McKinsey acquires data analytics firm QuantumBlack
McKinsey has acquired QuantumBlack to tap into the growing demand for data analytics. The deal will see QuantumBlack’s management team stay in place, with the strategy consulting firm calling on its subsidiary to deliver data science and analytical solutions. 45 employees transfer, the value of the deal has not been disclosed.
Companies are generating a huge amount of information as more and more inputs from a wide range of monitored points are being stored. Leveraging that data for actionable insights is not an easy task however, with not merely the derivation of interesting interpretations a problem but also their presentation to business decision makers a difficulty.
Recent years have seen particularly consulting firms seek ways of redressing this issue, with data visualisation one of the key roots explored. The rapidly changing business environment has called for technologies that are effectively able to transform large data sets into useful outputs that are understandable based on sometimes unforeseen requirements.
One area in which large amounts of data are being generated is the Internet of Things, particularly within the Industry 4.0 realm. According to a McKinsey report, the technology will be worth up to $11.1 trillion by 2025, with around a third of that from industrial demand.
QuantumBlack
QuantumBlack Visual Analytics, known as Adaptiveflow Decisions prior to 2012, was founded in 2009 and incorporated in 2011. The company had three Directors at its incorporation, Jacomo Corbo, Simon Williams and Sam Bourton, in 2014 they were joined by Yves Boussemart also as a Director. Jeremy Palmer joined the firm as a Director in 2015, bringing with him more than 25 years of financial services industry experience, including CEO of UBS Investment Bank Europe, Middle East and Africa, as well as positions at Salomon Brothers, JP Morgan and Barings. The company currently employs around 45 staff and is situated in London’s Tech City at 12 Carthusian Street.
The company leverages large data sets for actionable business and performance insights through visualisation of relevant data. By focusing on making marginal changes for the better a company can, like the butterfly that beats its wings, create considerable (positive) effects down the line. To achieve results the firm uses the latent potential contained within large data sets to determine possible action, those actions are then made simple to comprehend, through which improvements to, as well as content for, the decision making process can be delivered to clients.
The company has of late managed a wide range of successful projects that were able to generate high returns. For instance, QuantumBlack supported an NHS operator to reduce its A&E time breaches by 15% through the improved utilisation of available resources. In another project the firm helped make sense of information from 250,000 sensors gathering information for the maintenance of a £15 billion urban infrastructure project.
The result of extending the traditional Gaussian models with spatio-temporal correlation derived from machine learning techniques to the data set from the sensors, was a 20% reduction in infrastructure and maintenance costs.
The analytics expert has its roots in Formula 1, where it helps teams with data-driven improvements. “Differences between teams [in Formula 1] are measured in milliseconds so they look for every available opportunity to make improvements,” says QuantumBlack co-founder Simon Williams. “Analysing data at scale is a way to optimise the performance not only of cars but also of engineering teams and whole organisations.”
The acquisition of QuantumBlack by McKinsey Solutions, the data analytics arm of the global firm, will see the company become a wholly owned subsidiary of the world’s leading strategy consulting practice. The company will be kept intact as it is, with the management team remaining in place. QuantumBlack will continue to develop its various analytics products and serve clients, with further support and resources available from McKinsey.
The partners have been working together quite some time prior to the deal, explains Bill Wiseman, head of McKinsey Analytics in Asia: “McKinsey and QuantumBlack worked together for more than a year in a number of industries." Similar engagements have also been conducted in Europe, acknowledges Sven Smit, head of McKinsey Western Europe.
According to the consultancy, the firm will be leveraging the subsidiary as required for projects across a wide range of industries. Expectations are that the continued data collection and the potentially disruptive changes that result will see increasing demand for services and solutions that are being developed at firms like QuantumBlack.
Expansion strategy
The deal is the firm's fourth acquisition of 2015, in line with a strategy to bring new tools, technologies, and capabilities to McKinsey clients, says Daniel Pacthod leader of McKinsey's New Ventures unit: “Clients are asking us for more than just advice. We’re building some terrific new capabilities organically and we’re actively looking for partnerships or acquisitions where it makes sense.”
Other acquisitions include Germany-based 4tree and US-based VisualDoD, and prior to that it bought SATMAP (a North American software specialist that provides contact centre technology) and design consultancy Lunar. Late last year it agreed an alliance with Eversight, a provider of cloud-based sales and marketing services.
Nicolaus Henke, head of McKinsey Analytics, remarks: “Data analytics is one of the most disruptive and potentially transformative developments in management. QuantumBlack, through its Nerve platform, combines data from disparate sources to produce meaningful data around human endeavor – something that previously has not been reliably measured. This is why we’re so excited about the combination of our organisations – together we can provide our clients with a completely new means of making decisions and converting knowledge into action.”
