Technology

The Future of Virtual Data Rooms and Their Role in the New-Era of Business Models

4 Mins read

Before the advent of cloud technology and the internet, documents and files of all kinds were stored in physical data rooms. These rooms required various things to maintain such as paper suppliers, staff, couriers and other costs.

Besides the financial and human resources you need to invest, most business people that used physical data rooms had to travel to their storage’s location.  This means that they have to take time out of their busy schedule to sort through and review numerous stacks of paperwork. This is a very costly hassle.

All of these expenses and wasted time can now be avoided as the need of physical data rooms have been mostly eliminated; with the help of Virtual Data Rooms. In this article, we’re going to look at what the future of virtual data rooms is and the role they play in this new era of business models.

Virtual Data Rooms: What are They?

Virtual Data Rooms, VDRs for short, have become one of the most powerful and fastest growing tools in the world of computing software. The advent of Virtual Data Rooms has taken away all the roadblocks between time, location, and place by bringing the population together on the internet.

In Virtual Data Rooms, instead of storing data inside actual physical rooms, numerous documents and files are stored on an online server. These servers feature excellent security and let multiple users efficiently and easily access, manage, and share their vital information without risking it being lost or stolen. 

You can think of virtual data rooms just like a hall of records or library, but it is all virtual. There is no more need to shuffle through thousands of paperwork, instead you can search for the exact file you need in just a matter of milliseconds.

On top of the convenience, the use of Virtual Data Rooms can also contribute to helping the environment. With more and more businesses not keeping physical data rooms, the less paper is used globally. This will help in reducing trees being cut down for paper production. 

The Future of Virtual Data Rooms

Each year, the demand for Virtual data rooms keeps on increasing.  The VDR market has experienced a huge boom, enjoying upwards of $800 million in revenue in the past few years. In fact, a report by IBISWorld in 2012 calculated that the market for Virtual Data Rooms would increase 17% per year. This is due to the ever increasing demand for more powerful technology and software. A lot of people are also turning to the internet for their services, such as food delivery and shopping.

Over $800 million of market revenue was made in 2016 by 240 Virtual Data Room providers. 73% came from the 4 largest firms in the VDR market. Even though only a few firms have such a huge cut of the market, the smaller firms are still doing very well.

Smaller VDR firms are doing well because they provide niche VDR solutions for those that need it customized. Large companies and corporate conglomerates are very interested in investing in technology solutions; with the VDR market being in their sights. Synchronoss Tech, a huge company, acquired Intralinks in January 2017 for a whopping $821 million.

Compared to other sectors in technology, the VDR market looks like it is growing from here. The software is always improved and tailored to various companies and their needs. This leads to a very promising future for the whole VDR market. By 2022, the global VDR market is predicted to grow to 1,895 million. This is likely due to M&As and their increase of business data needs.   

How is the VDR Market Today?

Virtual data rooms have revolutionized the transaction and data storage process in today’s business industry. With the advent of cloud-based technology, anyone can get instant access to their data from anywhere in the world and on any device with a stable internet connection.

On top of the convenience, Virtual Data Rooms provide very secure data management and storage. This saves a lot of precious time and thousands of dollars. VDRs have evolved from just storage and performing due diligence to facilitating an entire transaction or deal. Even though virtual data rooms are widely used for M&A, it is also very popular in other areas; such as private equity, venture capital, load syndication, etc. across various industries.

How Can Virtual Data Rooms Help My Business?

There are plenty of ways a VDR can help improve your business. One of them is the fact that VDRs help reduce time wasted and are eco-friendlier compared to paper-based, physical data rooms. Additionally, it is a very secure way of storing sensitive business data. Advancements in technology are inevitable, this means that the efficiency and security of virtual data rooms can only improve in the future.

Virtual Data Rooms are a huge asset for any business or company that deals with plenty of sensitive data. This can include acquisitions, mergers, due diligence, and many more. The main goal and purpose of a VDR is to securely keep, efficiently organize and access a business’ data on demand.  One of the biggest advantages of a virtual data room is that all activities are automatically recorded. You can see who viewed which document, taking all the guesswork away.

The Benefits of Virtual Data Room for Your Business

Here is a quick list of the benefits a virtual data room can give to you and your business.

  • Increase in productivity and efficiency due to technological advancements
  • Save money by reducing travel expenses and human resources
  • Help save the environment by reducing paper use and waste
  • Store and manage information efficiently and securely
  • Have access to all your needed files 24/7
  • Protect your business data from piracy and theft by storing it an a secure and online server
  • Enjoy a more efficient way of transferring business documents from one person to another

Conclusion

In conclusion, the Virtual Data Room market has a very bright future ahead of it. The demand for more data storage is increasing every year as more and more of the population have access to stable internet. Its role in a business has never been more important, especially one that is based online.

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