Data mining working

While large-scale information technology has been evolving separate transaction and analytical systems, data mining provides the link between the two. Data mining software analyzes relationships and patterns in stored transaction data based on open-ended user queries. Several types of analytical software are available: statistical, machine learning, and neural networks. Generally, any of four types of relationships are sought:

• Classes: Stored data is used to locate data in predetermined groups. For example, a restaurant chain could mine customer purchase data to determine when customers visit and what they typically order. This information could be used to increase traffic by having daily specials.

• Clusters: Data items are grouped according to logical relationships or consumer preferences. For example, data can be mined to identify market segments or consumer affinities.

• Associations: Data can be mined to identify associations. The beer-diaper example is an example of associative mining.

• Sequential patterns: Data is mined to anticipate behavior patterns and trends. For example, an outdoor equipment retailer could predict the likelihood of a backpack being purchased based on a consumer's purchase of sleeping bags and hiking shoes.

Data mining consists of five major elements:

• Extract, transform, and load transaction data onto the data warehouse system.

• Store and manage the data in a multidimensional database system.

• Provide data access to business analysts and information technology professionals.

• Analyze the data by application software.

• Present the data in a useful format, such as a graph or table.

Different levels of analysis are available:

• Artificial neural networks: Non-linear predictive models that learn through training and resemble biological neural networks in structure.

• Genetic algorithms: Optimization techniques that use processes such as genetic combination, mutation, and natural selection in a design based on the concepts of natural evolution.

• Decision trees: Tree-shaped structures that represent sets of decisions. These decisions generate rules for the classification of a dataset. Specific decision tree methods include Classification and Regression Trees (CART) and Chi Square Automatic Interaction Detection (CHAID) . CART and CHAID are decision tree techniques used for classification of a dataset. They provide a set of rules that you can apply to a new (unclassified) dataset to predict which records will have a given outcome. CART segments a dataset by creating 2-way splits while CHAID segments using chi square tests to create multi-way splits. CART typically requires less data preparation than CHAID.

• Nearest neighbor method: A technique that classifies each record in a dataset based on a combination of the classes of the k record(s) most similar to it in a historical dataset (where k 1). Sometimes called the k-nearest neighbor technique.

• Rule induction: The extraction of useful if-then rules from data based on statistical significance.

• Data visualization: The visual interpretation of complex relationships in multidimensional data. Graphics tools are used to illustrate data relationships.

Technological infrastructure required

Today, data mining applications are available on all size systems for mainframe, client/server, and PC platforms. System prices range from several thousand dollars for the smallest applications up to $1 million a terabyte for the largest. Enterprise-wide applications generally range in size from 10 gigabytes to over 11 terabytes. NCR has the capacity to deliver applications exceeding 100 terabytes. There are two critical technological drivers:

• Size of the database: the more data being processed and maintained, the more powerful the system required.

• Query complexity: the more complex the queries and the greater the number of queries being processed, the more powerful the system required.

Relational database storage and management technology is adequate for many data mining applications less than 50 gigabytes. However, this infrastructure needs to be significantly enhanced to support larger applications. Some vendors have added extensive indexing capabilities to improve query performance. Others use new hardware architectures such as Massively Parallel Processors (MPP) to achieve order-of-magnitude improvements in query time. For example, MPP systems from NCR link hundreds of high-speed Pentium processors to achieve performance levels exceeding those of the largest supercomputers.

Process

The Knowledge Discovery in Databases (KDD) process is commonly defined with the stages:

(1) Selection

(2) Pre-processing

(3) Transformation

(4) Data Mining

(5) Interpretation/Evaluation.

It exists, however, in many variations on this theme, such as the Cross Industry Standard Process for Data Mining (CRISP-DM) which defines six phases:

(1) Business Understanding

(2) Data Understanding

(3) Data Preparation

(4) Modeling

(5) Evaluation

(6) Deployment

or a simplified process such as (1) pre-processing, (2) data mining, and (3) results validation.

Polls conducted in 2002, 2004, and 2007 show that the CRISP-DM methodology is the leading methodology used by data miners. The only other data mining standard named in these polls was SEMMA. However, 3-4 times as many people reported using CRISP-DM. Azevedo and Santos conducted a comparison of CRISP-DM and SEMMA in 2008.

Pre-processing

Before data mining algorithms can be used, a target data set must be assembled. As data mining can only uncover patterns actually present in the data, the target data set must be large enough to contain these patterns while remaining concise enough to be mined within an acceptable time limit. A common source for data is a data mart or data warehouse. Pre- processing is essential to analyze the multivariate data sets before data mining. The target set is then cleaned. Data cleaning removes the observations containing noise and those with missing data.

Data mining

Data mining involves six common classes of tasks:

• Anomaly detection (Outlier/change/deviation detection) – The identification of unusual data records, that might be interesting or data errors and require further investigation.

• Association rule learning (Dependency modeling) – Searches for relationships between variables. For example a supermarket might gather data on customer purchasing habits. Using association rule learning, the supermarket can determine which products are frequently bought together and use this information for marketing purposes. This is sometimes referred to as market basket analysis.

• Clustering – is the task of discovering groups and structures in the data that are in some way or another "similar", without using known structures in the data.

• Classification – is the task of generalizing known structure to apply to new data. For example, an e-mail program might attempt to classify an e-mail as "legitimate" or as "spam".

• Regression – Attempts to find a function which models the data with the least error.

• Summarization – providing a more compact representation of the data set, including visualization and report generation.

Results validation

The final step of knowledge discovery from data is to verify that the patterns produced by the data mining algorithms occur in the wider data set. Not all patterns found by the data mining algorithms are necessarily valid. It is common for the data mining algorithms to find patterns in the training set which are not present in the general data set. This is called overfitting. To overcome this, the evaluation uses a test set of data on which the data mining algorithm was not trained. The learned patterns are applied to this test set and the resulting output is compared to the desired output. For example, a data mining algorithm trying to distinguish "spam" from "legitimate" emails would be trained on a training set of sample e-mails. Once trained, the learned patterns would be applied to the test set of e-mails on which it had not been trained. The accuracy of the patterns can then be measured from how many e-mails they correctly classify. A number of statistical methods may be used to evaluate the algorithm, such as ROC curves.

If the learned patterns do not meet the desired standards, then it is necessary to re-evaluate and change the pre-processing and data mining steps. If the learned patterns do meet the desired standards, then the final step is to interpret the learned patterns and turn them into knowledge.