At first, secure virtual data rooms and generic online file storage systems seem like they have a lot in common.
Storing files in one of these online systems has any number of benefits over keeping physical files — it allows for remote access, easy sharing and can be a great way to back up files, since it prevents them from being lost in a system failure, fire, flood or other natural disaster.
However, most of the generic options are designed for personal use, with little to no security for sensitive files, limited space for storing documents and complex pricing structures, should the user need additional storage space.
These generic options may work great for an individual user, but most businesses need something more secure and with more space.
A business should use a secure data room (instead of a standard cloud storage system) if it:
— Deals in any sort of data that needs to simultaneously be easily accessible (even by an outside team) and extremely secure/confidential. This includes legal files when going through business litigation or financial files when working on an IPO, joint venture, or merger or acquisition (M&A).
— Needs to track who is accessing important files, track what they are doing with the files, and control when and where they can do this.
— Is required to keep documents on file that it doesn’t want falling into the wrong hands, including files that the business is required to keep by law for a number of years, such as tax records, bank statements or ex-personnel records.
— Has extremely large files requiring storage space that goes well beyond the standard space provided by the generic online file storage systems.
— Wants to have a backup of important documents off-site, in case of an emergency or natural disaster. These might include patents, licenses or financial documents.