search functionality or the ability to view files at a glance. A virtual data room that provides enterprise document management out of the box will ensure they can complete tasks with ease and no learning curve.

4. A virtual data room should provide a digital signing service

As virtual data rooms were initially designed as virtual signatory sessions, a digital signing service needs to be embedded in the product.

CentricMinds provides its own native digital signing technology

Our platform comes complete with native digital signing that satisfies legal requirements. That means there is no need to seek third-party digital signing technology to integrate with your virtual data room.

5. A virtual data room should enable all parties to preview files without the need to have any software installed

Much like we touched on before, user experience is paramount for external parties. No one wants to have to download extra software to be able to interact with your files.

CentricMinds enables users to preview any file type within their web browser

Our platform allows users to preview all files within a virtual data room via the web browser, without the need to have native software installed on the client’s system. This eliminates a friction point between you and your client.

Why do you need a virtual data room?

A virtual data room provides a secure space for you to share files and collaborate on them both internally and externally. It follows best practices for security for cloud-based data storage and sharing, more than typical file management systems deployed in the cloud.

Example: Why do you use a virtual data room during M&A?

The due diligence documents discovery requirements for mergers and acquisitions make for the perfect use case for a VDR. Teams of external parties involved in an M&A deal require sensitive documents for company aspects such as legal, accounting, and IT. As you need to share these with these external parties securely, a VDR between you and the other company (and their due diligence teams) makes the most sense from a security perspective. Additionally, with large financial transactions at stake, you want to have the most secure configuration available. 

Note: For more information on how to organize a due diligence data room with CentricMinds Drive, please reach out.

When would you use a virtual data room?

Here are some common uses of a virtual data room:

  • Working together with clients on projects
  • Pre-engagement document disclosure with interested parties
  • Partnerships with other companies
  • In-depth contract agreements
  • Sharing confidential information with outside parties
  • During mergers and acquisitions
  • Audit trail activities
  • Board/leadership information and strategic goals
  • IPO activities

A virtual data room may also be a good fit for a company with a lot of sensitive intellectual property that you wish to secure to the highest level possible - even if it’s only for internal purposes.

What are the advantages of a virtual data room?

  • Highest level of security in access controls for cloud-based file systems
  • Time-based access controls as standard
  • Own cloud security
  • User-friendly file sharing with internal and external parties
  • Provides a lawful signatory service
  • No need to download specific software to view files

Virtual Data Rooms versus File Sharing Platforms

Virtual data rooms and file-sharing platforms are similar to secure online repositories used for document storage. 

VDRs provide a finer granularity of access-based security over typical file-sharing platforms. In addition, while some file-sharing platforms can be deployed on your own cloud. This is standard for virtual data rooms, providing additional security.

Discover CentricMinds Drive, our virtual data room solution‍

If you need to share confidential documents, consider a virtual data room as part of your digital rights management solution. CentricMinds Drive is a VDR that provides secure file sharing and collaboration services with all this and more. Reach out to learn how to set everything up and take our solution for a test drive.