Technology-driven startups are the face of the modern-day corporate world. Not only startups but existing business entities are rapidly shifting to digital channels.
Where technology is a blessing for organizations, it also poses threats like cybercrimes. Virtual data rooms act as a counter-cyber threat solution, which is why they are becoming increasingly popular in the corporate world.
The global virtual dataroom software market was valued at $1.6 billion in 2021. The future seems promising as the market is projected to surpass the $3 billion figure by 2026.
Though it is evident that virtual data rooms have changed data management practices worldwide, the question stands: what drove such a remarkable digital data room industry growth? Here are some primary factors driving the data room market.
Top 4 factors driving virtual data room market growth
1. Increasing demand for cost-effective solutions
The scarcity of resources and ever-growing market competition has forced companies to look for cost-effective solutions. Companies invest in business solutions that can help them deal with multiple issues.
An electronic data room is a paperless data management solution with advanced communication and project management tools. For starters, it reduces paper and printing expenses. An average company in the US spends $400,000/year on paper and printing expenses.
Virtual data rooms also minimize the need for on-site business meetings, especially board meetings. It allows businesses to save the money spent on traveling and residence expenses of directors from distant areas.
One of the best things about VDRs is their economical prices. You can hire data room services according to your requirements or the nature of the project. For example, small-scale data-sharing projects become cheaper when you subscribe to the per-page pricing model. You can visit website to learn more about virtual data room pricing.
2. Growing cyber security concerns
Even after unbelievable technological advancements, cyber security remains the biggest challenge for businesses. During the first half of 2022, data thefts and other cybercrimes affected over 53 million people in the United States; you can imagine the intensity of cyber threats at the global level.
Online security is one of the biggest reasons companies and professionals are running towards electronic data room software, especially during deal making such as mergers, acquisitions, and corporate consolidations.
Virtual data room providers employ their services’ latest and strongest cybersecurity features. For instance, many VDRs have a 256-bit SSL data encryption feature generally used by the military and banking institutions.
Online data room software provides security and controls how you want to share your data. Data rooms during M&As give you the luxury of controlling your secretive files. You can:
- Restrict users from changing, altering, saving, printing, or sharing any document
- Delete any device or remove any user from the VDR immediately.
- Revoke access to documents without any prior notice
- Restrict or limit user entrance to a specific time
- Prevent screenshots, scans, or photographs of the VDR documents
3. Compliance
Complying with the standards or requirements of local and international regulatory bodies is also a challenge for companies. A business failing to ensure strict compliance may face heavy penalties or even suspension.
Financial companies operating in the US must comply with the standards set by FINRA. Similarly, many companies in Europe have to comply with GDPR. Besides regulatory compliance, many companies acquire optional certifications to strengthen their authority and win customers’ or investors’ trust.
Virtual data room providers, depending on the areas of their operation, are certified mainly by local and international authorities, such as:
- ISO (ISO 27081, ISO 27001, etc.)
- SOC2
- SSAE 16
- FINRA
- GDPR
- Safe Harbor International Privacy Practices
So, using certified data room services also helps companies comply with regulations from local bodies.
4. Changing work cultures
Although work-from-home culture was a product of covid-19 lockdowns, companies realized that they could also keep it in the future. Many companies still allow employees to work from home, while enterprises like Google have introduced a hybrid work culture.
Working from home seems like a luxury for many employees, and businesses can reduce their administrative expenses. However, creating a safe virtual work environment is also a challenge.
Virtual data rooms are giving businesses ready-to-use and highly safe virtual workstations. Data room providers allow companies to:
- Create multiple data rooms for their departments and teams
- Upload and organize their corporate documents in the VDR and give employees access to their roles.
- Ensure secure, 24/7 communication between the employees, managers, investors, and other stakeholders.
- Conduct online business meetings
- Share data within and outside the organization
Final words
The virtual data room market is already growing at a commendable rate and is expected to hit a $3 billion figure by 2026. Essential factors affecting market growth include cyber security, regulatory compliance, demand for cost-effective solutions, and changing corporate work culture.
