1. Data Mining: Introduction

2. Why Data Mining? l The Explosive Growth of Data: from terabytes to petabytes –Data collection and data availability  Automated data collection tools, database systems, Web, computerized society –Major sources of abundant data  Business: Web, e-commerce, transactions, stocks, …  Science: Remote sensing, bioinformatics, scientific simulation, …  Society and everyone: news, digital cameras, YouTube l We are drowning in data, but starving for knowledge! l “Necessity is the mother of invention”—Data mining—Automated analysis of massive data sets

3. Evolution of Sciences l Before 1600, empirical science l 1600-1950s, theoretical science –Each discipline has grown a theoretical component. Theoretical models often motivate experiments and generalize our understanding. l 1950s-1990s, computational science –Computational Science traditionally meant simulation. It grew out of our inability to find closed-form solutions for complex mathematical models. l 1990-now, data science –The flood of data from new scientific instruments and simulations –The ability to economically store and manage petabytes of data online –The Internet and computing Grid that makes all these archives universally accessible –Scientific info. management, acquisition, organization, query, and visualization tasks scale almost linearly with data volumes.

4. 4 Evolution of Database Technology l 1960s: –Data collection, database creation, IMS and network DBMS l 1970s: –Relational data model, relational DBMS implementation l 1980s: –RDBMS, advanced data models (extended-relational, OO, deductive, etc.) –Application-oriented DBMS (spatial, scientific, engineering, etc.) l 1990s: –Data mining, data warehousing, multimedia databases, and Web databases l 2000s –Stream data management and mining –Data mining and its applications –Web technology and global information systems

5. l Lots of data is being collected and warehoused –Web data, e-commerce –purchases at department/ grocery stores –Bank/Credit Card transactions l Computers have become cheaper and more powerful Why Mine Data? Commercial Viewpoint

6. Why Mine Data? Scientific Viewpoint l Data collected and stored at enormous speeds (GB/hour) –remote sensors on a satellite –telescopes scanning the skies –microarrays generating gene expression data –scientific simulations generating terabytes of data l Traditional techniques infeasible for raw data l Data mining may help scientists –in classifying and segmenting data

7. Mining Large Data Sets - Motivation l There is often information “ hidden ” in the data that is not readily evident l Much of the data is never analyzed at all The Data Gap Total new disk (TB) since 1995 Number of analysts From: R. Grossman, C. Kamath, V. Kumar, “Data Mining for Scientific and Engineering Applications”

8. What is Data Mining? l Many Definitions –Non-trivial extraction of implicit, previously unknown and potentially useful information from data

9. KDD Process Input Data Data Mining Data Pre- Processing Post- Processing

10. Data Mining in Business Intelligence Increasing potential to support business decisions End User Business Analyst Data Analyst DBA Decision Making Data Presentation Visualization Techniques Data Mining Information Discovery Data Exploration Statistical Summary, Querying, and Reporting Data Preprocessing/Integration, Data Warehouses Data Sources Paper, Files, Web documents, Scientific experiments, Database Systems

11. What is (not) Data Mining? l What is Data Mining? – Certain names are more prevalent in certain US locations (O’Brien, O’Rurke, O’Reilly… in Boston area) l What is not Data Mining? – Look up phone number in phone directory

12. l Draws ideas from machine learning/AI, pattern recognition, statistics, and database systems Origins of Data Mining Machine Learning/ Pattern Recognition Statistics/ AI Data Mining Database systems

13. Data Mining Tasks l Prediction Methods –Use some variables to predict unknown or future values of other variables. l Description Methods –Find human-interpretable patterns that describe the data. From [Fayyad, et.al.] Advances in Knowledge Discovery and Data Mining, 1996

14. Why Data Mining?—Potential Applications l Data analysis and decision support –Market analysis and management  Target marketing, customer relationship management (CRM), market basket analysis, cross selling, market segmentation –Risk analysis and management  Forecasting, customer retention, quality control –Fraud detection and detection of unusual patterns (outliers) l Other Applications –Text mining and Web mining –Bioinformatics and bio-data analysis

15. Ex. 1: Market Analysis and Management l Where does the data come from? –Credit card transactions, loyalty cards, discount coupons, customer complaint calls, plus (public) lifestyle studies l Target marketing –Find clusters of “model” customers who share the same characteristics: interest, income level, spending habits, etc. –Determine customer purchasing patterns over time l Customer profiling –What types of customers buy what products (clustering or classification) l Customer requirement analysis –Predict what factors will attract new customers

16. Ex. 2: Corporate Analysis & Risk Management l Finance planning and asset evaluation –cash flow analysis and prediction –cross-sectional and time series analysis (financial-ratio, trend analysis, etc.) l Resource planning –summarize and compare the resources and spending

17. Ex. 3: Fraud Detection & Mining Unusual Patterns l Applications: Health care, retail, credit card service, telecomm. –Auto insurance: fraud detection –Money laundering: suspicious monetary transactions –Medical insurance  Professional patients, ring of doctors.  Unnecessary or correlated screening tests –Anti-terrorism

18. Data Mining Tasks... l Classification [Predictive] l Clustering [Descriptive] l Association Rule Discovery [Descriptive] l Sequential Pattern Discovery [Descriptive] l Regression [Predictive] l Deviation/Anomaly/Outlier Detection [Predictive]