Virtual data rooms have already been cemented in the modern-day business arena. The global virtual data room market already reached the $1 billion figure back in 2018 ($1.3 billion, to be precise), and the experts projected that it would hit $3.63 billion by 2026 or sooner.
Initially, online data room software was specifically used to facilitate mergers and acquisitions due to the regulatory obligations imposed by the local or federal authorities. Apart from legal obligations, data room software is safe for complex transactions like mergers and acquisitions.
What triggered the use of virtual data rooms in businesses?
The growth of the virtual data room market was based on different factors, but cybersecurity was the largest reason. The business world, in the past decade, has rapidly shifted to digital channels. From online banking to online retail stores to online shopping, digitalization was the new normal.
However, on the other hand, digitalization also provided opportunities to hackers and digital thieves. The world has seen some of the biggest data scams, including famous Yahoo data leaks, in the past few years. All of this pushed businesses to look for secure online channels to keep their communication and confidential business data safe.
Additionally, the COVID-19 lockdowns left professionals and businesses with no choice but to look for secure alternatives to keep businesses running. Thankfully, virtual data rooms were up to the task as they not only provided unparalleled data security but ensured safe business communications.
Top 10 virtual data room providers
As a bonus, here is a list of some of the best virtual data room providers in 2022:
- Google Workspace
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The future of virtual data rooms
As mentioned earlier, the future of the virtual data room market is brighter than in the past. More and more businesses, government organizations, and professionals are turning to secure digital platforms. Here are some important reasons why data room services will be in high demand in the future.
Remote work culture has been appreciated by many employees during the COVID-19 era, and businesses are comfortable with it where it makes sense. An electronic data room is cloud-based software that you can access from anywhere.
Multi-dimensional business solutions
Businesses nowadays want diversity in the software or applications they use. Virtual data rooms are diverse or multi-purpose solutions, and you can use them for various purposes such as data storage and sharing, online communication, business meeting management, remote collaboration, and online deal-making.
Introduction of AI
AI or artificial intelligence is the latest and arguably the most amazing advancement in technology for growing your business. AI helps you project the future based on past information and trends. Businesses use AI-based tools for better decision-making, and virtual data room providers have already started incorporating AI in their solutions. Likewise, companies hire experts and professionals who have earned MBA in Artificial Intelligence to support their AI data and analytics.
Businesses nowadays possess an unprecedented amount of information that can either give them an undefeatable strength or drive them into bankruptcy. Corporations nowadays thrive based on intel, and most importantly, authorities and governments are more conscious about customer data protection. In simple words, businesses are legally bound to protect consumers’ data.
Use of online data room software in today’s businesses
Data rooms can be used in many ways, and here are some of them.
1. Centralized data storage
Storing your business data in multiple locations increases data security risks. It is obvious that protecting multiple data storage platforms is more difficult than protecting centralized data.
Virtual data rooms are centralized platforms where businesses store all types of documents, and concerned employees are allowed to access their relevant documents.
Most importantly, data rooms are remotely accessible. That means employees, project teams, or any concerned party can access VDRs whenever needed.
2. Safe communications
Modern-day business communications are not bound to that typical 9-5 schedule. Businesses are promoting remote working, and for that, they need secure communication channels. That is why an electronic data room is one of the best options for businesses.
Companies use data rooms for intra-organizational and inter-organizational communications. Employees, remote teams, managers, etc., can share documents online, engage in group or private chats, or communicate via public chat threads. Similarly, management coordinates with stakeholders or investors within the data room. VDRs are also used for official business meetings.
3. Due diligence
Businesses, corporations, enterprises, investors, or private equity firms use online data room software for due diligence during significant business transactions such as joint ventures, partnerships, M&As, capital asset acquisitions, initial public offerings, fundraising, and real estate transactions.
Their remote accessibility, versatile communication channels, and handy project management features makes due diligence simpler and faster.
Summing it up
According to projections, the virtual data room market will witness immense growth in the coming years and hit the $3 billion figure in 2026. Cyber security and AI are two important factors that will play an important role in the VDR industry’s growth. Businesses have been using virtual data rooms for data security, online communications, deal-making, project management, and due diligence, and this trend is expected to continue in the future.