Data Mining and Knowledge Discovery in Business Databases
- 1. Machine Learning, Data Mining, and Knowledge Discovery: An Introduction
- 2. Lesson Outline Introduction: Data Flood Data Mining Application Examples Data Mining & Knowledge Discovery Data Mining Tasks
- 3. Trends leading to Data Flood More data is generated: Bank, telecom, other business transactions ... Scientific data: astronomy, biology, etc Web, text, and e-commerce
- 4. Big Data Examples Europe's Very Long Baseline Interferometry (VLBI) has 16 telescopes, each of which produces 1 Gigabit/second of astronomical data over a 25-day observation session storage and analysis a big problem AT&T handles billions of calls per day so much data, it cannot be all stored -- analysis has to be done “on the fly”, on streaming data
- 5. Largest databases in 2003 Commercial databases: Winter Corp. 2003 Survey: France Telecom has largest decision-support DB, ~30TB; AT&T ~ 26 TB Web Alexa internet archive: 7 years of data, 500 TB Google searches 4+ Billion pages, many hundreds TB IBM WebFountain, 160 TB (2003) Internet Archive ( www.archive.org ),~ 300 TB
- 6. 5 million terabytes created in 2002 UC Berkeley 2003 estimate: 5 exabytes (5 million terabytes) of new data was created in 2002. www.sims.berkeley.edu/research/projects/how-much-info-2003/ US produces ~40% of new stored data worldwide
- 7. Data Growth Rate Twice as much information was created in 2002 as in 1999 (~30% growth rate) Other growth rate estimates even higher Very little data will ever be looked at by a human Knowledge Discovery is NEEDED to make sense and use of data.
- 8. Lesson Outline Introduction: Data Flood Data Mining Application Examples Data Mining & Knowledge Discovery Data Mining Tasks
- 9. Machine Learning / Data Mining Application areas Science astronomy, bioinformatics, drug discovery, … Business advertising, CRM (Customer Relationship management), investments, manufacturing, sports/entertainment, telecom, e-Commerce, targeted marketing, health care, … Web: search engines, bots, … Government law enforcement, profiling tax cheaters, anti-terror(?)
- 10. Data Mining for Customer Modeling Customer Tasks: attrition prediction targeted marketing: cross-sell, customer acquisition credit-risk fraud detection Industries banking, telecom, retail sales, …
- 11. Customer Attrition: Case Study Situation: Attrition rate at for mobile phone customers is around 25-30% a year! Task: Given customer information for the past N months, predict who is likely to attrite next month. Also, estimate customer value and what is the cost-effective offer to be made to this customer.
- 12. Customer Attrition Results Verizon Wireless built a customer data warehouse Identified potential attriters Developed multiple, regional models Targeted customers with high propensity to accept the offer Reduced attrition rate from over 2%/month to under 1.5%/month (huge impact, with >30 M subscribers) (Reported in 2003)
- 13. Assessing Credit Risk: Case Study Situation: Person applies for a loan Task: Should a bank approve the loan? Note: People who have the best credit don’t need the loans, and people with worst credit are not likely to repay. Bank’s best customers are in the middle
- 14. Credit Risk - Results Banks develop credit models using variety of machine learning methods. Mortgage and credit card proliferation are the results of being able to successfully predict if a person is likely to default on a loan Widely deployed in many countries
- 15. Successful e-commerce – Case Study A person buys a book (product) at Amazon.com. Task: Recommend other books (products) this person is likely to buy Amazon does clustering based on books bought: customers who bought “ Advances in Knowledge Discovery and Data Mining ”, also bought “ Data Mining: Practical Machine Learning Tools and Techniques with Java Implementations ” Recommendation program is quite successful
- 16. Problems Suitable for Data-Mining require knowledge-based decisions have a changing environment have sub-optimal current methods have accessible, sufficient, and relevant data provides high payoff for the right decisions! Privacy considerations important if personal data is involved
- 17. Lesson Outline Introduction: Data Flood Data Mining Application Examples Data Mining & Knowledge Discovery Data Mining Tasks
- 18. Knowledge Discovery Definition Knowledge Discovery in Data is the non-trivial process of identifying valid novel potentially useful and ultimately understandable patterns in data. from Advances in Knowledge Discovery and Data Mining, Fayyad, Piatetsky-Shapiro, Smyth, and Uthurusamy, (Chapter 1), AAAI/MIT Press 1996
- 19. Related Fields Statistics Machine Learning Databases Visualization Data Mining and Knowledge Discovery
- 20. Statistics, Machine Learning and Data Mining Statistics: more theory-based more focused on testing hypotheses Machine learning more heuristic focused on improving performance of a learning agent also looks at real-time learning and robotics – areas not part of data mining Data Mining and Knowledge Discovery integrates theory and heuristics focus on the entire process of knowledge discovery, including data cleaning, learning, and integration and visualization of results Distinctions are fuzzy witten&eibe
- 21. Knowledge Discovery Process flow, according to CRISP-DM see www.crisp-dm.org for more information Monitoring
- 22. Historical Note: Many Names of Data Mining Data Fishing, Data Dredging: 1960- used by Statistician (as bad name) Data Mining :1990 -- used DB, business in 2003 – bad image because of TIA Knowledge Discovery in Databases (1989-) used by AI, Machine Learning Community also Data Archaeology, Information Harvesting, Information Discovery, Knowledge Extraction, ... Currently: Data Mining and Knowledge Discovery are used interchangeably
- 23. Lesson Outline Introduction: Data Flood Data Mining Application Examples Data Mining & Knowledge Discovery Data Mining Tasks
- 24. Major Data Mining Tasks Classification: predicting an item class Clustering: finding clusters in data Associations: e.g. A & B & C occur frequently Visualization: to facilitate human discovery Summarization: describing a group Deviation Detection : finding changes Estimation: predicting a continuous value Link Analysis: finding relationships …
- 25. Data Mining Tasks: Classification Learn a method for predicting the instance class from pre-labeled (classified) instances Many approaches: Statistics, Decision Trees, Neural Networks, ...
- 26. Data Mining Tasks: Clustering Find “natural” grouping of instances given un-labeled data
- 27. Summary: Technology trends lead to data flood data mining is needed to make sense of data Data Mining has many applications, successful and not Knowledge Discovery Process Data Mining Tasks classification, clustering, …
- 28. More on Data Mining and Knowledge Discovery KDnuggets.com News, Publications Software, Solutions Courses, Meetings, Education Publications, Websites, Datasets Companies, Jobs …