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Virtual Data Room Guide

The latest technology you haven’t heard of but have used many times before.

  • Organizations are collecting and exchanging data at an astronomical rate today. New tools are opening up previously untapped channels for collaboration.
  • The sensitive nature of the information used in deal making, along with heightened regulatory scrutiny and reporting requirements and all the other moving elements, makes conducting transactions a huge task.
  • The difficulty lies in completing the transaction process of working with outside parties while using the best resources at hand.

Our Advice

Critical Insight

  • A virtual data room (VDR) is an online repository designed for secure collaboration on sensitive documents with outside parties. It is the physical data room's digital evolution.
  • VDR pricing is like internet and cell phone plans: there is a base fee and add-on fees for extra features. Avoid overages by selecting the best-fit pricing option.
  • Purchasing a VDR is not needed in all scenarios. If you are working with a third party (e.g. a bank) to help facilitate your transactions, then they might already have a VDR; therefore, the decision is made for you.

Impact and Result

  • The fundamentals: learn what a virtual data room is, how it works, and the advantages it offers.
  • Understand how a virtual data room differs from other file sharing options.
  • Consider pricing factors while deciding whether to purchase a virtual data room solution.

Virtual Data Room Guide Research & Tools

1. Virtual Data Room Guide Deck – A guide that walks you through the fundamentals of a virtual data room.

The purpose of this guide is to define everything you need to know when approaching a VDR solution.

This guide will explain the purpose, uses, and what to look out for when acquiring a virtual data room solution. It will also go through a brief provider comparison to help inform potential consumers.


Virtual Data Room (VDR) Guide

The latest technology you haven’t heard of but have used many times before.

Executive Summary

Your Challenge
  • Today, organizations are gathering and sharing data at an explosive rate. New tools are enabling unforeseen channels of collaborating.
  • The sensitivity of the data involved in deal making combined with increased regulatory oversight and reporting obligations makes conducting transactions a massive undertaking, along with all the other moving parts.
  • The challenge is to go through the transaction process of collaborating with external parties by leveraging the most appropriate resources available.
Common Obstacles

When going through a transaction there are some common obstacles:

  • Security. Are tasks being done without needing to worry about the data or the users being secured?
  • Efficiency. Do you have to go through extra steps as a precaution due to the sensitivity of the data involved?
  • Technology Problem. The current file sharing solution, especially if it involves physical paper, being leveraged is not meeting the needs of use cases involving external eyes on sensitive data. This is mostly due to missing features.
Info-Tech’s Approach
  • Start with the basics: Understand what a virtual data room (VDR) is, how it is leveraged, and the features that come with it.
  • Know the difference between a virtual data room and other file sharing solutions.
  • Decide your approach on whether to acquire a virtual data room solution and take into account pricing considerations.
Info-Tech Insight

A virtual data room is an online repository designed for secure collaboration on sensitive documents with outside parties. It is the physical data room's digital evolution.

Insight Summary

What is a virtual data room (VDR)? A VDR is an online repository designed for secure collaboration on sensitive documents with outside parties. It is the physical data room's digital evolution.
Determine the optimal plan when buying a VDR solution Pricing depends on features offered, project size, project duration, the amount of storage needed, the number of users, and the level of customization required. Like the internet and a cell phone, there is a base fee and add-on fees for extra features. Avoid overages by selecting the best-fit pricing option.
Purchasing a VDR is not needed in all scenarios If you are working with a third party (e.g. a bank) to help facilitate your transactions, then they might already have a VDR; therefore, the decision is made for you: a VDR purchase is not needed.

Virtual Data Rooms

versus

Generic File Sharing Solutions

A diagram of concentric semi-circles. The inner-most circle is 'Document Security', then 'User Security', 'Virtual Data Room Security', and 'Overall Compliance Security, Regulation - Audit - Compliance'. Above the circles is 'Information lifecycle' with four steps 'Generate', 'Capture', 'Deliver & Use', and 'Manage & Retire'; the middle two are circled as 'VDR focus'.

Virtual Data Room
On-a-Page

Store, share, and control sensitive corporate information and meet online securely. A VDR is:

  • A secure online repository that allows users to control who can access certain information in the repository, e.g. important financial transactions, fundraising, IPOs, and real estate asset lifecycle management.
  • Applied more and more to any organization concerned with secure and specialized management of its documentation.
  • A secure online meeting place for all parties involved in the negotiation of an agreement.
  • Accessible from anywhere.
  • Used for M&A or joint venture investments, executive communication between board members, patents and licensing, loan syndication, and private equity and venture capital funding.
  • Different from standard cloud storage in its complex rights management outside the company firewall and how it leads users through the entire deal and due diligence process.

Most popular uses:

  • Structured arrangement and organization of all necessary documents, including texts or images.
  • High-speed digital sharing of documents, which takes seconds instead of traditional mailing or courier delivery, which takes hours or even days.
  • Secure, granular access to the documents and files from any device, whether desktop computer or a tablet.
  • Quick, safe, and efficient discussion of documents online instead of time-consuming and risky face-to-face meetings.

Pricing:

  • Pricing depends on features offered, project size, project duration, the amount of storage needed, the number of users, and the level of customization required. Like the internet and a cell phone, there is a base fee and add-on fees for extra features.
  • There are four pricing models:
    • Per Page: Charged by page storage. Suitable for small projects. Can range from $0.40 to $1.00 a page.
    • Per User: Charged by the number of user licenses. Vendors offer a fixed number for a flat rate. User administration licenses range from $100 to $300. Other users/guest rates are lower.
    • Storage: Charged by the amount of storage required. Overages can add up.
    • Flat Rate: Monthly custom packages are available that support varying amounts of data, pages, and users. Flat rate pricing will eliminate overage surprises and allow for consistent budgeting. An average range would go from $500 to $1,000 a month.
  • Pricing can range from a few hundred dollars a month to over $100,000 for a large project.

Virtual Data Room
Features

Top features:

  • Access security
  • Easy and secure upload, saving and management of multiple files
  • Customer support
  • Ease of setup
  • Reporting

Other features:

  • Activity tracking and audit log
  • Multiple file format support
  • Bulk upload
  • Anti-virus protection
  • Simple and easy-to-use workflows
  • Unlimited users and storage
  • Optional pay models, upgrade when needed
  • Q&A tool
  • Notes
  • Alerts and notifications
  • Dynamic watermarks
  • Machine learning (enables automatic document translation and automatic red flag analysis)
  • Accessible from anywhere there is an internet connection
  • Multi-language support
  • Advanced search
  • Mobility
  • Multiple projects in one account
  • Microsoft Office integration
  • Print screen disabling
  • Customization
  • Collaboration

What to look out for when selecting a VDR

Certifications and audits

  • Virtual data room provider should be audited regularly and guarantee the maximum security in line with the highest security standards according to the ISO 27001:2013 certification and the GDPR.
  • Ask yourself: Do you only require secure data storage or all the functionality of a VDR?
  • Providers offer different levels of customer support – some around the clock, while others have more limited contact.
  • You don’t need to spend as much money on one-off projects as you do with ongoing or more business-sensitive projects. Do your projects require file sharing without enhanced security features?
  • Review the providers’ certificates. Use an accredited provider when dealing with sensitive information.

Fit for your key use cases

  • M&A and due diligence, legal documents management, capital raising, real estate transactions, regulatory risk management use case: M&A involves large volumes of confidential documents that need to be stored and protected with several security. Bidders in the M&A deal have access to information stored in the data room 24/7 with no limits as long as the seller’s side grants this access. The seller has transparency on user activity, documents, or buyer request analytics.
  • Fundraising use case: Fundraising campaigns can last for weeks, even years, and engage many teams and professionals to review, comment, or update financial documents. VDR should let users share information quickly and safely. Also a Q&A section and a comments section allow all parties of the fundraising process to communicate and stay on the same page. To improve the cooperation process, the fundraising virtual data rooms offer features like direct messaging, task manager, and other additional functions that facilitate teamwork.

Balance security and usability

  • A variety of document protection options: Can make the documents very secure – no printing, no screenshots, no downloading, and a large digital watermark, but the parties reviewing the documents may not be very happy with the user experience and the inconvenience, or the sensitivity of the document may not warrant the restrictive measures you’ve put in place.
  • You can make the documents easy to download and share, but at the end of the transaction, you might lose track of those documents, running the risk that local copies are out there outside your view. As an administrator, carefully weigh security and usability to find the right balance.

Who should provide the VDR?

“Those who don't use a VDR may be seen as not professional and that can impact your deal-making advantage.”

Situation 1
The seller should provide the virtual data room of their own data.

Situation 2
If the buyer has a VDR, then they might mandate using theirs since they will own the data,

Situation 3
If there’s a third party (e.g. a bank) to help facilitate the transaction, then you might not even need to purchase a VDR.

VDR Value Determination Matrix

Achieve value by determining the optimal plan option.
VDR Value Determination Matrix. Rows are 'Usage': 'Low', 'Medium', 'High'; columns are 'Plan Options': 'Projects', 'Users', 'Page', 'Storage', 'Archive', 'Support'. Fields are color-coded to the legend on the right. Base Fee Determined Based on Plan Details. Numbers are based on what providers typically charge.

Customize the color of matrix to your organization’s usage.

The column with a single most likely circumstance is the option with the best chance of avoiding extra charges.

For example, the best options for consideration in this instance are by page and storage as they are the only options with the highest overall likelihood.

Legend for the adjacent matrix. Dark blue fields are 'Likely Usage', Green fields are 'Possible Usage', and Grey fields are 'Unlikely Usage'.

Info-Tech Insight

If you are working with a third party (e.g. a bank) to help facilitate your transactions, then they might already have a VDR; therefore, the decision is made for you: VDR purchase is not needed.

Success Metrics

Metrics that will prove if your virtual data room was successful.

Adoption: How much engagement does your data room yield?

Efficiency: How efficient is it to conduct tasks in your data room?

Versatility: How flexible and accessible is your data room?

Security: How vulnerable is your data room and its assets?

Adoption Current Goal
Number of documents/pages accessed 50 75
Number of documents/pages with feedback 50 75
Amount of time spent in the data room per invited user 50 75
Efficiency Current Goal
Average time period to complete transactions 50 25
Number of tasks automated 50 75
Amount of time spent uploading/sharing/archiving 50 75
Versatility Current Goal
Number of different tools/technologies used throughout transaction process 50 75
Number of documents duplicated 50 25
Satisfaction that solutions delivered are cost-effective 50 75
Security Current Goal
Frequency of unexpected vulnerabilities 50 25
Number of vulnerabilities remediated 50 75
Average vulnerability remediation time 50 75
Virtual Data Room Guide preview picture

About Info-Tech

Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.

We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.

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Authors

Ibrahim Abdel-Kader

Andrea Malick

Contributors

  • DealRoom: John Morada
  • Domo: Ben Schien, James Johnson
  • Firmex: Kaynan Kaplan
  • Anonymous: Avast, Capgemini, DocuSales, Interac, Siemens, Walmart
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