Data Analytics-Introduction

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 Introduction
• Motivation: Why data mining?
• What is data mining?
• Data Mining: On what kind of data?
• Data mining functionality
• Are all the patterns interesting?
• Classification of data mining systems
• Major issues in data mining
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• Data explosion problem

– Automated data collection tools and mature database

technology lead to tremendous amounts of data
stored in databases, data warehouses and other
information repositories

• We are drowning in data, but starving for knowledge!

• Solution: Data warehousing and data mining
– Data warehousing and on-line analytical processing
– Extraction of interesting knowledge (rules,
regularities, patterns, constraints) from data in large
databases
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 Evolution of Database Technology

• 1960s:
– Data collection, database creation, IMS and network DBMS
• 1970s:
– Relational data model, relational DBMS implementation
• 1980s:
– RDBMS, advanced data models (extended-relational, OO,
deductive, etc.) and application-oriented DBMS (spatial,
scientific, engineering, etc.)
• 1990s—2000s:
– Data mining and data warehousing, multimedia databases,
and Web databases

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 What Is Data Mining?
• Data mining (knowledge discovery in databases):

– Extraction of interesting information or patterns

from data in large databases

– Knowledge discovery(mining) in databases

(KDD), knowledge extraction, data/pattern
analysis, data archeology, information
harvesting, business intelligence, etc.

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Why Data Mining? — Potential Applications
• Database analysis and decision support
– Market analysis and management
• target marketing, customer relation management, market
basket analysis, cross selling, market segmentation
– Risk analysis and management
• Forecasting, customer retention, improved underwriting,
quality control, competitive analysis
– Fraud detection and management
• Other Applications
– Text mining (news group, email, documents) and Web
analysis.
– Intelligent query answering
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 Market Analysis and Management (1)
• Where are the data sources for analysis?
– Credit card transactions, loyalty cards, discount coupons,
customer complaint calls, plus (public) lifestyle studies
• Target marketing
– Find clusters of “model” customers who share the same
characteristics: interest, income level, spending habits, etc.

• Determine customer purchasing patterns over time

– Conversion of single to a joint bank account: marriage, etc.

• Cross-market analysis
– Associations/co-relations between product sales
– Prediction based on the association information
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 Market Analysis and Management (2)
• Customer profiling
– data mining can tell you what types of customers buy
what products (clustering or classification)
• Identifying customer requirements
– identifying the best products for different customers
– use prediction to find what factors will attract new
customers
• Provides summary information
– various multidimensional summary reports
– statistical summary information (data central tendency
and variation)
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 Corporate Analysis and Risk
Management
• Finance planning and asset evaluation
– cash flow analysis and prediction
– cross-sectional and time series analysis
(financial-ratio, trend analysis, etc.)
• Resource planning:
– summarize and compare the resources and spending
• Competition:
– monitor competitors and market directions
– group customers into classes and a class-based
pricing procedure
– set pricing strategy in a highly competitive market
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 Fraud Detection and Management (1)
• Applications
– widely used in health care, retail, credit card services,
telecommunications (phone card fraud), etc.
• Approach
– use historical data to build models of fraudulent behavior
and use data mining to help identify similar instances
• Examples
– auto insurance: detect a group of people who stage
accidents to collect on insurance
– money laundering: detect suspicious money transactions
(US Treasury's Financial Crimes Enforcement Network)
– medical insurance: detect professional patients and ring of
doctors and ring of references

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 Fraud Detection and Management (2)
• Detecting inappropriate medical treatment
– Australian Health Insurance Commission identifies
that in many cases blanket screening tests were
requested (save Australian $1m/yr).
• Detecting telephone fraud
– Telephone call model: destination of the call, duration,
time of day or week. Analyze patterns that deviate
from an expected norm.
– British Telecom identified discrete groups of callers
with frequent intra-group calls, especially mobile
phones, and broke a multimillion dollar fraud.
• Retail
– Analysts estimate that 38% of retail shrink is due to
dishonest employees.
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 Other Applications
• Sports
– IBM Advanced Scout analyzed NBA game statistics (shots
blocked, assists, and fouls) to gain competitive advantage
for New York Knicks and Miami Heat
• Astronomy
– JPL and the Palomar Observatory discovered 22 quasars
with the help of data mining
• Internet Web Surf-Aid
– IBM Surf-Aid applies data mining algorithms to Web access
logs for market-related pages to discover customer
preference and behavior pages, analyzing effectiveness of
Web marketing, improving Web site organization, etc.
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 Data Mining: A KDD Process

Pattern Evaluation
– Data mining: the core
of knowledge Data Mining
discovery process.
Task-relevant Data

Data Warehouse Selection

Data Cleaning

Data Integration

Databases manish@IIITA
 Steps of a KDD Process
• Learning the application domain:
– relevant prior knowledge and goals of application
• Creating a target data set: data selection
• Data cleaning and preprocessing: (may take 60% of effort!)
• Data reduction and transformation:
– Find useful features, dimensionality/variable reduction,
invariant representation.
• Choosing functions of data mining
– summarization, classification, regression, association,
clustering.
• Choosing the mining algorithm(s)
• Data mining: search for patterns of interest
• Pattern evaluation and knowledge presentation
– visualization, transformation, removing redundant
patterns, etc.
• Use of discovered knowledge
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 Data Mining and Business
Intelligence
Increasing potential
to support
business decisions End User
Making
Decisions

Data Presentation Business

Analyst
Visualization Techniques
Data Mining Data
Information Discovery Analyst

Data Exploration
Statistical Analysis, Querying and Reporting

Data Warehouses / Data Marts

OLAP DBA
Data Sources
Paper, Files, Informationmanish@IIITA
Providers, Database Systems, OLTP
Architecture of a Typical Data
Mining System
Graphical user interface

Pattern evaluation

Data mining engine

Knowledge-base
Database or data
warehouse server
Data cleaning & data integration Filtering

Data
Databases Warehouse
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 Data Mining: On What Kind of Data?
• Relational databases
• Data warehouses
• Transactional databases
• Advanced DB and information repositories
– Object-oriented and object-relational databases
– Spatial databases
– Time-series data and temporal data
– Text databases and multimedia databases
– Heterogeneous databases
– WWW
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 Data Mining Functionalities (1)
• Concept description: Characterization and
discrimination
– Generalize, summarize, and contrast data
characteristics, e.g., dry vs. wet regions

• Association (correlation and causality)

– Multi-dimensional vs. single-dimensional
association
– age(X, “20..29”) ^ income(X, “20..29K”) 🡪
buys(X, “PC”)
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 Data Mining Functionalities (2)
• Classification and Prediction
– Finding models (functions) that describe and distinguish
classes or concepts for future prediction
– E.g., classify countries based on climate, or classify cars
based on mileage
– Presentation: decision-tree, classification rule
– Prediction: Predict some unknown or missing numerical
values
• Cluster analysis
– Class label is unknown: Group data to form new classes, e.g.,
cluster houses to find distribution patterns

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 Data Mining Functionalities (3)
• Trend and evolution analysis
– Trend and deviation: regression analysis
– Sequential pattern mining, periodicity analysis
– Similarity-based analysis

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 Data Mining: Confluence of
Multiple Disciplines
Database
Statistics
Technology

Machine
Learning
Data Mining Visualization

Information Other
Science Disciplines
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 Data Mining: Classification Schemes

• General functionality
– Descriptive data mining
– Predictive data mining
• Different views, different classifications
– Kinds of databases to be mined
– Kinds of knowledge to be discovered
– Kinds of techniques utilized
– Kinds of applications adapted
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 A Multi-Dimensional View of Data Mining
Classification
• Databases to be mined
– Relational, transactional, object-oriented, object-relational,
active, spatial, time-series, text, multi-media, heterogeneous,
legacy, WWW, etc.
• Knowledge to be mined
– Characterization, discrimination, association, classification,
clustering, trend etc.
– Multiple/integrated functions and mining at multiple levels
• Techniques utilized
– Database-oriented, data warehouse (OLAP), machine learning,
statistics
• Applications adapted
– Retail, telecommunication, banking, fraud analysis, DNA mining,
stock market analysis, Web mining etc.
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 Major Issues in Data Mining (1)
• Mining methodology and user interaction
– Mining different kinds of knowledge in databases
– Interactive mining of knowledge at multiple levels of
abstraction
– Incorporation of background knowledge
– Data mining query languages and ad-hoc data mining
– Expression and visualization of data mining results
– Handling noise and incomplete data
– Pattern evaluation: the interestingness problem
• Performance and scalability
– Efficiency and scalability of data mining algorithms
– Parallel, distributed and incremental mining methods
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 Major Issues in Data Mining (2)
• Issues relating to the diversity of data types
– Handling relational and complex types of data
– Mining information from heterogeneous databases and
global information systems (WWW)
– Application of discovered knowledge
• Domain-specific data mining tools
• Intelligent query answering
• Process control and decision making
– Integration of the discovered knowledge with existing
knowledge: A knowledge fusion problem
– Protection of data security, integrity, and privacy

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 Summary
• Data mining: discovering interesting patterns from large amounts
of data
• A natural evolution of database technology, in great demand, with
wide applications
• A KDD process includes data cleaning, data integration, data
selection, transformation, data mining, pattern evaluation, and
knowledge presentation
• Mining can be performed in a variety of information repositories
• Data mining functionalities: characterization, discrimination,
association, classification, clustering, outlier and trend analysis,
etc.
• Classification of data mining systems
• Major issues in data mining
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