The Future of Data Rooms TransactionsAuthor: Kathryn Gaw
As the market for virtual data rooms continues to grow and expand into each and every sector of the digital corporate world, what potential is there for the virtual data room industry as a whole?
The success of virtual data rooms can largely be attributed to the early pioneers of data room services who were able to identify a huge shift in how business would be done globally. They were able to detect the opportunities the internet offered as well as the drawbacks of legacy services such as physical data centers and took these insights and grew with the digital revolution. With a product that delivered such superior value over its alternatives, it is not hard to see how data rooms have pushed their way into every business in every corner of the globe.
With exponential growth and increasing demand comes new entrants. Virtual data room providers popped up at an alarming rate, all vying for a piece of the corporate pie. Unfortunately for many pioneering firms, their huge capital outlays and investments into cloud computing in the early days meant that they were forced to charge higher prices in order to reduce debt and deliver value to investors.
Newer firms that entered the market when data storage was cheaper and could computing was established were able to avoid these costs almost entirely and so were able to undercut many firm’s prices while delivering a similar service. Their presence in the market sparked what is turning out to be the next major shift in the data room industry and is already becoming the focal point of many virtual data room providers.
The newer firms, despite being able to charge lower prices, did not see their product replace the legacy virtual data rooms used by massive, multinational corporates. This was because those companies had little regard for the price they were paying for their data room software and cared more about being able to trust the provider with their sensitive company information.
As the global trust in cloud storage grew, the newer data room providers found their products being purchased by increasingly smaller, more niche firms. These firms were formally priced out of the market but could now utilize the same software that the big corporates were using for a much lower price. Their use of virtual data rooms, however, proved to be vastly different and more focused on promoting collaboration and communication within their company structure. This was in stark contrast to the typical use of a virtual data room for the due diligence on large mergers and acquisitions (M&A).
The future of data rooms transactions lies in this very difference. Smaller firms using cheaper data rooms unlocked the potential of a virtual data room to deliver efficiency gains, reduced costs and promote collaboration and communication during everyday business operations and not just on big M&A deals. Providers recognized this change and started focused much more on simplifying their platform by making it more intuitive and by making it available to be used on mobile devices and tablets in addition to traditional laptops.
Most of this change has already happened or is still happening, but what does it mean for the future of the virtual data rooms industry. The answer is virtual workspaces.
Virtual workspaces are essentially offices – places where people chat to each other, collaborate on projects and get work done – that are online or virtual. The drive away from traditional office space incorporates many global shifts such as rising populations and the move away from brick and mortar business and virtual data rooms have bridged this gap and have allowed people to create businesses that have no physical office space.
No longer does a multinational take hundreds of years to set up – it now takes a few employees and a virtual data room. Employees can work at varying hours from the comfort of their home, resulting in efficiency gains and increased productivity. Businesses reduce their set up costs as well as their overheads. Suddenly your target market becomes the entire online population and not just your local town. The possibilities and potential for growth are endless.
It is only a matter of time before virtual workspaces are commonplace around the world and everyone will be making use of a virtual data room.