What is Data Mining?
DAMA-NCR
Tuesday, November 13, 2001
Laura Squier Technical Consultant [email protected]
Agenda
What Data Mining IS and IS NOT Steps in the Data Mining Process CRISP-DM Explanation of Models Examples of Data Mining Applications Questions
The Evolution of Data Analysis
Evolutionary Step Business Question Enabling Technologies Product Providers Characteristics Data Collection (1960s) "What was my total Computers, tapes, revenue in the last disks five years?" "What were unit sales in New England last March?" Relational databases (RDBMS), Structured Query Language (SQL), ODBC On-line analytic processing (OLAP), multidimensional databases, data warehouses Advanced algorithms, multiprocessor computers, massive databases IBM, CDC Retrospective, static data delivery
Data Access (1980s)
Oracle, Sybase, Informix, IBM, Microsoft
Retrospective, dynamic data delivery at record level
Data Warehousing & Decision Support (1990s)
"What were unit sales in New England last March? Drill down to Boston." "Whats likely to happen to Boston unit sales next month? Why?"
SPSS, Comshare, Retrospective, Arbor, Cognos, dynamic data Microstrategy,NCR delivery at multiple levels
Data Mining (Emerging Today)
SPSS/Clementine, Lockheed, IBM, SGI, SAS, NCR, Oracle, numerous startups
Prospective, proactive information delivery
Results of Data Mining Include:
Forecasting what may happen in the future Classifying people or things into groups by recognizing patterns Clustering people or things into groups based on their attributes Associating what events are likely to occur together Sequencing what events are likely to lead to later events
Data mining is not
Brute-force crunching of bulk data Blind application of algorithms Going to find relationships where none exist Presenting data in different ways A database intensive task A difficult to understand technology requiring an advanced degree in computer science
Data Mining Is
A hot buzzword for a class of techniques that find patterns in data A user-centric, interactive process which leverages analysis technologies and computing power A group of techniques that find relationships that have not previously been discovered Not reliant on an existing database A relatively easy task that requires knowledge of the business problem/subject matter expertise
Data Mining versus OLAP
OLAP - On-line Analytical Processing Provides you with a very good view of what is happening, but can not predict what will happen in the future or why it is happening
Data Analysis Data Mining Originally developed to act Tests for statistical correctness of models as expert systems to solve Are statistical problems assumptions of models Less interested in the correct? mechanics of the Eg Is the R-Square technique good? If it makes sense then lets Hypothesis testing use it Is the relationship Does not require significant? assumptions to be made about data Use a t-test to validate significance Can find patterns in very Tends to rely on sampling large amounts of data Techniques are not Requires understanding optimised for large amounts of data and business of data problem Requires strong statistical skills
Data Mining Versus Statistical Analysis
Examples of What People are Doing with Data Mining:
Fraud/Non-Compliance Anomaly detection Recruiting/Attracting customers Maximizing Isolate the factors that profitability (cross lead to fraud, waste and selling, identifying abuse profitable customers) Target auditing and Service Delivery and investigative efforts more Customer Retention
effectively Build profiles of customers likely to use which services
Credit/Risk Scoring Intrusion detection Parts failure prediction
Web Mining
How Can We Do Data Mining?
By Utilizing the CRISPDM Methodology a standard process existing data software technologies situational expertise
Why Should There be a Standard Process?
The data mining process must be reliable and repeatable by people with little data mining background.
Framework for recording experience Allows projects to be replicated Aid to project planning and management Comfort factor for new adopters Demonstrates maturity of Data Mining Reduces dependency on stars
Process Standardization
CRISP-DM:
CRoss Industry Standard Process for Data Mining Initiative launched Sept.1996 SPSS/ISL, NCR, Daimler-Benz, OHRA Funding from European commission Over 200 members of the CRISP-DM SIG worldwide
DM Vendors - SPSS, NCR, IBM, SAS, SGI, Data Distilleries, Syllogic, Magnify, .. System Suppliers / consultants - Cap Gemini, ICL Retail, Deloitte & Touche, End Users - BT, ABB, Lloyds Bank, AirTouch, Experian, ...
CRISP-DM
Non-proprietary Application/Industry neutral Tool neutral Focus on business issues As well as technical analysis Framework for guidance Experience base Templates for Analysis
The CRISPDM Process Model
Why CRISP-DM?
The data mining process must be reliable and repeatable by people with little data mining skills CRISP-DM provides a uniform framework for guidelines experience documentation CRISP-DM is flexible to account for differences Different business/agency problems Different data
Phases and Tasks
Business Understanding Data Understanding Data Preparation
Modeling Evaluation Deployment
Determine Business Objectives Collect Initial Data
Background Business Objectives Business Success Criteria
Initial Data Collection Report
Describe Data
Data Set Data Set Description
Select Data
Select Modeling Technique
Evaluate Results
Data Description Report
Explore Data
Rationale for Inclusion / Exclusion
Clean Data
Modeling Technique Modeling Assumptions
Generate Test Design
Situation Assessment
Test Design
Assessment of Data Mining Results w.r.t. Business Success Criteria Approved Models
Review Process
Plan Deployment
Deployment Plan
Plan Monitoring and Maintenance
Monitoring and Maintenance Plan Final Report Final Presentation
Review Project
Inventory of Resources Requirements, Assumptions, and Constraints Risks and Contingencies Terminology Costs and Benefits
Determine Data Mining Goal
Data Exploration Report
Verify Data Quality
Data Cleaning Report
Construct Data
Build Model
Data Quality Report
Derived Attributes Generated Records
Integrate Data
Parameter Settings Models Model Description
Assess Model
Review of Process
Determine Next Steps
Produce Final Report
List of Possible Actions Decision
Merged Data
Format Data
Model Assessment Revised Parameter Settings
Experience Documentation
Data Mining Goals Data Mining Success Criteria
Reformatted Data
Produce Project Plan
Project Plan Initial Asessment of Tools and Techniques
Phases in the DM Process: CRISP-DM
Phases in the DM Process (1 & 2)
Business Understanding: Statement of Business Objective Statement of Data Data Understanding Mining objective Explore the data and Statement of Success verify the quality Criteria Find outliers
Phases in the DM Process (3)
Data preparation:
Takes usually over 90% of our time Collection Assessment Consolidation and Cleaning
Data selection
outliers?
table links, aggregation level, missing values, etc active role in ignoring noncontributory data? Use of samples visualization tools
Transformations - create new
variables
Phases in the DM Process (4)
Model building Selection of the modeling techniques is based upon the data mining objective Modeling is an iterative process - different for supervised and unsupervised learning May model for either description or prediction
Types of Models
Prediction Models for Descriptive Models for Predicting and Grouping and Finding Classifying Associations Regression algorithms Clustering/Grouping (predict numeric algorithms: Koutcome): neural means, Kohonen networks, rule induction, CART Association (OLS regression, algorithms: apriori, GLM) GRI Classification algorithm predict symbolic outcome): CHAID, C5.0 (discriminant analysis, logistic regression)
Neural Network
Input layer Hidden layer Output
Neural Networks
Description Difficult interpretation Tends to overfit the data Extensive amount of training time A lot of data preparation Works with all data types
Rule Induction
Description
Produces decision trees: income < $40K
job > 5 yrs then good risk job < 5 yrs then bad risk high debt then bad risk low debt then good risk
Weekly pay Cat. % n Bad 86.67 143 Good 13.33 22 Total (51.08) 165 Age Categorical P-value=0.0000, Chi-square=30.1113, df=1 Young (< 25);Middle (25-35) Cat. % n Bad 90.51 143 Good 9.49 15 Total (48.92) 158 Old ( > 35) Cat. % Bad 0.00 Good 100.00 Total (2.17) n 0 7 7
Credit ranking (1=default) Cat. % n Bad 52.01 168 Good 47.99 155 Total (100.00) 323 Paid Weekly/Monthly P-value=0.0000, Chi-square=179.6665, df=1 Monthly salary Cat. % n Bad 15.82 25 Good 84.18 133 Total (48.92) 158 Age Categorical P-value=0.0000, Chi-square=58.7255, df=1 Young (< 25) Cat. % n Bad 48.98 24 Good 51.02 25 Total (15.17) 49 Social Class P-value=0.0016, Chi-square=12.0388, df=1 Management;Clerical Cat. % Bad 0.00 Good 100.00 Total (2.48) n 0 8 8 Professional Cat. % n Bad 58.54 24 Good 41.46 17 Total (12.69) 41 Middle (25-35);Old ( > 35) Cat. % n Bad 0.92 1 Good 99.08 108 Total (33.75) 109
income > $40K
Or Rule Sets:
Rule #1 for good risk:
if income > $40K if low debt
Rule #2 for good risk:
if income < $40K if job > 5 years
Rule Induction
Description Intuitive output Handles all forms of numeric data, as well as non-numeric (symbolic) data C5 Algorithm a special case of rule induction Target variable must be symbolic
Apriori
Description
Seeks association rules in dataset Market basket analysis Sequence discovery
Kohonen Network
Description
unsupervised seeks to describe dataset in terms of natural clusters of cases
Phases in the DM Process (5)
Model Evaluation Evaluation of model: how well it performed on test data Methods and criteria depend on model type: e.g., coincidence matrix with classification models, mean error rate with regression models Interpretation of model: important or not, easy or hard depends on algorithm
Phases in the DM Process (6)
Deployment Determine how the results need to be utilized Who needs to use them? How often do they need to be used Deploy Data Mining results by: Scoring a database Utilizing results as business rules interactive scoring on-line
Specific Data Mining Applications:
What data mining has done for...
The US Internal Revenue Service needed to improve customer service and...
Scheduled its workforce to provide faster, more accurate answers to questions.
What data mining has done for...
The US Drug Enforcement Agency needed to be more effective in their drug busts and
analyzed suspects cell phone usage to focus investigations.
What data mining has done for...
HSBC need to cross-sell more effectively by identifying profiles that would be interested in higher yielding investments and...
Reduced direct mail costs by 30% while garnering 95% of the campaigns revenue.
Final Comments
Data Mining can be utilized in any organization that needs to find patterns or relationships in their data. By using the CRISP-DM methodology, analysts can have a reasonable level of assurance that their Data Mining efforts will render useful, repeatable, and valid results.
Questions?
