The following post is an excerpt from Introduction to Data Mining By Kurt Thearling.

Data mining, the extraction of hidden predictive information from large databases, is
a powerful new technology with great potential to help companies focus on the most
important information in their data warehouses. Data mining tools predict future
trends and behaviors, allowing businesses to make proactive, knowledge-driven
decisions. The automated, prospective analyses offered by data mining move beyond
the analyses of past events provided by retrospective tools typical of decision support
systems. Data mining tools can answer business questions that traditionally were too
time consuming to resolve. They scour databases for hidden patterns, finding
predictive information that experts may miss because it lies outside their
expectations.

How Data Mining Works?

How exactly is data mining able to tell you important things that you didn’t know or
what is going to happen next? The technique that is used to perform these feats in
data mining is called modeling. Modeling is simply the act of building a model in one
situation where you know the answer and then applying it to another situation that
you don’t.

For instance, if you were looking for a sunken Spanish galleon on the high
seas the first thing you might do is to research the times when Spanish treasure had
been found by others in the past. You might note that these ships often tend to be
found off the coast of Bermuda and that there are certain characteristics to the ocean
currents, and certain routes that have likely been taken by the ship?s captains in that
era. You note these similarities and build a model that includes the characteristics
that are common to the locations of these sunken treasures. With these models in
hand you sail off looking for treasure where your model indicates it most likely might
be given a similar situation in the past. Hopefully, if you’ve got a good model, you find
your treasure.

Comprehensive data warehouses that integrate operational data with customer,
supplier, and market information have resulted in an explosion of information.
Competition requires timely and sophisticated analysis on an integrated view of the
data.

Quantifiable business benefits have been proven through the integration of data mining with current information systems, and new products are on the horizon that will bring this
integration to an even wider audience of users.

To get a more better and clear understanding on data Mining and its techniques, i’ll recommend reading Kurt Thearling’s An Introduction to Data Mining, he is an Analytics and Data Science Executive, can be reached at kurt@thearling.com.

photo source : mpeg2tom

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