MasterCard Buys Stake in Mu Sigma — and Big Data Analytics

by   |   February 11, 2013 7:28 pm   |   0 Comments

Like many other large financial institutions, MasterCard Inc. already was invested in big data analytics as a critical tool for improving efficiency and increasing profits.

However, with the company ready to ramp up its external analytics practice, it faced the same shortage of analytical talent expected to hamstring the vast majority of enterprises in the next half-decade.

To address this challenge, MasterCard announced a partnership with Mu Sigma, a large Chicago-based decision sciences and analytics consulting firm.

Mu Sigma offers its more than 2,500 data analysts to enterprises that want to leverage their data but lack the in-house talent to do so.

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But the deal was much more than a partnership: MasterCard also acquired a financial stake in Mu Sigma (for an undisclosed sum), underscoring the value and promise the financial giant sees in data analytics.

“The equity investment reflects the importance of this partnership and our commitment to it,” Gary Kearns, executive vice president of Information Services for MasterCard Advisors, tells Data Informed.

The partnership combines Mu Sigma’s analytics engines and expertise with MasterCard Advisors, a division with more than 300 employees that conducts research into customer purchase behavior for retailers, advertisers, manufacturers, financial institutions and governments.

“MasterCard had a very solid analytics business today,” says Kearns. “This deal is all about accelerating our ability to scale our analytics business.”

“The announcement highlights the clout that organizations with analytics skills and experience are able to leverage to their benefit,” says Charles King, principal of Pund-IT. “In this case, that includes having a globally recognized retail brand like MasterCard provide cash (through its equity share) that could allow Mu Sigma to invest in new growth and talent development efforts.”

King adds that the deal also should provide MasterCard “the means to monetize their investments in purchase behavior insights far more quickly and cost efficiently than if they had to develop analytics skills in-house.”

Among the services offered by MasterCard Advisors are custom analytics, predictive analytics, portfolio analytics, competitive analysis and fraud management.

That’s expected to continue, with MasterCard Advisors and Mu Sigma planning to jointly develop analytics products.

Mu Sigma was founded in 2004 by former Booz Allen Hamilton strategy consultant Dhiraj Rajaram. While headquartered in the Chicago area, most of Mu Sigma’s analysts are based in Bangalore, India.

The company specializes in three areas—marketing, supply chain and risk analytics – and its clients include Microsoft, Dell and Pfizer.

In a statement announcing the partnership with MasterCard Advisors, Rajaram said, “Big data analytics is growing at a tremendous pace. We believe the combination of MasterCard’s deep data and information insights expertise when exposed to Mu Sigma’s Big Data analytics ecosystem will add tremendous value to various businesses.”

An oft-cited McKinsey report published in 2011 predicts a shortage of more than 140,000 people with deep analytical skills in the U.S. alone by 2018, as well as a shortfall of 1.5 million “managers and analysts with the know-how to use the analysis of big data to make effective decisions.”

To help close the gap between analytics demand and supply, universities, independent organizations and large corporations such as IBM and SAS are offering training and certifications in data analytics.

The MasterCard Advisors/Mu Sigma alliance “does speak to the fact that interest in analytics is growing far faster than the number of workers with analytics skills,” King says. “As a result, it’s likely we’ll see additional partnerships and deals of this sort as time goes on.”

Contributing Editor Christopher Nerney (cnerney@nerney.net) is a freelance writer in upstate New York. Follow him on Twitter @ChrisNerney.

Editor’s note, February 12, 2013: This orignal version of this article has been updated to include comments from Charles King, principal of Pund-IT.

 




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