When you are evaluating virtual data rooms providers, it is great to work through the standard checklist of questions to ask and issues to examine each provider. What’s not always apparent, however, are answers to questions that don’t appear on those checklists, and which can make – or break – the success of your data room.

1) Outsourcing the Outsourced

With cost control a major reason for outsourcing in many industries, when you secure any service provider it’s important to know whether components of their offering are further outsourced. This could mean that the partner you think you are getting may not be the one you’ll ultimately be dealing with.

Outsourcing of components such as hosting, management, scanning and support happens among smaller data rooms that don’t have resources to offer a full service. In theory this might seem like a reasonable solution, but in practice it can cause clients to have to deal with challenges such as:

  • Offsite security infrastructure
  • Processing time lags and server disconnects
  • Integration of processing practices across platforms

Any of these issues can delay the delivery of documents or compromise the confidentiality, and those may be risks you can’t afford to take.

In addition, there are data rooms’ reputation to consider. Your chosen vendor might have a flawless reputation, but their outsource partners may not be as shiny. You need to ask your provider about each company they work with. Taking the time to verify what – if any – components of the service are contracted out to others might save you trouble in the long term.

2) Security

Nothing is more critical to your choice of data room provider than security. Especially for sensitive projects, you need a highly secure chain of custody, with end-to-end controls across all processes. Not all data rooms are equally diligent in this respect, and true document protection encompasses more than security against hacking or viruses.

So, what issues should you be looking at when you’re evaluating vendors? Our top two are data encryption and document protection:

  1. A good data room provider should be offering an appropriate level of encryption such as 256-bit encryption, which means the vendor has the best software commercially available. This advanced encryption standard (AES) software conforms to international requirements and is now used worldwide.
  2. Appropriate document protection options include the ability to lock down PDF documents and provided customized access to users. This means the administrator can allow users to copy, print, forward or alter a document, depending on their level of authority. Access protocols should apply even to the print screen or download options, and a detailed audit trail should ensure that the vendor can track usage after distribution.

In some cases, administrators  of data rooms might need to revoke permissions once the document passes outside the corporate firewall. This could be the “acid test” for determining whether your potential provider has true document protection in place.

3) Communication is Critical

Hosting your confidential information with a virtual data room provider can cause inconvenience if the users don’t understand what’s required from them or comply with processes. A comprehensive Question & Answer module takes care of many compliance issues by providing a traceable record of all document interactions and also ensures that the user’s Queries are answered by the appropriate person. When it comes to asking questions, however, many vendors don’t have real-time responses available to unorthodox or unlisted deal questions. Support tickets are time-consuming and a waste of money when all you have is a quick question

Check that your potential data room provider has a system to manage the flow of questions or comments about documents. The system should mirror a physical workflow process and enable users to get answers as they need them, with links to relevant documents.

Don’t be fooled into thinking all data room providers offer the same services. A careful analysis of the finer points can make all the difference to your experience –and the integrity of your data.

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